Europe Data Center Interconnect Market Size (2024 - 2029)

Europe Data Center Interconnect Market Analysis

The Europe Data Center Interconnect Market size is estimated at USD 1.87 billion in 2024, and is expected to reach USD 3.42 billion by 2029, growing at a CAGR of 12.83% during the forecast period (2024-2029).

With the proliferation of data and expansion of technologies like AI and high-performance computing (HPC), the need to connect data center assets quickly, reliably, and cost-effectively is growing significantly. Factors such as throughput, latency, simplified operations, maintenance, intelligence, and security are becoming significant priorities for data center vendors. This is one of the major factors driving the adoption of data center interconnect (DCI) technology, owing to its ability to boost inter-data center bandwidth, reduce latency, and eliminate packet loss.

• Government agencies offer tax breaks and other benefits to attract the maximum number of investors to construct a hyperscale data center market in Western Europe & the Nordics. Due to vast resources of renewable energy, low power prices, favorable climate conditions, good infrastructure, and a skilled workforce, Nordic countries are well suited for data centers and, therefore, for DCI and have resulted in a surge of foreign investments over the years.
• The market studied is expanding due to the growing cloud computing industry and the recent increase in OTT service use due to a nationwide shutdown. Furthermore, introducing 5G services may broaden the scope of interconnected data center solutions. Autonomous cars, smart cities, digital twins, virtual reality, AI virtual assistants, video surveillance and monitoring, and gaming are fueling market demand.
• Cloud computing is one sector estimated to be a significant driver of the data center interconnect market. Cloud computing has been increasing over the past few years, owing to lower operational expenses faced by enterprises. Combining colocation with the cloud can reduce latency, increase security, and create cloud interconnection opportunities. Cloud provider companies require high bandwidth and resiliency private networks and support from a robust data center provider.
• The major challenge, especially for small and medium-sized businesses, is the cost of data center connectivity services. A new data center necessitates a significant investment in both construction and maintenance. Furthermore, the distance between data centers is important since it might reduce a data center's efficiency, limiting the growth of the data center interconnect industry.
• The fast growth of online activity has raised the demand for data center interconnection, particularly in recent years, as the COVID-19 pandemic made access to internet applications a requirement. With more people relying on the Internet for work, social networking, e-commerce, banking, and entertainment, the demand for almost limitless uptime and interconnection is growing.

Europe Data Center Interconnect Industry Segmentation

The data center interconnect (DCI) technology connects two or more data centers together over short, medium, or long distances using high-speed packet-optical connectivity. Some large operations use DCI to connect their own data centers within their extended enterprise infrastructures, while others connect to partners, cloud providers, or data center operators to enable simpler data and resource sharing or to handle disaster recovery needs. The market study focuses on end-user industries utilizing DCI to address space and power challenges.

The European data center interconnect market is segmented by country (Germany, United Kingdom, France, Ireland, Spain, Rest of Europe). The market sizes and forecasts are provided in terms of value in USD for all the abovementioned segments.