Data Centers Explained: Part 1 – A Quick Guide to the Four Main Types of Data Centers
All data centers may store and manage information, but they’re not one-size-fits-all. Just as buildings are designed to meet the needs of different industries, data centers also vary based upon who uses them, how they’re managed, and the types of digital workloads they output. In this installment of Data Centers Explained, we’re offering a quick guide to understanding the four primary types of data centers you’ll find in today’s digital landscape.
Hyperscale Data Centers
Built for efficiency at massive scale, hyperscale data centers support the computing needs of large cloud providers and technology platforms. These facilities are designed to handle significantly large volumes of data and computing power and focus on operational efficiency, power density, and scalability, often hosting hundreds of megawatts of capacity at a single campus.
Typical Tenant Lease Size: 50MW+
Best for: High-volume cloud platforms, global application hosting, big data analytics, and AI workloads
Ideal Users: Cloud service providers (e.g. AWS, Azure, Google Cloud, Oracle Cloud), large-scale SaaS firms, social media and video platforms
Common Use Cases: Public cloud services, data lakes, global content delivery, large AI model training
Key Attributes: Massive scale, modular architecture, automation, custom hardware, advanced energy optimization
Deployment Advantages: Easy to scale, low unit cost of compute, direct integration with global networks
Colocation Data Centers
A colocation facility leases space and power to multiple customers but is owned and operated by one organization for its own IT infrastructure. Each tenant installs and maintains their own equipment, while the facility operator manages the building, security, and infrastructure such as cooling and power backup systems. This model combines the benefits of enterprise control with the cost efficiencies of a shared environment.
Typical Tenant Lease Size: 5 – 20 MW
Best for: Businesses that want server control without the burden of owning and operating a facility and those hosting sensitive, business-critical applications
Ideal Users: Enterprises, SaaS providers, and firms in transition from on-premises to hybrid or cloud models
Common Use Cases: Backup and disaster recovery sites, geographic redundancy, data center consolidation, hybrid cloud deployments
Key Attributes: Shared facility costs, carrier-neutral connectivity, physical security, high availability
Deployment Advantages: Faster time to market, geographic flexibility, reduced capital expenditures, scalable footprint
Carrier Hotels
Carrier hotels are highly connected, multi-tenant data centers that serve as major interconnection hubs for internet traffic and telecommunications infrastructure. These buildings house a dense concentration of network providers, internet exchanges, CDNs and cloud on-ramps, allowing tenants to directly connect with hundreds of other network and service providers. They are often located in dense urban centers and are important nodes in the global internet backbone.
Typical Tenant Lease Size: 1 – 40 MW
Best For: Companies that require low-latency, high-bandwidth connectivity to multiple carriers and cloud providers
Ideal Users: Telecom carriers, internet service providers (ISPs), content delivery networks, cloud and SaaS providers, and enterprises with high interconnection needs
Common Use Cases: Peering, cloud interconnect, low-latency trading platforms, media distribution, transit aggregation
Key Attributes: Carrier neutral, dense interconnectivity, physical proximity to major fiber routes, robust security and uptime standards
Deployment Advantages: Fast and direct interconnection between carriers, cloud platforms and enterprises; access to global networks, reduced latency, and simplified network architecture
Edge Data Centers
Edge data centers are compact, distributed facilities positioned closer to end users. They process and store data locally to minimize latency, bandwidth use, and reliance on centralized systems. These sites can be deployed in underserved regions, near 5G towers, or within IoT-heavy environments.
Typical Tenant Lease Size: 100 kW – 2 MW
Best For: Real-time applications that require low latency and fast local processing.
Ideal Users: Telecom operators, autonomous systems developers, IoT service providers, content delivery networks
Common Use Cases: Smart cities, autonomous vehicles, augmented reality, real-time gaming, industrial automation
Key Attributes: Small footprint, regional proximity, latency optimization, modular design
Deployment Advantages: Faster response times, lower network congestion, improved user experience in latency-sensitive scenarios
To learn more about our data center portfolio and to read additional insights, click here.