France Data Center Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

France Data Center Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The France data center is expected to register a CAGR of 8.7 % during the forecast period (2022 - 2027). The rapid penetration of the internet and smartphone has increased the usability of digital payment services across the industry and has enhanced the demand for data centers in France.

Key Highlights

• Moreover, increasing cloud adoption across most enterprises due to emerging technologies, such as artificial intelligence, big data, and blockchain across various end-users, has also impelled the market in France. The General Data Protection Regulation and the French Data Protection Authority are expected to bring more investments in data centers, as it provides the protective legal framework for data storage and processing.
• Further, France contains several data center clusters throughout the region and provides plenty of colocation opportunities. The primary data centers are in major cities such as Paris, Marseille, Lyon, Lille, and Strasbourg. They feature rich ecosystems and state-of-the-art equipment, ensuring maximum uptime and connectivity to over 478 service providers.
• Energy distribution is a significant aspect of data centers, and France has a good source and coverage of the energy sector. The country is energized by 25.4% renewable or green sources, which provides significant opportunities for the key vendors to take advantage of clean energy. Additionally, the average PUE (the ratio of the total amount of energy used by a computer data center facility to the energy delivered to computing equipment.) for French data centers is 1.39 that, which ranges between 1.20 and 1.80 and encourages the investors to build a data center to meet the growing demand.
• Furthermore, the rise of edge computing could see the advent of a rapidly growing array of smaller data centers built closer to population centers. For instance, Cellnex and Bouygues Telecom have signed a strategic agreement to invest EUR 1 billion over the next seven years until 2027.
• They will deploy a national fiber-optic network in France to provide mobile and fixed fiber-based connectivity and significantly accelerate the roll-out of 5G in the country. It is expected to deliver an excellent quality of service to all the customers, drive edge computing in France, and boost the growth of data centers.

Key Market TrendsIncreased Internet Penetration is Expected to Drive the Market

• Rapid internet penetration in France due to the availability of bandwidth, cost-effective data plans, and increased awareness has led to digital adoption by the country. According to the Digital 2020 report for France, the number of internet users in France increased by 126,000 (+0.2%) between 2019 and 2020. Currently, there are 58.03 million internet users in France as of January 2020, with 89% internet penetration.
• France ranked as the sixth biggest e-commerce market worldwide and third in Europe, only after Germany and the United Kingdom. According to the Centre for Retail Research, the French e-commerce market is expected to reach EUR 46.688 billion in 2019 due to digital savings, higher internet penetration, and stronger legal protection for buyers using debit and credit cards as a mode of payment.
• France has more than 120,000 active e-commerce sites; the most visited online store in the country is Amazon, with more than 15 million unique visitors per month, which is significantly higher than other European countries and is expected to drive the data center market in the future.
• Moreover, Mastercard partnered with the French government to accelerate the digitization of the French economy. According to the agreement, Mastercard will spend EUR 15 million on a four-year partnership for the digital economy, which will cover various strategic areas of development in line with the government's strategic public policy regarding digitization and growth of the economy, such as tourism, fintech, AI, digital identity, and cybersecurity.
• According to OCP, France has the highest density in terms of data center capacity, followed by Germany and the United Kingdom. Data centers in France consume the most electricity, followed by the United Kingdom, Germany, and the Netherlands. Also, France offers a thriving ecosystem to produce a solid local data center market, which can be attributed to the country's largest national economy in Europe, having the required economic status to drive regional demand for resources contributed by the region's largest banks Deutsche Bank, the German Central Bank.

BFSI Sector is Expected to Drive the Market

• France has 60 million internet users representing 88.5% of the French population driving the digital revolution across industries. Banking is the most affected sector by the digital transformation of businesses and enables cost-effective earnings and saves time by automating repetitious and tedious tasks. Increased penetration of mobile phones and high-speed internet has encouraged French people to opt for digital banking early. It has led to the integrating of powerful CRM and cloud tools to store and analyze data, which is expected to augment the market's growth.
• Moreover, digital-only banks, also known as neobanks, are also redefining the future of the banking sector in France and have attracted many international established neobanks to the country's various cities. For instance, Lydia, a UK-based banking app, entered France’s neo-bank market in 2013 and has over 5 million current account holders in France. The customer growth of 4,000 new customers joining every day in 2022 is expected to exceed five million sign-ups in 2022 at the same growth rate.
• Further, France fintech companies are trying to improve financial activities such as paying, insuring, or lending to businesses and customers using technology. For instance, Shift Technology, headquartered in Paris, is creating an AI-based fraud detection SaaS+ solution used by more than 70 insurers globally. The company specializes in fraud detection, is also building a solid business case for claims automation, and has secured almost USD 100 million.
• Ledger is an infrastructure solutions provider for cryptocurrencies and blockchain applications for individuals and companies. It provides a hardware wallet and an app to manage transactions, add cryptocurrencies, and check the balance in a few clicks and has secured USD 85.1 million in funding till now. All the fintech companies are expected to fuel the further digitalization of the banking sector in France, which will boost the market growth.
• The COVID-19 pandemic has increased digital payment services and reduced cash payments. Moreover, to reduce the risk of spreading the coronavirus, the country has increased the payment limit from EUR 30 to EUR 50. It has encouraged people to choose a cashless mode of payment, which is expected to drive the market in the long run.

Competitive Landscape

The French data center market is highly concentrated and is dominated by a few significant players, like Equinix Inc., Interxion, DCforData, Euclyde Data Centers, and IBM Corporation. With a prominent market share, these major players focus on expanding their customer base across foreign countries. These companies leverage strategic collaborative initiatives to increase their market share and profitability. However, with technological advancements and product innovations, mid-size to smaller companies are growing their market presence by securing new contracts and tapping new markets.

• February 2022 - Equinix announced that it plans a USD 163 million international business exchange (IBX) data center in Paris. The data center, named PA10, is projected to be part of Equinix's Saint-Denis campus and the company's tenth data center in Paris. Equinix expects the data center to provide global and local companies the ability to connect directly and securely to the world's digital economy via comprehensive digital ecosystems.

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