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Wednesday, December 19th, 2012
- Cloud wins confidence: With an unforgiving economy, it’s hard to imagine IT budgets will increase, or that the demands on IT will fall. That’s not new for 2013, but over the coming year IT managers will be increasingly willing to evaluate and deploy cloud computing to satisfy their business stakeholders. Cloud is proven as a cost-effective and reliable solution now, so it will become the natural choice for many companies as its perceived risk falls.
- Security questions remain: We won’t resolve all the questions surrounding security and access control in the cloud in 2013. Data management will continue to be a key issue, and will limit what types of applications companies will be willing to place into the public cloud. The business benefits of the cloud are compelling enough though, that companies will see the data management challenges as obstacles to work around, rather than barriers to adoption.
- Hybrid moves in: Hybrid cloud infrastructure will become more popular with large enterprises, as their IT teams become more expert at understanding which applications and data can use the external cloud providers – both private & pubic. In the past, enterprises have overwhelmingly preferred internal private cloud over public cloud infrastructure. I don’t think we’ll see a u-turn, but we will see enterprises adopt hybrid architectures where possible, so they can take advantage of the lower costs and ease of adoption of external cloud services. As these hybrid deployments take off, orchestration and automation tools will become increasingly important.
- SaaS opens doors: Small and medium sized businesses will increasingly adopt the cloud, with software as a service (SaaS) providing a much easier entry point than infrastructure as a service (IaaS) or platform as a service (PaaS).
- Enter the brokers: To satisfy the increased interest in the cloud from smaller companies, more cloud brokers will emerge. They could become influential gatekeepers in the cloud computing business, but larger companies will continue to work with established cloud providers so they can negotiate the SLA directly.
- Government reaps rewards: The EC/EU cloud strategy will edge slowly forwards, with the industry helping to define and shape it. National governments will continue to adopt cloud infrastructures for their departments. The UK has established the G-Cloud Programme, which provides an easier way for public sector bodies to procure cloud services, and for cloud providers to sell them into the public sector. This example might well inspire other EU governments to set up something similar, with the encouragement of EC vice president Neeli Krooes and the EU’s Digital Agenda strategy.
- Supercomputing takes off: High performance computing (HPC) has been associated with data-intense applications like weather forecasting, but cloud-based supercomputing will become increasingly important to the commercial sector. This is especially true of federated HPC in the cloud, because it will provide access to the raw processing power without the huge capital expenditure usually associated with HPC hardware.
- Hosting bins the tin: Successful hosting companies will switch their strategy from renting tin to offering cloud services. We will also see systems integrators and OEMs increasingly market private cloud capabilities delivered from their data centres.
- Bandwidth burden increases: As more and more applications enter the cloud, network providers will struggle to provide the mobile bandwidth required for consumer and business use of cloud applications. Network providers will need to invest in their infrastructures, but greater cloud adoption could increase the revenue they receive from mobile data subscriptions.
- Big data dominates: More businesses will look at how they can extract business value from the data they have, but the limiting factor will be expertise. Data scientists, Java programmers and Hadoop specialists will find their skills in demand as business focuses more on extracting value for the multitude of different data sources they have access to. OEMs will offer an integrated solution, but many companies will prefer to save money by using their own do-it-yourself configurations. Although service providers will offer cloud-based big data solutions, the challenge will be getting huge volumes of data into the cloud in the first place. The biggest growth area in big data will be machine-to-machine communications.
