By Bob DeSantis, CEO, 365 Data Centers

The data center industry is set to undergo further transformation in 2025, driven, to a great extent, by rapid advancements in artificial intelligence (AI) and the evolving needs of enterprises in an increasingly digital world. This shift is reshaping digital infrastructure requirements, which will lead to innovative solutions and a rising tide of service provider opportunities.

The early integration of generative and inference AI technologies is already impacting data center capacity planning and power and cooling configurations. As the demand for infrastructure that serves AI workloads becomes more prevalent, data centers are adapting to meet the requirements for both increasing traditional and higher density AI colocation demands. The specialized AI-optimized colocation services that data center providers will be increasingly expected to offer will feature reconfigured power and chilled water systems designed to handle higher-density workloads.

Today, edge colocation compute and storage serve many customer verticals, including content customers and hyperscale cloud customers, to facilitate subscriber and application end-user access to all forms of content and applications such as autonomous vehicles, smart cities and IoT devices. Such facilities will now become increasingly more essential to reduce the latency associated with the transport and processing of the larger AI data sets. In 2025, we can anticipate the increasing demand for regional data centers which serve as key regional network hubs to support AI processing and data set transport. 

Key verticals that lean heavily on traditional colocation include:

• Finance
• Hospital Systems & Healthcare
• Pharmaceutical
• Higher Education
• High Tech
  

Going into 2025, this traditional colocation reliance will continue to drive digital infrastructure demand from at least these verticals. In addition, a more nuanced approach to cloud adoption can be expected from other enterprise sectors as they continue to reevaluate "Cloud First" strategies, leading to increased colocation demand for constant workloads as organizations seek more cost-efficient alternatives to public cloud services that are more suitable for "pay-as-you-go" volatile workloads. This will also lead to an uptick in hybrid cloud adoption, allowing businesses to balance the benefits of public cloud storage scalability with the ability to lower costs with edge colocation and cloud compute and public cloud on-ramp network services. In this hybrid cloud ecosystem, network-centric colocation providers will become increasingly relevant. By offering robust connectivity options and direct on-ramps to major cloud providers, they will enable seamless integration between on-premises infrastructure and cloud services. This support and connectivity will be crucial for enterprises looking to optimize their hybrid cloud strategies and ensure that data flows efficiently across various environments.

As data centers rise to the challenge of meeting the demand of AI workloads, energy efficiency will remain at the forefront of industry concerns. To address these increased power demands, data centers will continue to adopt innovative liquid cooling solutions to offset the incremental power which otherwise would be required to mitigate the heat generated by high-density AI deployments. Additionally, 2025 will see advancements in immersion cooling as well as strategic industry partnerships between data center developers, power providers, and the growing number of innovative cooling infrastructure providers.

In 2025, the data center landscape will benefit from the evolving clarity related to AI-driven demands and the continuing focus on traditional and AI capacity planning and cost efficient power procurement and management. Data center providers that can successfully navigate these challenges while offering innovative, flexible and secure solutions will be poised to thrive during this ongoing period of industry transformation and serve as pillars of support for their customers' growing infrastructure-as-a-service (IaaS) requirements.

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ABOUT THE AUTHOR

Bob DeSantis is an accomplished executive and entrepreneur who has held senior leadership positions in public and private, competitive and regulated companies within the communications, technology, and energy industries. He has been a leader in acquiring, building and growing businesses and arranging for their initial public offerings and other strategic events. Bob's expertise spans strategy, operations, finance, corporate law, real estate, and mergers and acquisitions.

Prior to becoming the CEO of 365 Data Centers, Bob was the Co-Founder and Managing Partner of Xand, which became the leading, privately owned, data center, managed services and cloud services operator in the Northeast prior to its sale to Tierpoint. His previous technology and communications experience includes serving as President and COO of cloud operator Flexisphere, CFO of DSL.net, CFO of Electric Lightwave, EVP of core optical switch manufacturer Tellium, and CFO of Frontier Communications (f/k/a Citizens Communications).