(Part 1 of a 2-part blog series)
Equinix former CEO Steve Smith has said that our “four crown jewels”-900+ networked data centers, a global footprint, customer ecosystems, and our reputation as a trusted partner-are helping position Equinix for “growth in a re-imagined world.”
What’s driving this re-imagination?
In this two-part blog post, based on excerpts from his presentation at Equinix Investor Analyst Day 2012, Smith examines eight secular technology trends reshaping our industry and the key role Equinix is playing in them.
In Part 1, he examines the first four trends.
I’m in my sixth year now, and I’m very proud to be part of this company. I joined when it was about $400 million in 2007, and we’re now approaching $1.9 billion, with projected revenues to reach $3 billion by 2015. So I’d like to provide a little context for how we’re thinking about Equinix today. We are becoming very data-driven as a company, and when you look underneath today’s secular trends, you see what a great opportunity Equinix has.
1. Consumerization of Technology
The first trend is something we’re calling consumerization of technology. The data in the market today suggests that 70 percent of users over the next few years could have up to five devices, and the data that we study also suggests that when you add China and India into the mix, there could be another one billion users of all these devices that we carry around with us and another 15 billion devices.
So if you think about that for a moment and all the server infrastructure and storage and networking gear required to underpin this, it’s got to go somewhere. We’re in a very good position to make a lot of this happen.
In 2011 something very profound happened. The number of smartphones outsold the number of PCs. Tablets are expected to surpass PCs in the next two to three years. This naturally changes everything.
Desktop applications work themselves into our data centers, and as we think about the future, the desktop is going very virtual, so we’re watching this trend very closely.
2. “Re-imagination of Everything We Do”
The second trend we call the “re-imagination of everything we do.” If you saw Mary Meeker’s recent report from Kleiner Perkins, she had a great section on this concept. Apps is today a $10 billion market, doubling every year. We’ve also discussed that we’ve moved way beyond just selling cabinet space, power and interconnection. We are also having very detailed conversations with our customers about the applications they want to run on this infrastructure and how our world is changing.
Today we listen to music on Pandora. We watch videos on YouTube. We communicate on Twitter. We make payments on Square.
I can remember a year and a half ago when I was at CEO Forum at JP Morgan and the founder of Twitter, who also started Square, talked about this concept, and they got JP Morgan to provide the financial support for it. I think they’re doing $10 million a month of payments on Square today.
This is re-imagining the concept of mobile payments. The world is changing. We’re doing things completely differently. And all the companies that provide these services are our customers, almost all of them in some form or fashion. So this is a very important trend.
3. Upward Mobility
The third trend is upward mobility. Internet users are expected to double by 2015 and most will be mobile. Mobile is growing three times the fixed-line business, and the traffic is doubling, predominantly driven by 4G LTE.
If you look around the edges of this, emerging markets are going to become very important, and that’s why you see Equinix starting to move into emerging markets.
Look at Maslow’s hierarchy of needs on the left side of this slide (see above) and then look at the right side to see what it’s evolved into. It’s simplified our world when you think about it. Food, shelter, you know, at the top of that is your phone.
So, the world is definitely changing right in front of our eyes. I would say that in our view mobile is probably the fifth major technology cycle behind mainframe, mini, PC and then the Internet. You can make an argument that mobile is that big of a thing around the world. That’s why we went into Brazil. That’s why we went into China. That’s why we’ll continue to move into emerging markets to capture this opportunity.
4. Social Networks
The fourth trend is the social network. You can’t be in this business and not pay attention to this.
Facebook has over 800 million users today, and you know the mission Facebook has: to give people the power to share and make the world more open and connected.
Think about what happened during the Arab Spring. It’s hard to track a lot of this stuff, but much of that traffic was running on Equinix data centers around the world to enable all of this to happen.
Why is it important to us? We have to be in front of these companies, and we have to get them deployed in multiple places to help enable this phenomenon. We spend a lot of time studying this!