Tuesday, September 13th, 2016

Time	Event
12:00p	Can EdgeConneX Disrupt Incumbent Data Center Providers? In both hockey and investing, it’s important to skate where the puck is heading. It might seem counter-intuitive that a private data center company building in secondary markets could impact future earnings for the big publicly held data center REITs, but it appears there are some game-changing developments underway. EdgeConneX is a portfolio company of Comcast Ventures; its other investors include: Charter Communications, Akamai, Cox Communications, and Ciena, as well as private equity firms Brown Brothers Harriman and Providence Equity Partners. It continues to construct and expand a network of new “skating rinks” (edge data centers) where cable, content, and cloud providers are collocating servers to improve the quality of service in local markets. Source: EdgeConneX – Conviva white paper In addition to providing lower latency for high-performance applications, EdgeConneX offers US customers a distributed wholesale pricing model, which can make it cheaper to locate servers closer to the “eyeballs,” or network edge. Read more: How Edge Data Center Providers are Changing the Internet’s Geography EdgeConneX ‘Disruptive DNA’ In a nutshell, the EdgeConneX one-two punch of improved network performance at a lower price point could win a lot of market share from incumbent data center providers. Wholesale Pricing: The provider offers a basic colocation contract charging $150 to $235 per kW per month (depending on redundancy and market). There is no administrative fee on contracted power usage. There is no charge for floor space occupied by IT cabinets. Cross-Connects: There is a $200 non-recurring set-up fee for running the fiber. The monthly recurring fee is $100 per “lit” pair, with no charge for unused connections. This pricing is posted on the EdgeConneX website along with its OPEN-IX certifications. It is not unusual for US data center providers to charge $300-$500 for installation and up to $300 for monthly recurring fees per cross-connect, lit or not. Lease Term: The typical EdgeConneX lease contract with anchors is for an initial term of 7 to 15 years, “with a bias toward the longer side,” according to Phill Lawson-Shanks, EdgeConneX chief architect and VP of innovation. Notably, the longer EdgeConneX lease term is a game changer for small kW deployments, which typically average just two to three years. These newly constructed peering points are designed to be permanent network nodes. Technology: The EdgeConneX network of data centers is fully automated utilizing a proprietary EdgeOS data center operations management system, which reduces risk of operator error. The EdgeOS technology also contributes to the wholesale pricing of data center space, power and cross-connects by lowering operating costs. Additionally, EdgeConneX tenants can monitor all data center locations in real-time on a single dashboard with visibility down to the equipment level, including power usage, temperatures and humidity. EdgeConneX – US Strategy EdgeConneX’s network of 25 data centers build across 24 US markets simply did not exist two years ago, which makes this company one of the fastest-growing data center providers. It is far more than just a landlord. It essentially has become a design-build partner creating new internet peering points in data centers located where anchor tenants can provide the lowest-latency video and other content to customers in edge markets. Source: EdgeConneX – August 23, 2016 Each location opens already seeded with content providers, CDNs, ISPs, networks, as well as cloud and managed services providers. This helps to accelerate the evolution of the content and cloud supply chain, or ecosystem. Most notably, EdgeConneX does not build data center facilities speculatively. In fact, each one that opens is immediately EBITDA-positive, according to management. Speed to Market The company’s speed to market is enhanced by its proprietary RIO (real estate inventory online) software. RIO is a site acquisition tool, which maps over 40,000 building locations nationwide in relation to fiber aggregation points, and fiber network routes by provider, in each US market. Selection of an ideally located existing building to purchase, gut, and remodel in a new market generally takes a week or less. The delivery of a purpose-built data center designed to support 600 watts per square foot, with minimum N+1 redundancy, takes four to six months depending upon length of time required for permitting. Here’s a time-lapse construction video which shows how EdgeConneX’s Boston EDCBOS01 facility was built in just 102 days, despite a severe winter storm: Recent Cloud Strategy In 2016, EdgeConneX has now upped the ante by rolling out high-speed on-ramps for Amazon Web Services, Microsoft Azure and Google Cloud. This nascent cloud initiative is already active in Portland and Boston in conjunction with connectivity partner Megaport. Notably, EdgeConneX has also provided the first AWS Direct Connect physical location to serve the Portland market. Read more: Megaport Brings Azure to EdgeConneX’s Portland Data Center Access to the Big Three cloud providers is also available in Detroit, where EdgeConneX has partnered with Console to provide scalable, private, direct connections for customers. EdgeConneX also offers colocation space for managed services companies and system integrators which can facilitate enterprise hybrid cloud deployments at these cloud-enabled locations. Global Reach While many data center operators are active across US secondary markets, this list shrinks rapidly when you only include those firms which also have significant international data center operations. In January 2016, EdgeConneX announced that its first European expansion would be in Amsterdam, and subsequently revealed two additional projects located near Dublin and London. Read more: