Monday, September 26th, 2016

Time	Event
12:00p	Interxion CFO Sees Silver Lining in Brexit Who would have thought that a Brexit vote might actually contain a silver lining for Interxion Holdings? Businesses tend to be risk-averse, and the UK’s unprecedented vote to leave the European Union is generally viewed as having a dampening effect on business decision making. Interxion derives 100 percent of revenues from the UK and Europe, and delays in contract signings or capital expenditures could negatively impact these economics. This is less of an issue for larger US-based rivals, such as Equinix and Digital Realty Trust, than for Interxion. However, Brexit may actually turn out to be a good thing for the Amsterdam-based firm. Earlier this month, Interxion CFO Josh Joshi presented at the Bank of America/Merrill Lynch Media, Communications and Entertainment conference. Following a big shakeup in the European data center market, Interxion is the lone remaining pan-European retail colocation provider that’s actually based in Europe. Joshi shared his views on Brexit, the changing competitive environment in Europe for data center operators, and how cloud adoption by enterprise customers in Europe still lags North America. Brexit Silver Lining The conventional wisdom is Brexit injected uncertainty into the markets and will slow decision making.  Strategic planning for corporations based in the UK and EU has been complicated and will delay corporate spending. Read More: US Data Center Giants in Europe: the Brexit Effect Joshi implied it was more of a mixed bag for the European data center market, saying “…several years of uncertainty will dampen activity, but the floor hasn’t fallen out of business by any means, including the London market.” Just today, the company announced it was expanding data center capacity in three European markets: Frankfurt, Marseilles, and Paris. In Frankfurt, it is building a new data center, which will be called FRA11, while the two projects in France are expansions on existing sites. The immediate negative impact from Brexit for Interxion was the devaluation of the GBP versus the Euro. It caused an immediate headwind of 4 euros per square meter, or ~1% decrease in average MRR per cabinet in Q2 2016, versus previous guidance. However, Brexit could actually benefit Interxion in a couple of different ways: Operating the widest footprint of data centers across Western European positions, Interxion should benefit from any dislocations that may result; The real silver lining of Brexit may be that it will become the catalyst for UK enterprise customers to move data and applications into the cloud to reduce risk and increase flexibility going forward. Enterprise Cloud Adoption Interxion is well-positioned to benefit from any acceleration of enterprise cloud adoption in Europe. However, it has been slow going to date. According to Joshi, adoption of outsourced IT solutions and cloud computing by European enterprise customers is two years behind the pace of cloud adoption by US corporations: Source: Interxion Q2 2016 Earnings Presentation Interxion is currently seeing enterprise R&D and trial cloud deployments, but it has yet to see many “material” enterprise deployments. Joshi predicts “waves of deployments,” which will be occurring over multiple years, with smaller countries still lagging behind the larger markets in cloud adoption. Source: Interxion Q2 2016 Earnings Presentation Interxion is laying the foundation for enterprise by leasing to “Hybrid Cloud Enablers” to create an attractive platform for future enterprise cloud adoption. Interxion – Edge Footprint The company derives 65 percent of revenues from the “Big Four” European countries: Netherlands, Germany, France, and the UK. The balance comes from serving the rest of Europe. In some markets Interxion is the only pan-European data center provider, and overall margins in secondary markets are approaching 58 percent. The company is well-positioned in smaller countries and “edge” markets compared with its larger US-based competitors, according to Joshi. He said the Nordic countries were “bright stars” with strong tech markets and used Copenhagen as an example, where Interxion’s latest 600-square meter data hall expansion was 100 percent leased. In Marseilles, there are two new subsea cables terminating within the existing Interxion data center. It was designed to be 6,000 square meters at full build-out, and the company has already leased another property from the Marseilles port authority. Marseilles is a cloud nexus supporting data flow between the South of France, North Africa, and the Middle East. Joshi pointed out Austria as another market which serves as an Interxion cloud gateway to Eastern and Central Europe. Europe’s Competitive Landscape During the past year there has been a major shake-up and consolidation of data center providers serving the UK and Europe. Regarding further potential consolidation involving Interxion, Joshi implied that nothing was off the table. He referred to any potential M&A deal as the “art of the possible,” but stated clearly that Interxion remains focused on “creating long-term sustainable value.” Read more: With Telecity Deal Equinix Secures European Market Lead The Equinix acquisition of TelecityGroup had the unintended consequence of expanding another US-based data center provider in Europe: Digital Realty, which acquired a number of Equinix data centers in the region it was forced to sell in exchange for regulatory approval of its Telecity merger. It was still too early in the game for Joshi to determine if there will be any competitive changes from Digital gaining a retail colocation footprint in three of the Big Four markets. Read more: