Wednesday, December 31, 2008
>>One of the largest data centers ever proposed for Silicon Valley is breaking
ground in Santa Clara.
Washington, D.C., real estate development company Dupont Fabros
Technology Inc., a newcomer to the region, has begun construction on the
first phase of a proposed 600,000 square-foot complex at 555 Reed St.
The project, with an estimated $1 billion building value at completion, is a
striking example of the global construction boom in data centers.
Construction has begun on a huge new data center in Santa Clara being built by
Dupont Fabros Technology Inc. of Washington, D.C.
Digital (Realty) is among those participating in the Silicon Valley data-center building boom. The company
has partnered with local data-center development guru Les Pelio of Pelio & Associates at 1500 Space
Park Drive in Santa Clara. Together they plan to start construction on 300,000 square feet of data
center space “any day now,” said Sutton Roley, a senior vice president and principal with the valley’s
CPS Corfac International and a leasing broker for the site. Another 74,000 square feet in the project
already has been leased.
Fifteen percent of Digital Realty’s annual revenue comes from Silicon Valley facilities, according to
A third Santa Clara data center complex with 350,000 square feet, including some offices, is also
being planned by CRG West, a division of The Carlyle Group. The first phase of its Santa Clara
complex begins construction this month.
The list of new Bay Area projects goes on. San Francisco-based 365 Main Inc., which owns five data
centers in Northern California, Arizona and Virginia, plans to start a 136,000-square-foot data
center in Newark “imminently,” said Miles Kelly, vice president of marketing and strategy. The
project has been “designed and permitted,” he said, but he declined to say how much it would cost
or whether it is purely speculative or partially leased.
Tuesday, December 30, 2008
|Also Known As|
|Traffic Ratios||Mostly Inbound|
|Looking Glass URL|
|Route Server URL|
|Notes||We have just turned up public peering in Equinix Chicago and are seeking public peers there and in Equinix Ashburn.|
Public Peering Exchange Points
|Exchange Point Name||ASN||IP Address||Mbit/sec|
|Private Peering Facilities|
|Equinix Ashburn (DC1-DC4)||7795||Ashburn||US|
|Equinix Chicago (CH1/CH2)||7795||Chicago||US|
from BBC News:
By Fergus Walsh
BBC News medical correspondent
A robot radiotherapy machine to treat cancer is to be available in the UK for the first time from February.
Called the Cyberknife, it moves with a patient's breathing so tumours can be targeted with greater accuracy, and damage to healthy tissue is reduced.
The machine will be at the private Harley Street Clinic in London.
More than a dozen countries worldwide already use the machine, including France, which has three under clinical trial....
The cyberknife minimises damage to healthy tissue
The French National Cancer Institute has paid for three Cyberknife machines to be trialled at hospitals in Nice, Nancy and Lille.
Professor Eric Lartigau from the Centre Oscar Lambret in Lille said he was very impressed.
He said: "We have been treated just over 200 patients in 18 months and all couldn't have been treated with conventional radiotherapy so its a big plus for our patients."
Professor Eric Lartigau is impressed by the technology
He said: "It is only in the past couple of years that the software has got to the stage where we believe it is right for introduction to our clinical service.
"So we don't believe we have been tardy; we have been waiting for the improvements to come and now they're here we are happy to introduce the machine."
Monday, December 29, 2008
|Also Known As||APL|
|Traffic Ratios||Mostly Inbound|
|Geographic Scope||Asia Pacific|
|Public Peering Exchange Points|
Sunday, December 28, 2008
>>William Toll works within the marketing and product management functions for managed dedicated hosting company, NaviSite.
NaviSite's dedicated hosting business will benefit significantly from several trends in 2009. First, we expect an increased interest from small businesses looking for a quality full service managed hosting provider to move to deploy their services and applications with. Small, financially questionable providers are now seen as a risk – while companies with significant experience with the enterprise that provide an affordable and accessible service for the small business will win new business.
