• Most of the top 20 hyperscale datacentre locations are in the US, according to Synergy Research Group
• The US also accounts for eight of the world’s top 20 colocation markets 
• Northern Virginia, US, is the leading location for both hyperscale capacity and colocation revenues

It will come as no surprise that the US is the world’s favourite location for hyperscale datacentres and colocation facilities, but what might raise an eyebrow is just how dominant the US is, according to data from Synergy Research Group, which tracks the cloud infrastructure and services sector. 

As the Synergy Research charts (above and below) show, Northern Virginia has an unassailable lead as the world’s number one location in both markets. 

According to the research firm, 13 of the top 20 hyperscale datacentre locations (as measured by MW of operational critical IT load) are in the US while four hail from the Asia-Pacific region (two in China) and three are located in Europe.

The prevalence of US locations in the top 20 can largely be explained by two factors, according to the Synergy Research team: Almost 60% of the world’s hyperscale operators are headquartered in the US, including the four biggest – Amazon Web Services (AWS), Google Cloud, Meta/Facebook and Microsoft Azure; and that the US accounts for almost half of all cloud infrastructure services revenues.

John Dinsdale, chief analyst at the research firm, adds that it’s not only proximity to customers that influences the choice of location for hyperscale infrastructure: Availability and cost of real estate, power and networking infrastructure are also factors, as is the ease of doing business and local financial incentives, plus political stability and being able to minimise the impact of natural hazards (Northern Virginia is big on tax breaks and low-cost power.)

“When you weigh up those factors,” says Dinsdale, “it tends to mitigate against some of the world’s biggest economic hubs, like London and New York, while favouring some sparsely populated US states like Oregon, Iowa and Nebraska.”

US hyperscale dominance is not solely domestic. Cloud providers AWS, Microsoft and Google, notes Synergy, account for 60% of the world’s hyperscale datacentre capacity with each having “multiple datacentres in many other countries around the world”.

The research firm anticipates that the US and China will still “dominate the numbers” in terms of hyperscale capacity, but other countries – such as Malaysia, India and Spain – will start to feature much more prominently in the coming years: AWS, in fact, has just announced the launch of a new datacentre infrastructure ‘Region’ in Malaysia. (AWS Regions consist of multiple, physically separated and isolated Availability Zones, or AZs, that are connected with low latency, high throughput, highly redundant networking: AZs are isolated datacentres that are connected with low latency, high throughput, and redundant networking. AZs are usually within 100km (60 miles) of each other, but are physically separated.) 

A more nuanced colocation picture

Synergy’s latest data on colocation datacentres shows the US once again as a popular choice, occupying eight of the top 20 markets (as measured by revenues generated during the past four quarters). Seven are in the Asia-Pacific region, four in Europe and one in Latin America.

Unlike the distribution of hyperscale datacentres, Synergy Research notes that the leading colocation markets – beyond Northern Virginia – mainly reflect the world's leading economic hubs.

"Proximity to customers is a key driver of the colocation market, so datacentres tend to be located in metros that have a large concentration of companies and economic activity,” states Dinsdale. “That will not change but what we are seeing is the increasing emergence of many metros in countries that have smaller economies, but which are growing rapidly."

Dinsdale flags Malaysia, Indonesia, Nigeria and South Africa as “interesting opportunities”, adding that the Latin American market has developed beyond Sao Paulo (Brazil), moving into high-growth metros such as Santiago (Chile), Rio de Janeiro (Brazil) and Querétaro (Mexico). Hyperscale companies, he notes, often use retail colocation datacentres to house their edge-oriented infrastructure. 

“It is also the case that increasingly there are power or geographic constraints limiting [colocation] growth in some traditional metros, pushing growth opportunities into neighbouring regions,” observes Dinsdale. “These emerging metro markets will not reach the scale of a Singapore or a Frankfurt any time soon, but they will increasingly reshape the evolving colocation market."

Other metro markets that are growing quickly, according to the research firm, are Johor (Malaysia), Jakarta (Indonesia), Chennai (India), Lagos (Nigeria) and Johannesburg (South Africa).

On a worldwide basis, says Synergy, the leading colocation companies are Equinix, Digital Realty, NTT, China Telecom, CyrusOne and China’s GDS Services. 

– Ken Wieland, Contributing Editor, TelecomTV