Why Equinix Data Center Deal is a Huge Win for Digital Realty Joshi made the point that Interxion is still competing against the same data centers, and pointed out that Digital Realty and Equinix will likely to be more disciplined in allocating capital than TelecityGroup was previously in many markets. He did not discuss the potential impact of EdgeConneX entering the European market. A Competitive Wildcard? Comcast Ventures-backed EdgeConneX has begun constructing large-scale projects in Amsterdam, adjacent to the large Interxion campus near Schiphol airport. There are also mega-scale EdgeConneX projects underway outside of Dublin and London. Read more: Inside EdgeConneX’s Massive European Data Center Buildout Additionally, EdgeConneX has said that it intends to roll out smaller “edge” data centers in markets across Europe, initially to support the efforts of Liberty Global, which is also an investor. Read more: Can EdgeConneX Disrupt Incumbent Data Center Providers? It remains to be seen if EdgeConneX will become a significant competitor to Interxion, an incumbent with deep roots and a home field advantage. One vertical market where EdgeConneX could quickly become disruptive would be digital media and content distribution networks (CDNs). Notably, Akamai is another investor in EdgeConneX, and Netflix recently announced an alliance with Liberty Global in Europe. Both of these content giants are currently Interxion customers. In aggregate, content and digital media currently account for 10 percent of revenues for Interxion. Update: The article has been updated with news of Interxion’s expansion in Germany and France. (Comment on this)
6:16p	Microsoft to Plug Renault-Nissan Cars Into The Cloud (Bloomberg) — Microsoft Corp. agreed to provide cloud-computing services for cars made by Nissan Motor Co. and Renault SA as the manufacturers push ahead with developing connected vehicles. Microsoft will build cloud infrastructure for the two carmakers that can host navigation data and allows drivers to predict gas usage and check on their cars remotely, the Redmond, Washington-based software producer said in a statement on Monday. The U.S. company will also help Renault and Nissan, which are both run by Chief Executive Officer Carlos Ghosn, develop user interfaces for their brands. Vehicles with the new features could reach the market as early as 2018, with more than 10 models with autonomous driving technology to be available two years later. The tie-up will be “a long-term commitment,” Jean-Philippe Courtois, head of Microsoft’s global sales, marketing and operations, said by phone. Partnerships with technology companies are flourishing as carmakers shift their focus to self-driving technologies and digitization. Last week, the Renault-Nissan alliance said it’s acquiring French software developer Sylpheo.  In March, General Motors Co. agreed to buy self-driving software maker Cruise Automation. Fiat Chrysler Automobiles NV has teamed up with Google Inc. to develop self-driving minivans, while BMW AG, Audi AG and Daimler AG bought Nokia’s maps business to improve their location services, a key feature of automated-driving technology. “In order to be leading in the space, we need to partner with the best tech companies,”  Ogi Redzic, Renault-Nissan’s head of connectivity services, said by phone. Privacy Concerns Connected vehicles have raised concerns that data gathered by the car could be used to track passengers’ whereabouts and get information about whom they call and what they search for on Google on the way — bits of information that are valuable for carmakers including French producer Renault and Japanese partner Nissan, which can then offer tailored services to passengers. The arrival of technology companies in the auto industry should be considered a threat, as new entrants may glean data from carmakers that will help them produce their own vehicles in the future, Adam Jonas, an analyst at Morgan Stanley, said in January. Since “Microsoft is a platform provider, we are not competing with the brands,” and the software maker isn’t seeking to retain car manufacturers’ data, Courtois said. While Microsoft is already working with car manufacturers — including a deal to bring augmented-reality goggles to Volvo Car Group showrooms — this is the first long-term partnership of its kind, according to Courtois. (Comment on this)
7:17p	Data Center Stocks are Hot Internationally Analysts and investors are increasingly excited about data center stocks, and recent performance of a data center provider that went public six years ago in Australia illustrates that the excitement isn’t limited to US markets or the short list of US-based data center giants. Nextdc, one of the biggest data center providers in Australia, founded by the country’s well-known tech infrastructure entrepreneur Bevan Slattery, is not only the most expensive among six stocks added to the S&P/ASX 200 Index this month; it is the Australian benchmark index’s most expensive stock, period. Nextdc reached its record value last week, and analysts are bullish, according to Bloomberg. Similar to the biggest US-based data center stocks, Nextdc is outperforming the index it has been included in. The seven publicly traded US data center REITs (Equinix, Digital Realty Trust, CoreSite Realty, QTS, CyrusOne, DuPont Fabros Technology, and Iron Mountain) have all outperformed S&P 500 so far this year, riding the wave of growth by the giants that provide cloud and other internet services, such as Google, Amazon, and Microsoft, who have been gobbling up data center space at record rates. See also: Silicon Valley Billionaires’ Wealth Manager Enters Data Center Market Nextdc’s SY1 data center in Sydney (Photo: Nextdc) Nextdc has eight data centers, located in Melbourne, Brisbane, Sydney, Perth, and Canberra. Last year, it partnered with CenturyLink to provide data center services in Australia to the Monroe, Louisiana-based company’s customers. It isn’t the only company Slattery has taken public. One of his latest ventures, Megaport, an SDN-enabled data center connectivity services firm, went public in December 2015, raising AU$25 million. The business Slattery launched most recently is Cloudscene, which provides an online directory of data centers and service providers around the world. Read more: Another Huge Quarter for Data Center REITs: What’s Next? (Comment on this)
