Transforming Your Costly Data Center Infrastructure Into a Revenue Center (part 2)

Jim Poole

By Jim Poole (Part 2 of a 3-part series)

In Part 1, we looked at the industry and market trends that have made it possible and necessary for service providers and enterprises to consider their data center infrastructure as a revenue center. We examined the paradigm shift that the industry is witnessing when it comes to the role of the data center, and key drivers for this evolution including:

  • The explosion of connected devices, entertainment services, and online trading – all of which require exceptional performance that can be derived from the data center
  • Carriers are looking beyond interconnecting to one another to interconnecting with growing traffic sectors including mobile network operators (MNOs), smartphone platforms, cloud services providers, financial services firms and video sites.

In part 2, we’ll look at how we validated the data center as revenue center message during customer presentations at the ITW conference in Washington, D.C. (May, 2011).

Equinix caters to five major business ecosystems-networking and mobile, content and digital media, cloud and IT services, financial services, and enterprise services-enabling customers in one facility to directly connect to a global value chain of partners.

Other data center infrastructure providers don’t support such rich non-carrier ecosystems.

Telehouses, such as Telx, which runs the meet-me rooms in 8th Avenue in New York and in 56 Marietta in Atlanta, focus on interconnecting Carrier A to Carrier B. Other data centers that service enterprises either don’t take a carrier-neutral approach or don’t have an extensive global presence, both of which significantly limit the ability of service providers and enterprises to cost effectively interconnect to their value chains around the world.

With our carrier and service neutrality and our global reach, Equinix provides an aggregation point for customers and has achieved a density of carriers, service providers and enterprises to create a self-sustaining momentum.

For example, Equinix currently hosts:

  • 10 of the top 10 video sites
  • five of the top five social network sites
  • five of the world’s largest mobile network operators (MNOs)
  • four of the five smartphone platforms

In total, our non-network customers already spend more than $5.5 billion on communications services in our data centers, and the organic growth of that spend currently stands at 27 percent per year. This presents an unparalleled opportunity for carriers that operate inside of Equinix.

The Verticals

For companies trying to understand the opportunity for their business, we have broken down our growth by geography and verticals.

Figure 1a (below) shows the distribution of our 84,000 interconnections globally, revealing, for example, the relative dominance of financials services connections in EMEA, and network connections in Asia-Pacific, while the Americas are seeing a more even distribution of interconnection types (Figure 1b) below.

Figure 1a

Figure 1b

The table below looks at our 27 percent growth rate and applies a vertical perspective to the type of interconnection. Slicing the data in such a way gives our carrier customers a calculated view of “where the action is” to help them synthesize strategies for infrastructure expansion that net the best return on their capex spend.

They may note, for example, the strong growth of Network customers interconnecting with Financial Services customers and Content customers (e.g. social channels, media/advertising, e-commerce / e-retail and gaming).

However, while these top our list of cross-vertical interconnections, accounting for 23 percent and 33 percent respectively, Network-to-Cloud Services Providers (e.g. X-as-a-Service) and Network-to-Enterprise are actually accelerating dramatically, having accounted for zero growth just a couple of years ago.

In the area of rapidly growing cloud services (or “managed services”), Enterprise customers will enter the Equinix facility for colocation but then realize that just about every service and resource they need is a simple cross-connect away. So while they may be driven to our sites for colo, they discover they can outsource storage to a vendor a few aisles over.

Cloud-to-Cloud services, which stands at a very robust 35 percent of our growth, represents the maturing of the cloud services market as new service providers now frequently opt to purchase infrastructure from another provider instead of building their infrastructure from scratch. And, once again, although cloud-to-content and cloud-to-enterprise are smaller numbers, they were non-existent just a couple of years ago.

Coming up in part 3 of this series, we’ll look at the advantages of participating widely in the Equinix footprint and show you how one company has successfully leveraged Platform Equinix for revenue generation.