Inside EdgeConneX’s Massive European Data Center Buildout The massive scale of EdgeConneX’s European data center hub deployments dwarfs the US edge data centers. EdgeConneX utilizes a modular approach to build US edge data centers in 2 MW initial phases, designed with provisions for expansion in 2 MW increments. EdgeConneX plans to roll-out a similar network of smaller edge data centers in secondary cities across the UK and Europe to provide low-latency alternatives for an ecosystem of tenants, anchored by media giant Liberty Global. Long-Term Commitments EdgeConneX prefers to own its data center infrastructure rather than to lease facilities from other landlords. This requires a lot of capital investment, but clearly Comcast and other venture partners have deep pockets. In 2013, the first EdgeConneX data center location was built in a leased facility in Katy, TX outside of Houston. Fast-forward to 2016, and EdgeConneX recently purchased StratITsphere, the small wholesale data center provider which owned that facility, in order to control that property. This purchase underscores the importance which EdgeConneX places on owning its fleet of data centers — an approach which makes sense given the long-term contracts which key customers are signing. Investor Bottom Line This early in the game it remains unclear just how much of a threat the evolving EdgeConneX business model may pose to incumbent data center landlords. One risk is that large numbers of servers deployed in multiple edge markets will slow the rate of growth in core US data center markets over time — especially for media firms and content providers. Additionally, the EdgeConneX pricing plan could become a revenue headwind for incumbents who are located upstream, in larger data center markets. EdgeConneX is certainly more than just another niche player in secondary US markets and is already a much larger enterprise than probably most investors realize. Some back-of-the-envelope math indicates that the company could soon generate revenues rivaling some of the smaller publicly traded data center REITs. My main takeaway is EdgeConneX is a fast-growing, disruptive data center player that investors in publicly traded data center REITs should be aware of and watch very closely. (Comment on this)
5:31p	Nvidia Debuts New Chips in Race With Intel to Provide AI Engine (Bloomberg) — Nvidia Corp. announced new processors Monday to try to embed its products in artificial-intelligence systems that are increasingly becoming part of daily life. The chipmaker, which dominates in video gaming, rolled out graphics chips for running software that makes split-second decisions needed when everything from phones to cars to internet search engines respond to inputs such as speech, images and moving objects. The company said its new Tesla P4 chip is for servers used in massive data centers. Based on its Pascal design, the P4 is more than three times as efficient at processing images than its predecessor and 40 times more efficient than Intel server chips, according to Nvidia. Another new chip, called the P40, is designed for more-powerful single computers, such as supercomputers. More on infrastructure for AI: Why Nvidia Gifted Elon Musk’s AI Non-Profit Its Latest Supercomputer Intel Building Next-Gen Xeon Phi for Artificial Intelligence Google Has Built Its Own Custom Chip for AI Servers Nvidia is taking aim at its Santa Clara, California-based neighbor Intel Corp., which last month announced its own AI chips and talked about its ambition to muscle in on this nascent but fast-growing market. Both companies also want to ensure data center operators such as Google not only use their technology but aren’t tempted to design their own custom solutions. Nvidia has argued its graphics chips, which perform multiple small manipulations of data simultaneously, are the right answer for AI systems, and it has invested in software to make them easier to use. Intel has said its chips, which have less ability to work in parallel but are more capable in general purpose computing, offer the right solutions. Data center owners, whose biggest cost is energy, are focused on components that can get the job done using less power. It’s still early days in the market for AI chips. In its latest quarter, Nvidia’s data center business more than doubled sales to $151 million and most of this came from AI tasks. Intel’s data center unit had sales of $4 billion, but very little of that revenue came from AI projects. (Comment on this)
5:57p	Accenture Taps Former CIA CTO to Lead Federal Cybersecurity Practice Brought to You by Talkin’ Cloud Accenture Federal Services (AFS) has brought on a former CIA chief technology officer to lead its cybersecurity practice. Ira “Gus” Hunt has joined Accenture to oversee its cybersecurity practice which offers clients strategic consulting, security technologies, cloud migration support, and operational security such as incident response. Hunt retired from the CIA in 2013 after a 28-year career. As CTO, Hunt oversaw the agency’s implementation of the Amazon cloud, and led its IT strategic direction. “We are excited that Gus has joined our team, as his expertise can help our federal clients identify new approaches to better safeguard their agencies,” David Moskovitz, chief executive for Accenture Federal Services said in a statement. “He brings the experience, vision and passion to help our clients better understand their highest-value assets, address their threats and vulnerabilities, and effectively protect themselves within their budget and technology constraints.” Previously, Hunt served as chief architect for hedge fund Bridgewater Associates, based in Westport, Conneticut. Prior to Bridgewater, Hunt was president and CEO of Hunt Technology, a private consulting practice for security and cloud. “I look forward to helping federal agencies meet their cyber needs, whether they are trying to secure data on their legacy systems or moving key operations to the cloud,” Hunt said in a statement. “Accenture is uniquely positioned to help federal agencies plan, design, deliver and operate these systems more securely.” This first ran at http://talkincloud.com/cloud-computing/accenture-taps-former-cia-cto-lead-federal-cybersecurity-practice (Comment on this)