8:15p	Enterprise Cloud Security Startup Skyhigh Raises $40M Skyhigh Networks, an enterprise cloud security startup that claims to have 40 percent of the Fortune 500 list as its customers, has raised $40 million in a Series D funding round. The four-year-old company helps enterprises secure cloud control points for IaaS, Paas, and SaaS. It says it has 600 enterprise customers, including Equinix, Hewlett-Packard, Aetna, Comcast, and Viacom. Skyhigh and its competitors, companies like Netskope and Bitglass, are benefitting from a growing enterprise cloud market as enterprises increasingly outsource infrastructure and applications to cloud service providers and want to have centralized security and controls over all cloud services deployed across the enterprise. Skyhigh automatically detects all cloud services used by an organization, analyzes them for abnormal behavior, and enforces security and usage policies. The latest round brings Skyhigh’s total money raised to $105.5 million. New investor, Thomvest Ventures, led the round, and previous investors, Sequoia Capital and Greylock Partners, joined. Stock issued in the round was 9 percent lower than in its previous 2014 round, leading to its characterization as a “down round.” The Wall Street Journal pointed to the round as the latest example in a string of recent down rounds by tech startups. Skyhigh CEO Rajiv Gupta, however, said Series D was not a down round, since the company’s overall value has gone up. Individual share price went down because the volume of shares was higher, due to more generous stock options the company has been issuing its employees, he told Fortune. “We just closed the biggest quarter in Skyhigh’s history and are thrilled to be raising money from top tier investors in an up round,” Gupta told the Journal. (Comment on this)
11:03p	Microsoft Ignite: Microsoft Chasing What’s Next After Mobile First, Cloud First Brought to you by IT Pro One of the things that struck me watching today’s Ignite keynote announcement was what wasn’t said, at least not immediately: That Microsoft is a mobile-first, cloud-first company. The company still definitely is: They boasted that they’re one of the biggest app publishers on Android and iOS and showcased endless datapoints showing Azure’s successes, including noting that it now has 34 regions, twice the number of AWS. In fact, as my colleague at SuperSite noted, it was a non-Microsoft speaker that first used the phrase. Instead, Microsoft executives oriented their sessions around three key areas: Security, intelligence, and productivity. And while that’s not as catchy or as clear as Satya Nadella’s mobile-first, cloud-first manifesto that has guided much of Microsoft’s reinvention the past few years, I think it could be even more profound when it takes shape. Security is a no-brainer: The industry is beyond a mess when it comes to keeping data safe and secure, and Microsoft’s push to the cloud benefits from their unique credibility with both IT departments and consumers, and Microsoft has obviously chosen Windows 10 and Office 365 as an opportunity to be both more aggressive in pushing security updates and best practices along with getting organizations more comfortable with the cloud (there was a oddly moving video mid-keynote where an IT professional said that moving to cloud was what finally earned him his company’s respect). But the other areas — productivity and intelligence — take advantage of the core strengths that Microsoft has been building up in machine learning with Azure, and look to take advantage of more advanced automation and intelligence where other competitors seriously lag. Take, for example, the new PowerPoint feature QuickStarter. Soon, instead of sorting through templates or stressing over an original design, Microsoft lets users type in a few words, and then it creates a bare-bones template populated with Creative Common images, suggested key points, and a carefully paced flow, all pulled together through an automated process with an end-product that would put the average office presentation to shame. That kind of product requires a wide-array of expertise, the right productivity software, and a lot of data, all of which Microsoft has a very good claim over at the moment. It takes the promise of the current wave of digital assistants, but then does something genuinely useful beyond being a new interface. (I wouldn’t be surprised if, in a year or two, you can use Cortana to start or even pull together that entire presentation, but it all comes back to Microsoft building off homegrown advantages that let its products actually do the work.) Microsoft whiffed on mobile, and I think the company has done a lot of great work trying to make up for that. But more importantly, they’re now clearly focused on what’s next beyond mobile, and all signs point to a strong head start. This first ran at http://windowsitpro.com/ignite/microsoft-ignite-microsoft-chasing-whats-next-after-mobile-first-cloud-first (Comment on this)

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