Data Center Renovation Market - By Product (Cooling, Power, IT Racks & Enclosures, Networking Equipment, LV/MV Distribution, DCIM), By Application (BFSI, Colocation, Energy, Government, Healthcare, Industrial, IT & Telecom, Others), Forecast, 2023 - 2032

Data Center Renovation Market Size

Data Center Renovation Market was valued at USD 20 billion in 2022 and is estimated to register a CAGR of over 14% between 2023 and 2032. The increasing reliance on online services worldwide, driven by factors such as remote work, e-commerce, and cloud computing, is fueling the demand for data center renovation.

As businesses expand their digital presence, they require upgraded & more efficient data centers to handle the growing data loads and ensure uninterrupted service delivery. This surge in demand for data center upgrades and expansion is propelling the market with companies investing heavily to meet the escalating data processing needs.

The exponential growth in data, driven by factors such as IoT and digital transformation, is a significant growth factor driving the market trends. Existing data centers may struggle to efficiently handle the expanding data volumes. In such cases, renovation helps optimize infrastructure, cooling systems, and power management to accommodate the surge in data while ensuring reliability & performance. These factors make renovation crucial for businesses striving to meet the demands of the digital age.

Renovation activities can hamper the day-to-day activities of data centers, which can negatively impact the service offering capabilities of operators. The process can comprise multiple internal changes including the replacement of servers, networking equipment, LV/MV distribution, and UPS. Data center renovation projects can also encompass the reconstruction of the complete cooling & ventilation system. These factors can impact data center administration abilities to consistently provide clients with back-end IT services along with affecting business growth. To address this challenge, market players are focusing on systematically delivering services that do not require a temporary shutdown of the facility.

COVID-19 Impact

The COVID-19 pandemic had mixed impacts on the data center renovation market. On one hand, it accelerated the shift toward digitalization and remote work, increasing the demand for data center capacity. However, on the other hand, lockdowns & restrictions disrupted renovation projects due to supply chain disruptions and labor shortages. Organizations had to balance their immediate needs for digital infrastructure, which led to varying effects on the pace of data center renovation activities.
 

Data Center Renovation Market Trends

The demand for data center renovation is increasing globally due to the development of green data centers by leading service providers. They are engaged in integrating energy-efficient power, networking, cooling & storage solutions to reduce the environmental impact of IT devices and improve network connectivity simultaneously. For instance, in March 2022, Vantage Data Centers constructed green data centers in Canada. The company planned to extend its QC4 Montreal complex with a third building, which was scheduled to be launched in the fourth quarter of 2022.

Data Center Renovation Market Analysis

Based on product, the data center renovation market is categorized into cooling, power, IT racks & enclosures, networking equipment, LV/MV distribution, and DCIM. The networking equipment segment held a market share of around 32% in 2022 and is expected to reach approx. 37% by 2032. The rising demand for strong networking solutions for data traffic management is boosting the networking equipment segment trends.

Modern data centers require high-speed, low-latency networking equipment to efficiently manage and distribute data. For instance, in March 2022, Huawei Technologies Co., Ltd. launched the CloudEngine High Availability Multicast (HAM) data center switches: CloudEngine 6860-HAM and CloudEngine 8850-HAM. These are suitable for the financial, insurance, and high-end manufacturing industries, assisting businesses in developing large-scale production & processing systems. The rising prevalence of digitalization across sectors has accelerated the demand for strong networking solutions for data traffic management, thereby stimulating data center renovation.

Based on application, the data center renovation market is divided into BFSI, colocation, energy, government, healthcare, industrial, IT & telecom, and others. The IT & telecom segment held a dominant market share in 2022. The growing 5G penetration has resulted in higher internet user traffic, fueling the demand for data center renovation and ensuring efficient data traffic management. For instance, in January 2022, Orange S.A. launched a 5G network rollout plan in Spain on the 700 MHz frequency spectrum. The company planned to gradually expand this technology in over 1,100 towns & cities by the 2022. Telecom operators are focusing on enhancing customer experience by incorporating advanced power and cooling & networking solutions into their systems and are heavily investing in network infrastructure upgrades.

North America led the data center renovation market with a major share of around 37% in 2022. The growing use of AI is complementing the surge in data traffic by increasing computational demands. AI applications require substantial computing power and generate vast datasets, necessitating enhancements in existing data centers. This trend is particularly prominent in the U.S., where AI-driven industries such as tech and healthcare thrive. To meet these demands, data center renovation is crucial to accommodate advanced hardware, high-performance computing clusters, and improved cooling solutions, positioning the U.S. at the forefront of AI innovation.

Data Center Renovation Market Share

Major players operating in the data center renovation market are

• Vertiv Group Corp.
• Schneider Electric SE
• Dell Inc.
• Hewlett Packard Enterprise Company
• Eaton Corporation
• Huawei Technologies Co., Ltd.
• ABB Ltd.
• Rittal GmbH & Co. KG.
   

Data Center Renovation Industry News

• In June 2023, Cisco developed a new data center in the Kingdom of Saudi Arabia (KSA) for cloud-delivered security. The center will support the company’s cloud services including the Secure Service Edge (SSE) solution, also known as Cisco Secure Access.
   
• In April 2023, IBM launched new single-frame & rack-mount configurations of IBM z16 and IBM LinuxONE 4. The new solutions are designed to provide a modern & flexible hybrid cloud platform that can support digital transformation for a range of IT environments.
   

The data center renovation market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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By Product, 2018 – 2032

• Cooling
• Power
• IT Racks & Enclosures
• Networking Equipment
• LV/MV Distribution
• DCIM

By Application, 2018 – 2032

• BFSI
• Colocation
• Energy
• Government
• Healthcare
• Industrial
• IT & Telecom
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Poland
  • Benelux
• Asia Pacific
  • China
  • India
  • Japan
  • Singapore
  • Australia
  • Indonesia 
• South America
  • Brazil
  • Argentina
  • Chile
  • Colombia
  • Peru
• MEA
  • GCC
  • South Africa