| Time | Event |
| 2:55p | PeakColo Expands to Chicago Market Denver-based Infrastructure as a Service provider PeakColo has expanded its cloud, adding its seventh cloud node in Chicago in a PlusOne facility. PeakColo now has six cloud regions, with the others residing in Seattle, Denver, New York, New Jersey, and in the UK. The company is partnering with PlusOne, a Chicago-based data center service provider, to provide low latency services in that region. “The opportunity to accomplish this expansion with PlusOne not only supports our business model but also enhances it with their exemplary operational model,” said Luke Norris, CEO and founder of PeakColo. PeakColo raised $7.5 million in growth equity capital from Meritage Funds and Sweetwater Capital last September. The company stated its intentions of using the money to expand into additional geographic markets at that time. Now we know Chicago was one of those markets. The company offers hosted private cloud (called RedCloud), hosted public cloud (BlueCloud) and it allows white-labeling of its cloud services, which allows resellers to go to market with their own cloud offerings under their own branding (WhiteCloud). Its white label cloud seems to be catching on. “Interest in PeakColo’s white-labeled cloud services has grown exponentially,” said Norris. “Our customers demand presence throughout the US, and the addition of our Chicago cloud node ensures we remain one of the fastest enterprise clouds in the marketplace.” PeakColo also offers colocation, which it positions as more of a compliment to cloud services than a primary offering, meant for legacy applications or as part of a migration plan. PeakColo cloud is built atop VMWare vCloud and NetApp. PlusOne provides mission-critical solutions to a broad range of industries including media, healthcare and telecom. Its flagship data center is located in downtown Chicago. Kevin Francis, Director of Real Estate for PlusOne said, “The growth and technical requirements presented to us by PeakColo, while demanding and leading-edge, were accommodated in our standard operating model. We are excited to have PeakColo add PlusOne as a major PeakColo cloud service node.” In addition to space, redundant power and cooling, PlusOne offers redundant 10Gbps+ bandwidth, expert remote-hands, 24x7x365 dedicated on-site staff, and other value-added support services to complement its core colocation services. |
| 3:13p | Equinix to Join NASDAQ 100 Colocation market leader Equinix will join the NASDAQ 100 index on Monday, Dec. 24. Paulo Gorgo, an analyst who has tracked EQIX closely over the years, has a column at Seeking Alpha that looks at the history of the company and its journey, including a near-death experience during the dot-com bust. It’s worthwhile reading, especially in noting the emergence of “Equinix 2.0″ through a 2002 deal to acquire two data center providers in the Asia-Pacific region. I remember reading through that 2002 release about three times in an effort to understand the complex restructuring, which included a reverse stock split. That turned out to be a pivotal moment in the life of the company, which has since emerged as a benchmark for the colocation sector and data center stocks. The inclusion of Equinix in the NASDAQ 100 has boosted the company’s shares, which will now be purchased by funds and ETFs that mirror the NASDAQ index. It’s a heady milestone for the company, and a good time to reflect on the difference a decade can make. |
| 4:12p | Open Compute Summit The Open Compute Summit, the periodic gathering of those involved in and interested in the Open Compute Project, is planned for January 16-17, 2013, at the Santa Clara Convention Center in Santa Clara, CA. Started by Facebook and joined by many others in the hardware community, the goal of the Open Compute Project is to spark a collaborative dialogue about hardware designs and encourage sharing. Additionally, the project works to recruit more companies and individuals to be part of this collaboration. Registration is now open. The conference is free because its sponsored by these organizations. For archives of presentations and video of the previous meeting in San Antonio, visit the Open Compute website. Venue The initial hotel is sold out. Here is the other suggested hotel: For more events, return to the Data Center Knowledge Events Calendar. |
| 4:26p | Green Data Center Conference The Green Data Center Conference and Exhibition (GDCON) will convene in San Diego on January 29-31 at the Marriot La Jolla. GDCON offers data center managers and engineers the opportunity to learn about optimizing data centers through best practices in efficiency innovation, techniques and equipment. Participants will discover the cost-saving benefits of the green data center movement. The full agenda has been announced and is available here. Speakers include: Tate Cantrell, CTO, Verne Global; KC Mares, President & CEO, MegaWatt Consulting Inc. and CTO,Unique Infrastructure Group; David Filas, Data Center Engineer, Trinity Health; and Peter Light, Senior Product Manager Bloom Energy, among others. For more information and registration, visit the GDCON website. Marriot La Jolla A limited number of rooms have been reserved at a discount rate of $149.00 per night. |
