Why IT Co-location Centers Will See a Boom in 2009 Despite the Macroeconomy

It wasn't what anyone would consider a major IT news story when it broke earlier in December, but it was an important clue to how the IT co-location business can be expected to play out in 2009 and beyond.

i/o Data Centers, which serves as the physical home for about 150 small- and midsize-business IT systems, announced on Dec. 10 that it has secured a whopping $56 million in  venture capital from Sterling Partners.

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In this slumping macroeconomy, that's a bonanza not unlike scoring the tie-breaking goal in the last minute of a World Cup championship.

i/o Data Centers' servers and routers have quickly filled to capacity its first facility: a 125,000-square-foot, next-generation secure building that the company opened two years ago in Scottsdale, Ariz. With its fresh new capital and a psychological head of steam, i/o Data Centers is now planning to open two more data centers: one in Phoenix and another in Northern California, Colorado or New Jersey. And it's certainly not the only company taking advantage of this huge market.

IT co-location is the provision of space, bandwidth, and power in a data center, with the customer being required to provide and manage the computing hardware. Data centers that provide this service are called co-location centers; most are independently owned and operated.

In general, most analysts and industry insiders believe that the co-location and Web hosting businesses will thrive in 2009, despite the weakening macroeconomy. This is because as companies look to economize in their IT budgets, they are beginning to look more closely at hosted services as a way to avoid capital expenditures that include new servers, switches, software, and affiliated licenses and services.