Hyperscale data centers now account for more than 40% of total global data center capacity, with more than 1,000 now in operation around the world.
New data from Synergy Research Group shows that just over half of hyperscale capacity is now in purpose-built data centers, with the rest in leased facilities.
And with non-hyperscale colocation capacity accounting for another 22% of capacity, on-premise data centers amount to just 37% of the total.
This, Synergy said, is in stark contrast to six years ago, when almost 60% of data center capacity was in on-prem facilities.
At the end of last year, the US accounted for more than half of worldwide hyperscale data center capacity, with Europe and China accounting for 17% and 16% respectively.
Naturally, Amazon, Microsoft, and Google lead the pack in this regard, with all three competing fiercely to command a share of the global generative AI market.
"The mix of data center capacity is quite different region by region, an example being that hyperscale owned data center capacity is much more prevalent in the US than in either Europe or the APAC region," said John Dinsdale, a chief analyst at Synergy Research Group.
"However, overall, the trends are all heading in the same direction - and it is easy to see what is behind these trends. In 2012 enterprises spent twelve times as much on their data center hardware and software as they did on cloud infrastructure services, while today they spend three times more on cloud services than they do on their own data center infrastructure."
Hyperscale data center expansion shows no sign of slowing down
Looking ahead, Synergy reckons that by 2029, hyperscale operators will account for over 60% of all capacity, while on-premise will drop to just 20%.
Data center demand around the world is expected to continue to rise rapidly, driven primarily by hyperscale capacity growing almost threefold over the next six years.
While the colocation share of total capacity will slowly decrease, Synergy said colocation capacity will actually continue to rise steadily. The on-premise share will drop by almost three percentage points per year, though the actual capacity of on-prem data centers will remain relatively stable.
Dinsdale pointed to the huge growth in SaaS and consumer-oriented digital services such as social networking, e-commerce, and online gaming as key to the rocketing growth in hyperscale data centers.
"Enterprises are also choosing to house an ever-growing proportion of their data center gear in colocation facilities, further reducing the need for on-premise data center capacity," he said.
"The rise of generative AI technology and services will only exacerbate those trends over the next few years, as hyperscale operators are better positioned to run AI operations than most enterprises."
Earlier this year, a report from CBRE found that during last year, data center demand exceeded supply in Europe for the second time in five years.
"Hyperscalers have sought increasingly larger facilities that are tailored to their needs for some time," said Kevin Restivo, CBRE's head of European data center research.