| 6:36p | A Crystal Ball on the Cloud: Predictions for 2013 Alan Priestley is a multi-year Intel veteran, and currently hold the role of Strategic Marketing Director within Europe, Middle East and Africa.  ALAN PRIESTLEYIntel It’s that time of year when analysts, technology bloggers and journalists all look to the next 12 months, and report their predictions. As part of my work for Intel Cloud Builders, I’m frequently talking to businesses, telcos and service providers and what’s going to happen next in cloud. (Cloud Builders is a cross-industry initiative aimed at making it easier to build, enhance, and operate cloud infrastructure.) So I thought I would join in the fun by sharing my forecast for the cloud. Here are the key developments I expect we’ll see: So those are my predictions. What do you expect to see in the year ahead? Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library. |
| 6:48p | GI Partners Acquires Two Fully-Leased Data Centers It seems that the smart money is getting busy, at least in regards to fully or almost fully-leased income properties. Private Equity firm GI Partners has two notable data center acquisitions, both fully leased to strong tenants. Earlier this month, GI Partners acquired Lightwave Corporate Center, a data center and office property fully leased to cloud and managed services provider American Internet Services, and San Diego Gas & Electric Co., a public utility . GI Partners followed it up with the acquisition of Liberty Park at Tysons in Northern Virginia, a property that is principally occupied by the GSA on a long term lease in support of a mission-critical application. Both acquisitions provide consistent rental income streams to GI’s portfolio for several years to come through high quality tenants. Liberty Park was purchased through TechCore while Lightspeed was purchased through DataCore, two funds with similar names and similar aims. TechCore and DataCore; CalPERS and CalSTRS; Potato and Potato. TechCore is a $500 million discretionary core real estate fund launched earlier this year and managed by GI Partners on behalf of the California Public Employees’ Retirement System (“CalPERS”). DataCore is a fully discretionary core real estate fund managed by GI Partners that was launched earlier this year with the California State Teachers’ Retirement System (“CalSTRS”). Both have a similar aim with different (but similar) beneficiaries. Liberty Park Liberty Park at Tysons is a 225,038 square foot mission critical data center and office property located in Vienna, VA. “This was an excellent opportunity for us to acquire a state-of-the-art data center facility that recently underwent a major renovation to support the long term needs of a world class tenant,” said Rick Magnuson , Executive Managing Director of GI Partners. As mentioned earlier, the acquisition was made through TechCore, a $500 million core real estate fund launched earlier this year. TechCore targets data centers, internet gateways, corporate technology campuses and life science properties. In real estate, a “core” investment is a stable property with high occupancy rates and steady income from tenants with strong credit, which can generate a solid return without significant development or expansion. TechCore focuses on acquiring highly-leased single tenant data centers, as GI has done here. TechCore also recently acquired a 198,033 square foot office building at 1600 Technology Drive in San Jose,CA, which acts as global HQ for Atmel Corporation, a semiconductor industry player. Lightwave GI Partners also acquired a data center and office building in San Diego earlier this month, made through the DataCore core real estate fund. The facility is a two-story, 166,892 square foot property located at 9305 Lightwave Avenue in the Kearny Mesa submarket of San Diego. It’s fully occupied, leased to American Internet Services, a cloud, connectivity and managed services company, and San Diego Gas & Electric Co, a public utility that provides energy service to 3.4 million people through 1.4 million electric meters and 850,000 natural gas meters. In summation, two strong, very desirable tenants that aren’t going anywhere any time soon. “We are pleased to have formed this relationship with CalSTRS (California State Teachers’ Retirement System) that leverages our expertise and strong reputation for investing in technology-advantaged properties,” said Magnuson. “This property represents DataCore’s initial acquisition, features extensive data center improvements and is leased to strong tenants in their respective fields. We have an active pipeline and we will continue to identify and acquire core technology real estate investments on behalf of DataCore.” Earlier this year, GI Partners advised CalSTRS on its acquisition of LCOR, a fully integrated investment, management and development company focused on large-scale multifamily, commercial, and mixed-use properties. The California State Teachers’ Retirement System (CalSTRS) created DataCore as a core investment vehicle to invest in technology-focused real estate in the U.S., including data centers, Internet gateways, corporate campuses for technology tenants and life science properties located in primary MSAs and leased to industry leading tenants. This is the first investment for the DataCore fund. CalSTRS has a portfolio valued at $154.8 billion as of Oct. 31, 2012, and is the largest educator-only pension fund in the world. CalSTRS serves California’s 856,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts. Data