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Monday, October 3rd, 2016
| Time | Event |
| 12:00p | With Microsoft Data Center Deal, EdgeConneX Takes on Wholesale Giants While EdgeConneX’s primary business has been operating smaller data centers in edge data center markets to help content and cloud companies optimize delivery of their services to end users, a recent Microsoft data center deal signals that the company is looking beyond its core edge-focused model as well. The Comcast Ventures-backed data center provider appears to be throwing its hat into the ring to compete for large wholesale cloud deals with the likes of Digital Realty Trust and DuPont Fabros Technology. Access to capital and existing C-suite relationships give the company leverage in this market, which is currently seeing unprecedented growth fueled by the expansion of cloud data center capacity by tech giants, including Microsoft, Amazon, and Google, among others. Hyperscale Cloud Anchor?EdgeConneX recently bought a large industrial building in Elk Grove Village, just outside of Chicago, and secured the necessary power to convert it into a data center. Crain’s Chicago Business reported details of the real estate transaction, citing public records: The 132,000-square foot building was built in 2005 and purchased from industrial REIT Prologis, Inc. for $22.8 million, or just under $175 per square foot. But there appears to be far more to this story. According to a source familiar with the Elk Grove acquisition, the facility at 1800 Nicholas Road is slated to become a 25-30MW build-to-suit data center leased to Microsoft Corporation. EdgeConneX has told Data Center Knowledge that it will only enter a new market if it has an anchor tenant for it. This business model insures each new data center will generate cash flow on day one. The company’s chief commercial officer, Clint Heiden, said in a May interview with Telecom Ramblings:
As of this writing, EdgeConneX has not responded to a request for comment. Large Scale OverseasChicago is not the company’s first foray into the large-scale data center market. It began by constructing a large-scale project in European data hub Amsterdam, adjacent to the large Interxion campus near Schiphol airport. There are also mega-scale EdgeConneX projects underway in the Dublin and London markets. Read more: Inside EdgeConneX’s Massive European Data Center Buildout It has previously said that it intends to roll out smaller “edge” data centers in markets across Europe, initially to support the efforts of cable and media giant Liberty Global, which is also an EdgeConneX investor. The same source that told us about the Elk Grove transaction said Microsoft is also the anchor at EdgeConneX data centers in Amsterdam and Dublin. In fact, all three mega-scale deals may have been negotiated at the same time. Heiden had stated previously that EdgeConneX is bringing one of the top two mega-scale cloud providers into its Amsterdam facility, and its Dublin project is near an existing Microsoft data center at Grange Castle Business Park. In addition to Microsoft, cloud giants Amazon, Apple, Google, and Facebook are all active in the Dublin market, but Microsoft is the world’s second-largest cloud provider, after Amazon. Focus on the EdgeBeginning with one leased facility outside of Houston, EdgeConneX has quickly built about two dozen data center facilities across secondary markets over the past two years. These data centers are typically 2MW, designed with capacity to expand by another 2MW or more, depending upon the market.
Source: EdgeConneX – August 2016 These facilities are usually anchored by cable companies and content providers, including Comcast, and other investors in EdgeConneX, such as Cox and Akamai. There are also many customers who are not investors, including networks and IT service providers. These facilities are also designed as speedy and secure access points to public cloud providers for enterprise customers. EdgeConneX leases colocation space to wholesale users who offer products and services to enterprise customers. Read More: Can EdgeConneX Disrupt Incumbent Data Center Providers? Unlike many private data center operators, EdgeConneX has enough financial horsepower to expand at a rapid pace and own the vast majority of its facilities. In fact, the company recently purchased its original Katy, Texas, data center (outside of Houston) from former landlord StratITsphere. As I wrote in an earlier piece, “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.” There can no longer be any doubt that it is a disruptive competitor. The immediate question now becomes: Will the Chicago project be a one-off, or is it the beginning of a strategic wholesale initiative in top US markets? |
| 4:36p | 18 Years in the Making: IANA Transition Moves Forward as Planned, Despite Republican Pushback  Brought to You by The WHIR Despite last ditch efforts by Senator Ted Cruz (R-Texas) and others to block the transfer of Internet Assigned Numbers Authority (IANA) functions to ICANN, over the weekend the contract between ICANN and the U.S. Department of Commerce expired, effectively handing over IANA functions to ICANN. “This transition was envisioned 18 years ago, yet it was the tireless work of the global Internet community, which drafted the final proposal, that made this a reality,” ICANN Board Chair Stephen D. Crocker said in a statement. “This community validated the multistakeholder model of Internet governance. It has shown that a governance model defined by the inclusion of all voices, including business, academics, technical experts, civil society, governments and many others is the best way to assure that the Internet of tomorrow remains as free, open and accessible as the Internet of today.” The Internet Governance Coalition, in a statement released on Monday, praised the IANA stewardship transition but said that “there is still much work that needs to be done to ensure the accountability and transparency of ICANN.” The Coalition includes members such as Comcast, GoDaddy, and Microsoft. “The transition of IANA from the U.S. government to the global internet community is the result of years of hard work and collaboration and validates the multi-stakeholder governance model. Thanks to the dedicated efforts of many people and organizations from across the community, a plan has been implemented that includes strong accountability measures and upholds the bottom-up approach that embodies the very nature of the open internet we experience today. Although this is an important step in the transition process, there is still much work that needs to be done to ensure the accountability and transparency of ICANN. We look forward to working with the multi-stakeholder community on these ongoing efforts.” You can read more about the IANA stewardship transition on the ICANN blog. This first ran at http://www.thewhir.com/web-hosting-news/1 |