The interest in hosted applications such as SaaS, has not only crossed over to the mainstream, but is now a preferable model for 'utility' needs like email, office collaboration and information sharing and CRM. The increasing popularity of hosted Exchange is the best example. With hosted Exchange businesses of all sizes can stop worrying about SPAM, increasing needs for storage and archiving and muitiple mobile platforms for BlackBerry, iPhone, Windows Mobile and more.''
>>We’re pleased today to announce that Toyota Motor Corporation has selected us to provide content delivery services for www.toyota.com. Another great win for our Japan team! Since the press release was only distributed in Japanese, we’re providing a summary for our English-speaking readers:
Toyota will use the LimelightDELIVER and LimelightSTREAM services to accelerate the delivery of the rich media content of their website, in both Windows Media and Adobe Flash formats, as well as dynamic content of the toyota.com homepage. Toyota uses rich media extensively, especially in conjunction with the launch of new cars.
As the announcement says, “Since Limelight Networks content delivery infrastructure is directly connected to over 900 last-mile access networks worldwide, TOYOTA will be able to ensure the rapid delivery of interactive contents to a global audience of auto enthusiasts.”
Saturday, December 27, 2008
Friday, December 26, 2008
Commerzbank Increases Speed and Bandwidth with a Direct Connection to the Services of Gruppe Deutsche Börse at Equinix IBX Data Center in Frankfurt
>>Commerzbank Increases Speed and Bandwidth with a Direct Connection to the Services of Gruppe Deutsche Börse at Equinix IBX Data Center in Frankfurt
Foster City, CA/Frankfurt am Main, 11th December 2008 – Commerzbank AG, one of Germany`s leading banks is in a first mover role being the first major bank making use of the premium service solution provided by Gruppe Deutsche Börse with a direct connection to the systems of the stock exchange trading environment in an IBX® data center of Equinix (Germany) GmbH in Frankfurt.
With this measure Commerzbank is underlining its high demand for data quality in the financial trading business. The connection is increasing the bandwidth, therefore Commerzbank is enabled to gain faster access to market data and stock exchange relevant information. This lead is playing an important role in the financial trading business. The high reliability of the transactions stays secured. With its infrastructure Equinix is providing this reliability in the Equinix IBX data centre and is maintaining Commerzbank`s high technical and security relevant requirements for a connection to the services of Gruppe Deutsche Börse. Commerzbank’s business processes are supported by modern high performing IT infrastructures.
Commerzbank is setting a sign for future orientated thinking and acting by using the premium-offer of Gruppe Deutsche Börse being specifically designed for trading partners with increased transmission speed and bandwidth. In addition this access is enabling Commerzbank to rapidly implement new services from Gruppe Deutsche Börse in their own service portfolio on the technical side and sooner following innovation cycles continuing to move faster.
“Having Commerzbank as a customer in our Equinix International Business Exchange™ (IBX®) data center in Frankfurt is something special for us. We do have many years of experience working with an expanding global financial customer base that has already committed to our secure redundant infrastructure. The co-operation between Gruppe Deutsche Börse and Equinix creates an attractive synergy for the optimization of trading, based on our high availability infrastructure and innovative services of Gruppe Deutsche Börse”, comments Joerg Rosengart, General Manager – Germany for Equinix.
”The combined offer from Gruppe Deutsche Börse and Equinix provides Commerzbank with high data quality and high speed transfer which will directly benefit our customers, particularly as we face the prospect of increasing data volumes“, informs Dr. Peter Leukert, CIO of Commerzbank.
Equinix dedicated Financial eXchanges services congregate a community of common interest, consisting of capital market participants such as execution venues, buy and sell side firms, market data providers, technology utilities and network service providers, that locate operations within Equinix data centers in order to implement a high-performance, low latency connectivity infrastructure within a neutral environment. With these Equinix Financial eXchanges services and the high availability infrastructure behind it the company is ideally positioned, to maintain the complex demands of dense connectivity and low latency for transactions in a neutral environment that financial trading organizations demand. Equinix, Inc. is one of the major financial data center operators being specialized on the applications and solutions of banks and financial service providers. The company is operating high availability and neutral data centers in the world’s top ten financial markets.
Thursday, December 25, 2008
12/22/08 - Jefferies & CoNEW YORK, December 22 (newratings.com) - Analysts at Jefferies & Co reiterate their "hold" rating on Accuray (ARAY). The target price has been reduced from $7.50 to $6.50.