Centers: A Different Beast of Asset Class These acquisitions mark a continued shift from GI Partners’ entry into the data center sector in 2001. At the time, the data center industry was entering a prolonged slump amid an oversupply of space. When the Internet market crashed, companies who had overbuilt wound up in bankruptcy, leaving data centers sitting empty, to be sold for pennies on the dollar. GI Partners acquired dozens of these properties, gradually filling them with tenants and redeveloping any unfinished space. In the past decade, data centers have grown into a new asset class, to the point where TechCORE and DataCORE funds can focus on stable income properties with solid leases rather than on speculative turnarounds. These acquisitions are a good example of the healthy state of the data center industry. The smart money goes where the potential is, and right now, the industry is healthy enough that these fully leased properties are extremely attractive. More on TechCore, and the thinking behind it, can be found here. For another recent example of a fully-leased data center acquisition, check out Carter Validus’ acquisition in Philly, or ByteGrid’s acquisition of a fully-leased data center in Atlanta. |
| 6:55p | Best of the Data Center Blogs for Dec.19 Here’s a roundup of some interesting items we came across this week in our reading of data center industry blogs. Data Center Commissioning 101 – At the Compass Points blog, industry veteran Kfir Godrich provides an overview of data center commissioning. “Data center commissioning is about enabling the business through performance validation and functional testing of integrated platforms,” Kfir writes. “This should typically be performed by an independent agent as part of the customers trusted advisory team and as a core part of the overall project schedule.” Catbird gets $2M from new VC fund – What’s Terremark founder Manny Medina been up to since exiting after the Verizon deal? Stacey Higginbotham at GigaOm has the details: “Catbird, a 12-year-old business that offers a security software product for virtualized environments, has raised its first round of funding — a $2 million initial tranche from a new venture firm called Medina Capital Partners.” Medina has also reportedly invested in DDoS protection specialist Prolexic. A New Metric for Data Center Industry: Momentum – At the RagingWire blog, Jim Leach looks at market dynamics: “The mass of a data center region refers to the number of providers. If there are only a few providers in the region, most likely you will not see the innovation and efficiencies that come from competition. You could end up with a monopoly effect where a single provider has all the power and the buyers pay too much for a product that may not be competitive in the broader industry. You want the data center region to have a critical mass of providers, say 3-5, but also note there are diminishing returns for both providers and buyers as the number increases. For example, a market with 10 data center providers is not necessarily two times better than a market with five suppliers.” Views from the fiscal cloud – FS trends in 2013 - At the InterConnections blog, David Wilkinson of Equinix discusses trends in financial services. “The move towards colocation for the financial services sector will escalate in the New Year as institutions realize that a centralized financial ecosystem leverages economies of scope and scale for all parties. By colocating within a network-rich data center, exchanges, data vendors, clearing firms, financial extranets, broker-dealers and others can dramatically reduce the number of circuits required to support multiple counterparties. Colocation does not just mean proximity to the exchange, but to other counter parties as well, all inhabiting the same network rich environment.” |
| 7:07p | Citigroup Consolidation Shutters 50 Facilities  The Citi Data Center in Frankfurt features a “green wall” featuring plants that are irrigated with recycled water. (Photo:Citigroup) Citigroup has completed a major data center consolidation, which is profiled in Wall Street & Technology. During the course of the project, the huge financial went from 70 data centers to just 20, according to Jagdish Rao, head of enterprise operations and technology at Citigroup. Here’s an excerpt: “We are near to the end of a five year data center consolidation strategy,” Rao says. “This is a massive consolidation that follows our global operational model.” With many older data center facilities, along with some that were acquired during acquisitions, Rao says the bank determined that it could close a large number of data centers. The flip side of the equation: Citigroup built 8 brand new data centers around the world, including facilities we’ve profiled in Austin and Frankfurt. The Wall Street & Technology story is a nice update to our 2009 story on the project, which was then at its midpoint, and Citi’s decision to pursue LEED certification on its new facilities. The Citigroup example is worth noting, as analysts often cite consolidation as a trend that reduces demand for data center space and services. In many cases, large projects result in the consolidated workloads being housed in powerful new servers in newly-built data centers that can support the high densities associated with higher utilizations. |
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