9:49p	The Data Center Industry Has a Problem: Too Many Men Every time Lisa Huff attends a session at a technical conference she scans the room to see how many women there are in the audience. Tuesday morning, during the keynote at Data Center World, there were nine, including herself and her partner. The huge gender gap in the tech sector overall is not a secret, but in the subsector we refer to as “the data center industry” the issue is more acute than in most of its other corners. And nowhere does the gap reveal itself more than at data center conferences, where hallways and presentation rooms are flooded with middle to late middle age white men. At Data Center World, taking place this week in New Orleans, Huff, principal analyst at Discerning Analytics, sat on a panel that explored the reasons behind this issue and the ways it could be addressed. She has an engineering degree and, having spent her entire career in technical roles, she is used to being the only woman in the room. Things aren’t any different in her current role as an analyst. “I can’t even recall a woman data center manger that we deal with – out of hundreds,” she said. While a Salesforce or a Facebook may feel safe in knowing that there are hordes of college graduates with computer science degrees eager to start plugging away at the keyboards in their offices at a moment’s notice, there’s no guarantee that the pool of qualified workers companies that design, build, and operate data centers can draw from won’t shrink in the near future. It’s hard to argue that the data center workforce is sustainable when the average data center manager is a male in his 50s. “In the not-too-distant future, you’re going to lose a whole swath of your workforce,” said Dr. Theresa Simpkin, head of department, Lord Ashcroft International Business School, Anglia Ruskin University. Simpkin, who moderated the panel, coauthored the university’s master’s level-qualification in data center leadership and management. She is currently studying leadership and management changes in data centers and the impostor syndrome experienced by women working in STEM (science, technology, engineering, and math) roles. The latter project actually started as a project focused on the data center industry, but she quickly realized that there weren’t enough women to interview for it. “I had to broaden it out to women in STEM, because I couldn’t find anybody to talk to who was a woman [working] in data centers,” she said in an interview with Data Center Knowledge. “I just can’t find a route to them. That in itself is telling.” Impostor syndrome is a psychology concept. The term describes the fear some successful people have of being outed as unqualified for the roles they have been successful in. Dr. Theresa Simpkin, head of department, Lord Ashcroft International Business School, Anglia Ruskin University. While her study is still in progress and she doesn’t know exactly how common the phenomenon is among women in STEM occupations, it isn’t uncommon, Simpkin said. Many women she’s talked to so far feel like “they’re waiting for the tap on the shoulder, saying, ‘Actually, we’ve made a mistake. You aren’t supposed to have gotten the job; it was meant to be somebody else,’” she said. Of course, there isn’t a simple solution to the gender gap in the sector. Children start divesting career options very early on – as early as three or four years old, according to Simpkin – using signals they receive from the culture that surrounds them. And the signals girls receive about their career options are different from the ones received by boys. One part of the solution would be to “start stripping away these ideas that occupations have a gender bend,” she said. Those early signals are crucial. Huff said she was encouraged by her parents to get into a technical field, but encouragement from parents isn’t enough. In fact, it often matters less than influence outside one’s home. Teachers and counselors in primary and grade school can have a much bigger impact on a person’s career path. Jennifer Cooke, research director, Data Center Trends and Strategies Group, IDC, who was also on the panel, said somebody simply pointing out what she was good at when she was in college is one of the reasons she is where she is today. Another way the data center industry specifically could help expand its labor pool would be to step out of the shadows. The sector has “a bit of an image problem in that nobody knows what it is,” Simpkin said. “You can’t attract people to roles in the data center sector if the data center sector itself is not widely identified as an employer of choice. There needs to be a sectoral response.” And this response needs to happen soon, because the gender gap isn’t simply a matter of gender. There is a business case for having a more balanced workforce. A lot of research has shown that a more diverse workforce is more innovative, Simpkin said. This, coupled with the average age of a data center manager, makes for a compelling argument for greater diversity. “The time is ripe for those sorts of conversations to get really pointed, because the sector is maturing,” she said. “The impending exodus of those 55-year-old managers leaving the sector means that there’s going to be a bit of a vacuum, unless there’s a concerted and strategic response.” Help Dr. Simpkin advance her research by participating in her studies: Data Centre ‘Skills’ and Labour Research Programme Impostor Phenomenon and women in STEM (Comment on this)

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