Wednesday, December 24, 2008
Founded in 1997 with a vision to enable educational innovations everywhere by connecting people and technology, Blackboard is a leading provider of e-Education enterprise software applications and services. Consisting of five software applications bundled in two suites, the Blackboard Academic Suite and the Blackboard Commerce Suite, these products are licensed on a renewable basis.
Our global clients include primary and secondary schools, higher education, corporation and government markets as well as textbook publishers and student-focused merchants. Blackboard and its clients have pioneered the emergence of the e-Education industry around the world.
- Company Reports Record Cash Flow from Operations and Raises Full Year Cash
Flow from Operations Guidance -
- Third Quarter Revenue Increases 35 Percent to $83.1 Million -
WASHINGTON, Oct. 29 /PRNewswire-FirstCall/ -- Blackboard Inc. (Nasdaq: BBBB) today announced financial results for the third quarter ended September 30, 2008 and updated guidance for the fourth quarter and the full year of 2008.
Total revenue for the quarter ended September 30, 2008 was $83.1 million, an increase of 35 percent over the third quarter of 2007. Product revenues for the quarter were $74.3 million, an increase of 38 percent over the third quarter of 2007, while professional services revenues for the quarter were $8.8 million, an increase of 16 percent over the third quarter of 2007. For the third quarter of 2008, net income was $2.1 million, or $0.07 per basic share and $0.06 per diluted share, compared to net income of $3.3 million, or $0.11 per basic and diluted share for the third quarter of 2007. In the quarter, the company had a $2.4 million benefit for income taxes.
|Public Peering Exchange Points|
|Exchange Point Name||ASN||IP Address||Mbit/sec|
|Private Peering Facilities|
|Equinix Amsterdam (AM1)||22556||Amsterdam||NL|
|Equinix Ashburn (DC1-DC4)||22556||Ashburn||US|
Data Center Knowledge:
Wishing all my readers a Merry Christmas and a Happy and Proficuous 2009... let's hope this is over...
Tuesday, December 23, 2008
GLOBAL VOICE GROUP LAUNCHES DATACENTER|NEX CONNECTING OVER 100 DATACENTERS ACROSS EUROPE WITH ON-DEMAND HIGH-PERFORMANCE NETWORKING
Designed without compromise, datacenter|nex redefines networking solutions and delivers for customers across multiple fronts.
Unrivaled network reach
datacenter|nex connects the most important datacenters in Europe. The platform is deployed over Global Voice Group’s wholly-owned, billion euro, all-optical infrastructure which combines ‘long-haul’ networks with 15 dense ‘last-mile’ metropolitan networks in 15 of Europe’s leading cities. In one unified platform, datacenter|nex connects over 100 of the leading datacenters in Germany (Frankfurt, Munich, Stuttgart, Düsseldorf, Cologne, Hamburg), France (Paris), the Netherlands (Amsterdam, Schiphol-Rijk, Utrecht, Rotterdam), Ireland (Dublin) and the United Kingdom (London).
100% Carrier Grade Ethernet
Ethernet is the lowest cost, most demanded and most flexible protocol for connecting business. datacenter|nex is 100% carrier grade Layer-2 Ethernet end2end with solutions start at 1Gigabit Ethernet, scalable to 10GigE to any on-net datacenter.
Lowest latency performance across Europe
Network speed is vital to highly demanding applications such as trading, and increasingly essential to a range of new applications such as storage, synchronous replication, media and web2.0. All-optical and all next gen end2end ensures that datacenter|nex delivers the lowest
latency performance - ultra-low milliseconds across Europe, microseconds across metro’s. No other provider is faster.
On-Demand Deployment Redefines Lead-Times
Global Voice Group’s customers demand not only lightning fast networks, but also lightning fast deployments. To meet this challenge, datacenter|nex networks can be deployed on-demand from over 100 datacenters across Europe, all achieved by pre-provisioning multiple-terabits of Ethernet capacity in the field.
