By Steve Smith (Part 2 of a 2-part series)
In the second part of this two-part blog series, Equinix CEO Steve Smith continues his examination of eight secular technology trends reshaping our industry and the key role Equinix is playing in them.
In Part 1, he covered consumerization of technology, the “re-imagination of everything we do,” upward mobility and social networks.
In Part 2, he explores cloud computing, electronic trading, big data and “the traffic is coming.”
5. Cloud Computing
The fifth trend, cloud computing, is the fastest growing vertical for us today, roughly 25 percent of our revenue.
Analysts predict that the share of IT spend on the cloud will move from 2 to 20 percent by 2015. This is software as a service, platform as a service, and infrastructure as a service.
We’re seeing it in all kinds of forms: public nodes, private nodes, hybrid nodes.
This is a very large paradigm shift that may be as big as the development of the World Wide Web, and we are definitely of the opinion that is irreversible. CIOs that we talk to today in every company we talk to are moving some amount of workload into the cloud.
With 25 percent of this business finding its way into Equinix data centers and provisioning the cloud offerings out to the world, we believe we’re in a great position to accelerate the commercial development of the cloud.
6. Electronic Trading
Trend six is electronic trading. We’ve been very vocal about this for a very long time.
If you look at the chart (see below) – and this is U.S. data only – you can see the adoption across all of these asset classes.
It’s pretty much headed towards 100 percent electronic trading. Equinix has collected many matching engines around the world.
The peak message data chart on the right (see below) is order confirmation. It’s rising rapidly. This gain is still all about latency and proximity. Latency has become the place to play in this business.
But the fact is, we have many of these matching engines, these alternate trading venues, in our IBXs around the world, and they’re attracting the sell and buy-side in order to get very close, so this is still a very unique ecosystem and much deeper than what any other provider of data center capacity in the world has.
7. Big Data
Trend seven, big data, is fairly new, and we are starting to study it pretty deeply.
Think about this, 90 percent of the world’s data has been created in the last two years, and it’s supposed to grow at 800 percent over the next five years. And 80 percent of the data that we’re going to see over the coming years is going to be unstructured.
We think this is going to change the whole dynamic, and big data is going to be a very large shift for us. Most CIOs we talk to today are architecting around this and thinking about how a network data center like Equinix is at the center of their solution, so we’re in a great position to help enable this.
We also think the synergies between big data and cloud computing will be pretty unique, so we’re going to continue to look at this.
And, at the end of the day, what’s the “so what” to Equinix? Big data equals big traffic. Big traffic equals growth. It’s a big phenomenon for us.
8. The Traffic Is Coming
So the net of all this is that we believe that traffic is going to continue to come.
These are big trends, and I’ve even left out a couple. IP traffic is still growing. The Internet is still growing.
On this chart (see below) is a pretty interesting factoid that our team found. From the beginning of time to the year 2003, we had collected only 5 exabytes of data in the world.
Look at the two charts on the left and right (see below). By 2015, we’re going to be doing 80 exabytes per month of IP traffic. On the right side, there’s over 6 exabytes of mobile traffic per month, according to the Cisco VNI report.
We look at these as directional, and business models are being upended around the world. We see this every day in our conversations with our customers because of all this technology changing globalization. The power is definitely shifting to the East. Emerging markets are becoming center stage.
We have to pay attention to that because we believe we are at the intersection of all these trends, all these devices, all these apps, all the mobility, all the mobile data. The digital supply chain is transforming how companies sell, price, produce and deliver products and services, and our conversations today are all about how to help them do that.
I said earlier that we’re way beyond just having a conversation with our customers about how many cabinets they need and how much power they need. Ultimately, though, it gets down to that because we have to architect a solution.
But if we can understand the type of applications we’re bringing into these IBXs and we’re solving for, we put ourselves in a very good position and take pressure off ensuring long-term that we get the right stuff in here.