| 4:59p | Google Must Prove It’s Making Headway in the Cloud (Bloomberg Gadfly) — If horror-film villain Freddy Krueger had threatened terror for nine movies but never followed through with evil acts, eventually movie-goers would have stopped being scared of him. Google is at risk of becoming that neutered Freddy Krueger. For years, Google’s cloud software for businesses has been seen as a scary, looming threat to Amazon Web Services (AWS) and Microsoft. It has Google Apps for Work, a competitor to Microsoft Office, and a relatively newer cloud business vying against AWS and Microsoft to take over back-end computing chores. Executives have said they expect Google’s cloud software to make more money than its ad products in 2020. To put that ambition in context, Google’s ad products generated $67 billion in revenue last year. Google on Thursday splashily rolled out a revamped lineup of cloud technologies. It seemed to acknowledge it needs to do more to get corporations to try and buy its software. But Google and its respected cloud boss Diane Greene can’t for much longer simply be a theoretical danger to Amazon and Microsoft. They need to show progress by disclosing sizable revenue or other proof they’re making headway. So far, the number of press clippings about the cloud operations (including from me) far exceeds actual revenue. More on Thursday’s announcement: Google Will Lend You Its Own Engineers to Keep Your Cloud Apps Running Smoothly Read more: Amazon, Google Detail Next Round of Cloud Data Center Launches It’s now been almost a year since Google hired Greene, a business-software veteran who founded VMware, and consolidated its business software products under her watch. Greene — who knew the company well as a Google director — didn’t come cheap. To bring her aboard, Google parent company Alphabet paid $380 million to buy bebop, a mysterious startup Greene had been developing. Including that purchase, five of Alphabet’s 12 announced acquisitions since November have been aimed at helping Google’s cloud business, according to an analysis of Bloomberg data. That’s a large share, considering the cloud business is an unknown but likely immaterial chunk of Alphabet’s $80 billion in annual revenue. Bebop and a more recent acquisition of cloud-software firm Apigee also were Google’s two biggest deals since the 2014 purchase of Dropcam. See also: What Cloud and AI Do and Don’t Mean for Google’s Data Center Strategy Those are all signs of commitment. Google also has oodles of money at its disposal, and the best computing network in the world. Those assets should give it a big leg up in business software. But is there progress? It’s hard to know. The company doesn’t disclose finances for Greene’s operation. It has announced customer wins, although it’s not clear those attention-grabbing customers are paying real money to use Google’s software. Apps for Work and the cloud outsourcing products could be quietly huge, but it’s not likely. Apps has never made much headway beyond small and medium-sized companies. Google’s AWS-like business is growing quickly but commands something like 5 percent market share, with Amazon taking the vast bulk of the rest, according to Synergy Research. At a recent Goldman Sachs event, News Corp’s head of technology predicted AWS “will be incredibly hard to catch.” AWS’s annual revenue is about $10 billion and shows few signs of slowing down. There is plenty of room for Google to succeed, even if it doesn’t kill Microsoft or Amazon. The three companies aren’t so much competing as they are chipping away together at the more than 90 percent of information technology budgets spent on old-fashioned software and hardware. Still, it’s no coincidence that very few successful consumer technology companies like Google also do well selling tech to companies. Businesses make for lucrative but demanding customers. They want account reps to yell at when things go wrong. They sometimes ask for technology changes that seem idiotic and self-defeating. They take forever to make decisions and want to cut their bills. Tech companies wouldn’t put up with those whiny jerks, except those whiny jerks spend $2 trillion a year on technology. If Google wants to grab a bigger piece of that corporate tech-spending prize, the company needs to show it has more than smarts, ambition and some scary Krueger slasher nails. It needs to show results. This column does not necessarily reflect the opinion of Bloomberg LP, its owners, Data Center Knowledge, and Penton. |