‘Freedom Networks’ delivers un-heard of operational flexibility to Global Voice Group’s customers. Unlike the industry approach of fixed networks, fixed geographies, fixed locations, and fixed terms, Global Voice Group’s Freedom Networks enable our customers to shift their networking solutions to any other on-net site. So as our customers’ needs evolve, their Global Voice Group Ethernet circuit will follow them. Metro customers shift within any of Global Voice Group’s 15 metros, euro customers can connect between any other euro site – all within their existing contracts at no additional recurring costs.
Lowest cost connecting across Europe on Gigabit Ethernet
The combination of Global Voice Group’s wholly-owned optical network and all next-generation platform, delivers the lowest-cost connecting across European datacenters. Unlike any other provider, datacenter|nex customers receive one fixed price, regardless of distance or geography. Combined with Freedom Networking and On-Demand, Global Voice Group customers achieve not only the lowest cost, but the most responsive way to connect across Europe.
“datacenter|nex was built for businesses who’s network is their business,” said Stephan Harren, Solutions Director of Global Voice Group. “Designed without compromise, datacenter|nex delivers the lowest-cost and highest performance in connecting Europe’s leading datacenters – and all provisioned on-demand. Our unique ‘Freedom Networks’ approach means that our customers can shift their network requirements anytime, any place as their requirements dictate delivering both network reach and operational flexibility unmatched by any other operator in the industry.”
SELECTION OF ON-NET DATACENTERS
London (Telecity Harbour Exchange I+II, Telstras London Hosting Centre, Telehouse East, Telehouse North, InterXion, BT Radianz, Level(3), Equinix I+IV, Telehouse Metro, Verizon, Viatel, Global Switch, Telecity Bonnington House, Telecity Muirfield Crescent, City Lifeline, Thus IPHouse, Telecity Meridian Gate, Telecity Sovereign House)
Amsterdam (Global Switch, Nikhef, Telecity I+II, Global Voice Group, Equinix, InterXion Gyroscoopweg I+II, Sara, Telecity III+IV, Cap Gemini, Viatel, Getronics), General (InterXion Cessnalaan, KLM Bunker, Schuberg Phillis, Easynet, Equant, KPN Cybercenter, InterXion V, Spaanse Kubus, Tele2 Utrecht, Iconnext
Frankfurt (Global Switch, Equinix II, InterXion, Ancotel, Telecity (former Redbus), e-Shelter I+II, Telecity, Tenovis, Equinix I), Cologne (Deutsche Bahn), Dusseldorf (Equinix, InterXion, MyLoc), Munich (Equinix, Lambdanet/Telefonica, Interoute, C&W, Lambdanet), Hamburg (Global Connect), Stuttgart (Telia)
Dublin (InterXion, Data Electronics Kilcarberry, Data Electronics Ballycoolin, Global Voice Group Citywest, Hosting365, Servecentric/DLT, Digiweb, Microsoft/IBM, Hibernia Atlantic, HP Datev Centre, Verizon, Esat X, Telecity, Meteor, Eircom, Verizon Business, C&W, Verizon Clonshaugh, NTL, Vodafone, Wyeth, Colt)
Paris (Telecity Courbevoie, Telecity Aubervilliers, Neuf CegeTel, Global Switch, Equinix I+II, Telehouse I+II, InterXion I+II, Level(3))
>>The Seeking Alpha blog has a very nice write-up on the Equinix presentation, given with Dan Golding from Tier 1 Research: Operating Today's Data Centers & Key Industry Trends That Will Affect Your Business. This is a very nice presentation with some really good insights to supply and demand for the industry.
Monday, December 22, 2008
by Ralph Hanson
Unlike alternatives such as Amazon S3, Nirvanix, Limelight Networks and Akamai, SimpleCDN provides an advanced global content delivery platform without contracts or long setup times. SimpleCDN is ready and available to deliver your files within seconds.
Founded in 2007, SimpleCDN Technologies, Inc. is a privately held company headquartered in Chicago, Illinois.
|Regional Monitoring Group||CDN Servers HTTP||CDN Servers Streaming||S3+ HTTP|
|North America West Coast (3)||up||up||up|
|North America Midwest (2)||up||up||up|
|North America East Coast (4)||up||up||-|
|Western Europe (2)||up||up||up|
|Eastern Europe (1)||January 10, 2009||January 10, 2009||-|
|Asia (3)||January 25, 2009||January 25, 2009||-|
All edge servers have the same IP address, which is why download servers will always be resolved to the same IP address.
