Government investments boost Chinese data center market through 2020: Technavio

Government investments, both for its own purposes and to stimulate technology development, will lead the data center market in China to enjoy a compound annual growth rate (CAGR) of approximately 13% from now through 2020, according to a new report from Technavio. The market research firm defines the data center market as including revenue generated from the capital expenditure (capex) of IT infrastructure, power management systems, cooling solutions, general construction, racks, security, and data center infrastructure management (DCIM).

Many government agencies have established data centers for their operations over the past decade, according to the report. Meanwhile, the Chinese government is investing heavily in data center advances as a means of stimulating the country’s digital economy. The result is an increase in adoption of cloud-based services, big data analytics, and the internet of things (IoT), according to Technavio.

“Growing small and medium-sized enterprises prefer to run their business operations through CSPs [cloud services providers], colocations, and web hosting cloud data centers because of benefits such as scalability, reliability, and cost reduction,” says Rakesh Kumar Panda, a lead data center research analyst at Technavio, says. “Many cloud data centers are termed as mega data centers, which consume lots of power during peak data intensive operations. There is an increase in innovations over the design and deployment of micro data centers.”

Meanwhile, China is fertile ground for growth in IoT, according to Technavio. The development of standardized high-speed wireless networks encourage the use of RFID and sensors, the market research firm points out. Meanwhile, the growth of the manufacturing sector in China, with improved storage systems and computing power, also fosters the use of connected devices. Technavio estimates the Chinese IoT market was worth $104.2 billion in 2015, but will grow to $248.5 billion by 2020 at a CAGR of around 19%.