The pressing shortage of suitable data
centre space in large metropolitan areas is increasing the appeal of
co-location providers. And that is likely to lead to hyper-inflation in the
market, says market watcher IDC.

IDC predicts that prices for co-location
will increase at around 20% a year, through to 2011. It bases that estimate on
a review of data centre strategies at 834 European enterprises, which confirms
that demand is set to increase in coming years.

The study found that 20% of UK data centre
operators are planning to begin using co-location services within the next 12
months. Meanwhile, 36% are planning to open a new data centre in the same time
period â“ increasing the likely competition for suitable space.

The UK is the most mature market for
collocation, where the providers are well established, charging models are most
sophisticated and the barriers to entry â“ which minimise the likelihood of new
entrants sparking a price war â“ are the highest.

Concerns around the availability of power
are starting to bite: According to the study, companies wishing to run
facilities with an above average power consumption are more likely to outsource
to a co-location service provider, as are those who require high availability.