When a request is made to a download server, your ISP will automatically route the packet to the closest SimpleCDN Peering Point, and then we'll route your packet to the closest edge server.
Currently SimpleCDN maintains main backup authoritative DNS servers in a few of our POPs, including Chicago (USA), Los Angeles (USA) and Paris (France).
These IPs will take you to the closest DNS server:
Actual Unique DNS Server IPs:
|Private Peering Facilities|
|Equinix Ashburn (DC1-DC4)||46177||Ashburn||US|
|Equinix Chicago (CH1/CH2)||46177||Chicago||US|
|Equinix Dallas (DA1)||46177||Dallas||US|
|Equinix El Segundo (LA3)||46177||El Segundo||US|
|Equinix Paris (Saint-Denis) (PA2)||46177||Saint-Denis||FR|
|Equinix San Jose (SV1)||46177||San Jose||US|
|InterXion Frankfurt 1||46177||Frankfurt||DE|
Sunday, December 21, 2008
| 1.Title of Security |
|2. Trans. Date||2A. Deemed Execution Date, if any|| 3. Trans. Code |
| 4. Securities Acquired (A) or Disposed of (D) |
(Instr. 3, 4 and 5)
| 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) |
(Instr. 3 and 4)
|6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)||7. Nature of Indirect Beneficial Ownership (Instr. 4)|
|Code||V||Amount||(A) or (D)||Price|
The discussion was targeting many aspects of the colocation business and Equinix product offer, but the main interest, from an investor point of view, was Dan Golding's speach about the state of the sector, and his forecast for the close future.
Here's the agenda of the web cast:
Dan is VP and Research Director at Tier 1 Research, an independent advisory firm covering the IT and Telecom Sectors. Founded by Andrew Schroepfer, T1R is probably the best analyst team in the colocation sector.
Dan Golding's presentation was enriched by a few slides, that help focusing on some tends in the industry. Obviously, given the economic climate right now, looking into the crystal ball is harder than ever, but recent results in the sector, and several different channel checks we have done recently, all seem to point in the same direction for this sector.
Most slides are quite self explaining, but we'll try to put a few personal notes and facts as additional comments to Dan's points.
Let's divide this small summary of the web cast into a few sessions:
The credit crunch and its effect on colocation
Colocation is a very capital intensive business. Building a data center, given today's power and security requirements, costs now around 1,300 $ per sqft. A new build also requires about 18 months to be completed. Utilization is growing nicely with most of the Companies in this business, and in the last 12/18 months financing new data centers has become more difficult. Not all Companies enjoy such a rich cash flow from operations to be able to look at new builds without need for accessing the credit market.
A great example of this problem is what happened to DuPont Fabros (DFT) recently.
In October DuPont Fabros Technology announced that they had halted the development of a data center in the Silicon Valley.
In August 2008, the Company commenced construction on a $270 million wholesale data center in Santa Clara, California, based on the expectation of higher loan proceeds from ACC4. Due to the level of loan proceeds obtained, development at the Santa Clara site has been temporarily suspended.
Development of ACC5 in Ashburn, Virginia and NJ1 in Piscataway, New Jersey are progressing. The Company expects to complete both developments as planned assuming additional loan proceeds are obtained.<<
As Rich Miller noticed in his article on Data Center Knowledge at that time:
>>DuPont Fabros paid $22 million to purchase its 17-acre Santa Clara site last December. The company’s plans called for a pair of 300,000 square foot data center buildings with a power capacity of 72.8 megawatts.
Santa Clara has been a favored market for data center development because the city’s utility, Silicon Valley Power, has significantly cheaper power (about 7 cents per kilowatt hour) than many other areas of Silicon Valley. That has led Facebook and Yahoo to announced major leases of new space in Santa Clara this year. Earlier this year DuPont Fabros expressed enthusiasm about its Silicon Valley project.
