Having read a brief article from Datacenters.com, I can’t help but become increasingly interested in how Equinix has developed from Co-Lo provider and manager of real-estate to full blown Cloud and telecom provider.
The business while primarily focused around hosting center services and colocation solutions has created for its self and its customers a clever niche. By building services for particular markets. Equinix has created an ecosystem that its customers can’t live without. Indeed, the model has created demand with most customers legislating services in Equinix facilities simply because of adjacency, creating a challenge for other providers, in particular, telco and managed service business who may already have perfectly adequate facilities of their own. The pull of the Equinix ecosystems is such that providers are forced to take capability in Equinix facilities. No better case demonstrates this than the banks and financial service providers who enjoy the ability to trade next to their partners whether that be commodities, foreign exchange or whatever.
So what next, how do you top that demand? You bolt on Amazon, Microsoft and Google cloud services. Connect them at speed so they look like they are in the rack next door to your services. No point in building cloud services when they are already there and if we look at the recent announcement by HP that their Helion cloud service is to cease in January, it looks like the case has already been made not to build a public cloud platform competing against the existing behemoths.
So you have your own Eco-System, you have connected cloud services and over a 100 data centers all over the world. Build a network and connect them at speed. The recent announcement by Infinera that they are to provide their latest equipment to Equinix primarily to connect the Equinix’s Japanese facilities represents yet another phase in Equinix’s transition from Real-Estate to high-speed byte broker. How long before they start lighting up dedicated wet segments, we know that OTT companies like Google are already starting to review their infrastructure and have started construction of dedicated fibre platforms in the US.
Where does this leave traditional Telco? In short if your not an incumbent with a steady (all be it declining) income then you’re going to have to start re-inventing yourself. It is entirely possible the race to build the best Public Cloud Infrastructure has already been won. The capital required to compete in the public cloud market and maintain scale is mind-boggling. Amazon has burnt through several billion dollars, and the big 3 continue to spend capital on a monthly rate that traditional telcos would expect to burn over 5 or 10 years. Capital burn and agility are not things that sit with Telcos’s traditionally, so there is a real need for these businesses to either re-invent or re-trench to domestic markets.
The fact is some telcos already are, BT the UK incumbent has created BT Sport and is taking revenues from traditional media markets such as SKY and the BBC, it is practically a mainstream media and content provider for sport already. In Australia, Telstra’s home markets compete in an ever increasingly regulated environment, they have adopted Health or rather e-health as their thing (amongst others). It really will be this sort of new market creation or at least driving a change in the heritage delivery models for things like media and health that will differentiate them, the trick will be to hold their nerve and commit 110% to the development of these services. In the meantime whether it be by luck or good judgment Equinix seem to have re-invented themselves, and on an all too regular basis are taking a significant and dominant stand in the hosting and cloud market.