| 6:23p | Piller Buys Cash-Strapped Active Power Piller, subsidiary of the British engineering and industrial giant Langley Holdings, has agreed to acquire Active Power, the US-based maker of electrical equipment, including to a large extent data center power infrastructure. Active Power is known for its flywheel-based UPS products. The deal is a lifebuoy for Active Power, which has been having difficulty raising capital to sustain its operations. In a statement, Mark Ascolese, the Austin-based company’s CEO, blamed the situation on market conditions. “The current capital market environment is very challenging, making it difficult to raise capital through traditional equity financing to support our current operations,” he said. “Langley is a proven, long-term investor and this deal enables us to avoid a costly liquidation process or further funding operations given our diminished cash balance.” Terms of the transaction were not disclosed. The deal is another sign of a shake-up taking place in the data center infrastructure market. Last year, the French electrical equipment vendor Legrand acquired Raritan, a New Jersey-based data center infrastructure vendor. This year, Emerson Electric spun off Emerson Network Power, its data center equipment subsidiary as part of a program to divest underperforming businesses. Active Power has differentiated in the data center power equipment market with its flywheel-based energy storage technology for UPS systems. Flywheels are more environmentally friendly than led-acid batteries, the most commonly used UPS energy storage technology, but provide shorter runtime, which means a facility’s backup power systems have less time to fire up generators and stabilize in case of a utility outage. While long enough for many data center operators, some of them – namely hyperscale cloud data center operators whose infrastructure investments are fueling the current data center market boom – don’t accept the 15 seconds of runtime Active Power’s previous-generation products offered. To expand its market opportunity, the company’s engineers have in recent years focused on extending runtime, first by combining flywheels with batteries and more recently by spinning flywheels faster. Read more: Active Power Aims at Cloud Data Centers with Longer UPS Runtime In addition to UPS systems, Active Power sells containerized electrical infrastructure solutions for data centers and other critical applications. Piller, whom Langley acquired in 2004, also sells power protection equipment for mission-critical facilities, including data centers, airports, broadcasting buildings, and government departments. The century-old company is headquartered in Osterode, Germany, and has subsidiaries of its own elsewhere in Europe, as well as in the Americas, and Asia Pacific. Langley, Piller’s privately-owned parent company, made $1.1 billion in revenue in 2015. In a statement, Langley board member, Bernard Langley, said the company planned to keep Active Power’s current US operations in place. “The addition of Active Power’s differentiated flywheel UPS technology to Piller’s power protection portfolio will further strengthen its position in the market, creating more compelling alternatives to traditional UPS offerings for mission critical applications,” he said. “We plan to maintain Active Power’s manufacturing operations in Austin, further expanding our operating footprint in the United States with this acquisition.” |
| 10:56p | Microsoft Doubled Cloud Data Center Capacity in Europe in Past Year Continuing to mount its offensive in the cloud services market against Amazon Web Services, Microsoft announced today plans to launch multiple cloud data centers in France, starting next year. AWS said it was planning to do the same last week. In the same announcement, Microsoft said it has invested about $3 billion in building cloud data centers in Europe to date. The company has doubled its European data center capacity over the past year alone, its CEO Satya Nadella said while speaking to an audience at a company event in Dublin on Monday. “We’re building it out as a global hyperscale cloud,” he said about strategy behind Microsoft’s ongoing data center expansion around the world. “We now have over 30 regions across all parts of the globe, making sure that there’s access to the cloud.” Microsoft has been pursuing physical data center capacity to support cloud services in as many locations as possible as a key differentiator in the cutthroat market, where AWS dominates by revenue and Microsoft comes a distant second. Google, which has yet to disclose its cloud revenue (analysts estimate it is far behind Microsoft’s) is also vying for a leading position in the market and investing billions of dollars in cloud data center construction around the world. Read more: Amazon, Google Detail Next Round of Cloud Data Center Launches Today, Microsoft’s 30 operating cloud availability regions make it a leader in terms of the number of locations its customers can chose to host their cloud applications and data in. The company has announced six more that are in progress. Its European cloud data center footprint now consists of facilities in the UK; Germany, where it is using T-Systems as both data center provider and “data trustee;” the Netherlands; Ireland; Austria; and Finland. Microsoft’s cloud infrastructure isn’t limited to the 30 locations where it has big dedicated data centers or data center campuses. It includes an extensive worldwide CDN, or Content Delivery Network, comprised of smaller points of presence provided by Verizon and Akamai. Nadella suggested the company was either already beefing up or planning to beef up capacity in many of those edge locations, primarily in response to growth in the number of connected devices, collectively referred to as the Internet of Things. “We are building out our servers as the edge of the cloud,” he said. “Especially with the prevalence of IoT, as more data is generated at the edge, you need more compute and storage at the edge. You cannot just have a throwback to just centralized computing anymore. You need true distributed computing fabric.” One of the companies helping Microsoft and its rivals expand the edges of their clouds is data center provider EdgeConneX, which specializes in building edge data centers but which recently signed a deal to deliver large-scale data centers for Microsoft in the US and in Europe, a person familiar with the deal told Data Center Knowledge. Backed by major telcos, EdgeConneX has already built an extensive edge data center network across the US and planted the seeds for something similar in Europe. The EdgeConneX data center in Portland, for example, provides direct network connectivity to AWS and, through a partnership with connectivity services company Megaport, to Microsoft Azure. Many other data center providers, such as Equinix, CoreSite, and Digital Realty Trust, have also made direct access to major cloud providers from their facilities an important part of their business strategies. |
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