“I think (Santa Clara) is one of the best markets in the country, and I wish we had product available sooner,” Fateh said. “Historically, from an Internet standpoint, that’s been the best market in the country.”<<
During their conference call on November 6, DFT comments still were very positive about the opportunities going ahead for the business (from Seeking Alpha DuPont Fabros 3Q 2008 Transcripts):
>>Like many companies, we're navigating through an incredibly challenging credit environment. The good news in this credit crunch is that over the next several years, it will curtail the introduction of speculative supplies. This environment should maintain the supply/demand imbalance that we see in place and should support attractive pricing for wholesale data center space.
In addition, companies that in the past may have used their own balance sheets to build new data centers will now look to us as an outsourcing solution. Just over the last few weeks, we're seeing increased interest from companies that were previously in discussion with private developers. These developers are now unable to complete their projects.
We're also seeing increased interest from companies that are revisiting the outsource as a build model. To a large expect, much of our competition comes from tenants wanting to build themselves. The current environment has somewhat eliminated this option. We suspected that the credit crunch would create more demand for outsource.<<
Unfortunately, soon after the call the Company came out with more bad news, even in spite of its decision to suspend the divident:
>>More Datacenter Construction Suspended (from Telecom Rumblings)
DuPont Fabros (DFT), which builds and operates datacenters as a REIT, has suspended construction at both its NJ-1 (Piscataway NJ) and ACC-5 (Ashburn VA) sites. This follows the news of three weeks ago that their Santa Clara project had been suspended. The company had just raised $100M but had needed far more than that to continue in Santa Clara. Well, apparently they need more to finish in New Jersey and Virginia as well, because this news effectively suspends their construction across the board.
Looking at the numbers, it is clear that Dupont Fabros cannot expand without access to the credit markets, their cash balance just can’t support it. And with the maturity of a mortgage on their new Chicago facility maturing in late 2009 to the tune of $120M, clearly they decided that discretion is the better part of valor. One has to assume that this situation is temporary, the datacenter sector is just screaming along and actually needs these facilities to meet demand. The suspension is an entirely artificial situation that will eventually work itself out one way or another. But in the short term competitors who are also building out space may benefit with improved pricing and uptake rates.<<
The credit crunch seems, so far, to be mainly a colo supply crunch, in the words of Dan Golding during the web cast, as few data centers are still in construction at the moment.
Very similar comments to DuPont Fabros were recently made by Equinix CEO, Stephen M. Smith, during the company's latest conference call (from Seeking Alpha Equinix 3Q 2008 transcripts), although the main difference is that Equinix expansion plan is fully funded:
>>Finally, limited access to capital could also further choke of incremental competitive supply from unfunded and speculative players over the next couple of years particularly given the cost in lead time to build a new data center. With the capacity we already have in place, a fully funded expansion plan as well as a strong balance sheet and operating cash flows we feel that we are well positioned to capitalize on growing our business in this environment.
How is demand doing?
Demand is probably diminishing, although at a lower rate that supply is disappearing. In percentage numbers, demand still seems to be growing at a two digit number rate, as it looks like for most companies more data center space is part of their mission critical infrastructure – something you may need to slow down on a bit, but not something you can stop adding completely.
Even Companies like Google or Microsoft are slowing down their construction plans, a sign that they may have revised their growth requirements: (from Data Center Knowledge)
Google has told the state of North Carolina that it won’t meet the job creation criteria for a $4.7 million state grant for its data center project in Lenoir, N.C. The grant required the company to create 200 jobs in four years, but Google has apparently slowed the pace of its project.
Last month Google suspended construction on its planned data center in Pryor, Oklahoma. The company says it remains committed to the $600 million project, and that work will resume when the company needs additional data center capacity.
Microsoft (MSFT) has announced that it will cut data center spending, saying it plans to reduce capital expenditures for 2008 by $300 million for the remainder of its fiscal year. Rackspace (RAX) has also revised its spending timetable in San Antonio, where the company bought a former shopping mall and is converting it into its headquarters. <<
Google and Microsoft have a strategy of building their own, large data centers in area where the cost of energy is very low – but still need to buy space in Companies like Equinix (EQIX) or Switch and Data (SDXC) for their peering needs, a great growth driver for Companies offering network neutral colocation.
Here is a very helpful slide taken from Dan's presentation and showing Supply and Demand Delta:
Bottom line, the credit crunch seems to have hit the market just as supply seemed to be starting to reach demand – and will probably allow the players who are still growing their data center supply to enjoy even stronger pricing in the longer term.
Pricing in 2010-2011 – forecast
Assuming an economic recovery will start in 2010, it will take a while before new data centers will be available in the market – it's all about the long construction building cycles of these infrastructures.
Again, Dan is visualizing it in one of his slides:
IT spend is certainly going down at the moment, and some may assume that in these economic bad times the “you need my money” line might be used with supplier – colocation might be one of the few sectors where this strategy is less likely to work, as suppliers are aware that, in the longer term, supply and demand will be in their favor.
There are certainly a few Companies in the sector whose balance sheet, at the moment, will allow customer use some leverage in their negotiations, but, as usual, it is also about strategic choices (is a sound balance sheet one of your requirements in a supplier, before you decide to put your servers in its place?). Other suppliers are quite healthy, enjoying rich cash flows from operation at the moment.
Demand will also bounce back immediately as the economy recovers – see the immediate reaction in the Demand Delta in the previous slide, potentially increasing the gap between supply and demand after 2010.
Why 2009 is different from 2001
All those who have been through the data center glut of the post-2000 bubble are afraid there might be a repetition of that period.
Luckily, there are many differences to underline:
- the quality of customers is completely different now (while most of them in 2000 were new Internet Companies that did not survive as they had no business model);
- Data centers were ghost towns, with very low occupancy rate, or sold in the wrong way (more about this later on), while today we are reaching full occupancy in many data centers;
- the equipment hosted today in most data centers is revenue producing – not something customers can really do without;
- although some customers may go out of business, churn is still forecasted low by most Companies and this should not strongly impact the sector;
- Peering and having a presence in several different locations has become a “need” rather than a funny request by the CTO;
- outsourcing will be “in fashion again” while customers will have to fight themselves through the credit crunch and budget limitations, so avoiding own builds, that also need reaching a decent occupancy to make economic sense;
- the growth of the Internet is there to stay, as discussed later on in the web cast, and will be strongly pushed by the consumer increasing its Internet usage.
- And finally, Companies have learned (the hard way...) from their previous mistakes, and will not repeat what they did in 2000 – as explained by this side comment taken from a post made by a former Equinix salesman: (from Feedbach forum)
>>Circling back to the example earlier of eBay over provisioning those 60 amps of power or 500 watts a foot in the 100 watt per foot designed facility and you quickly realize that you, as the vendor gave up 5 racks of space and associated revenue for everyone one rack of space that eBay pays for. And pays for at the lowest rate you ever did. The deal is 5X worse than you thought. Not only that, but the perception of your company to a stranger walking in to your facility is that you are struggling because your datacenter is only 20% occupied spacewise because those first 500 racks that ebay installed consumed all of the power and cooling resources. Now imagine your the vendor who didn't catch this overprovisioning issue until you had oversubscribed your mechanical plant by a factor of 2 or 3X and you have all customers usage creeping up simultaneously. What do you do then? You say, "this place could blow at any moment" :) Those of us who lived through those types of situations and conditions will never get in them again. The first time around can be chalked up to ignorance. The second time would only be stupidity. This thought is evidenced by the hard lines the vendors take today as it relates to placing limits on the amount of power per rack they will allow their customers to install. <<
Everything seems to point to a potential imbalance in supply and demand, in the longer term. What should a customer do?
Dan Golding's answer is very straight forward: buy as soon as you can. And, we would add, try to get a longer term deal, something some suppliers are considering at the moment, as it is also to their advantage to be able to get longer term commitments (with fixed price increased) in what is a great recurring revenue business model, so reducing the percentage of customers due for renewal every month (more than 4% if customers are on an average 2 year contract, 2.8% if they are on an average 3 year contract, around 2% on an average 4 year contract).
Locking prices may be a key advantage for the customers going forward. We have already seen it happening in the market place: Companies like Savvis (SVVS) and Internap (INAP) have dramatically increased prices for colocation once some old contracts expired in recent years, and this is what is happening in a few markets where supply is scarce (even in Europe) right now.
Another key point customers shouldn't forget in choosing their partner for colocation is the power requirement they might have – and suppliers should study this trend carefully to come out with the best offer for each market they supply.
This is a very interesting point for the industry, as high density centers bring along a very high construction price, and the recent events in the economy (energy prices going down dramatically, etc.) have somehow changed the macro economic scenario.
In spite of some recent forecasts, power requirements, in average, seem to be flat, Dan said, and power density in new builds is constant at the moment (and probably higher in the USA than Europe or Asia).
Several reasons might explain this trend, slightly different from previous expectations: the adoption of blade servers is slower than expected, and the impact of virtualization still limited in the colo sector, probably because a good level of efficiency in the use of servers was already there, driven by the pricing structure (per power usage and cabinet) of the sector.
Different customers also have completely different power needs: people using data centers for their peering needs mainly (Telecoms as well as the Google or Microsoft kind of customers in network neutral centers) still use the cabinets for routers and switches mainly, and need relatively little power (a reason why the legacy Equinix or Switch and Data centers, where most peering is happening, will not really need a power upgrade, and very often cabinets there are highly requested in spite of power limitations...), while banks will need very high power cabinets, making it necessary to plan well in advance the customers you are targeting in new builds – see this slide where Equinix explains that NY4, targeted at financial institutions, has also a different cooling approach to cabinets, among other things, etc.
Nortia Research final comments:
The colo sector should exit this difficult economic climate in a good shape – although, as always, it is extremely difficult to forecast entry points on single stocks as many unpredictable events may impact the share price.
We still prefer, among the players in the sector, the network neutral ones (like Equinix - EQIX and Switch and Data - SDXC), and Digital Realty Trust - DLR in the REIT sector (wholesaling to large enterprises, including Equinix itself in Europe and USA).
Other players are moving (or have already moved) their business model to a combination of several services, and offer colo as one of their products – like Navisite - NAVI, Internap - INAP, Savvis – SVVS – but might benefit from a positive trend in the sector.
An interesting comment, taken again from an old post on Feedbach Forum:
The dependence on the data center today is far deeper and wider than it was in 1999. How could it not be? The Internet is no longer just another source for information threatening print, radio and television. It is THE source for information, THE source for education, THE source for communicating with individuals or to populations, THE source for commerce and trade, THE source for entertainment and THE source for a recession proof economy. At the heart of it all is the data center. The data center provides the platform which is enabling a more equitable distribution of wealth across a global stage.
There is a huge misconception that a glut of data center space is on the horizon. The fact is that perception is ill conceived and those who believe it and make investment decisions are ill informed and quite possibly passing up a once in a lifetime investment opportunity. <<
This is a very upbeat approach, more realistically, a sector worth putting on everyone's radar screen, as its development might be positive as the economy starts recovering.
Companies mentioned in the article: EQIX SDXC NAVI INAP DLR DFT SVVS
Friday, December 19, 2008
>>VAN BUREN TOWNSHIP, Michigan — Automotive supplier Visteon is exploring a new technology inspired by mobile phones that would cause electronics' controls to vibrate, click or push back as they're being used.
Known as TouchSense, the concept is based on haptic technology, in which controls offer tactile feedback as they're being manipulated. The technology has the potential to be used throughout a vehicle, from radio and climate controls to navigation screens. Research has shown that haptic feedback allows users to make quicker and more accurate adjustments. In automobiles, that could translate to fewer distractions and more time for drivers to keep their eyes on the road.
Visteon plans to commercialize TouchSense by 2010 and will show concepts of the TouchSense technology at the 2009 Consumer Electronics Show in Las Vegas, which takes place January 8-11.
Inside Line says: As in-car electronics become more complicated, technologies like haptic feedback are essential in keeping controls intuitive. — Eric Tingwall, Correspondent
|Company Name||WV Fiber (Host Global Carrier Services)|
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