Tuesday, October 11th, 2016

Time	Event
12:29a	Report: Silver Lake Mulling Sale of Vantage Data Centers Silver Lake Partners, the private equity firm that has backed Vantage Data Centers, one of Silicon Valley’s biggest data center providers, since its founding in 2010, is considering selling the company, Reuters reported, citing anonymous sources. The news comes amid a boom in all top US data center markets, Silicon Valley included. As cloud and internet services giants beef up infrastructure capacity, data center providers like Vantage are racing to build new capacity to satisfy their hunger for server space. Vantage has data center campuses in Santa Clara, California, and Quincy, Washington, but most of its recent expansion efforts have been focused on Santa Clara. So far this year, the company raised $300 million to fund construction and announced plans to add 21MW of capacity at its original Santa Clara location (home to a former Intel data center campus) and build a whole new 51MW campus on a nine-acre site about two miles away. Read more: How Vantage Data Centers ‘Created Land’ For a 51 MW Santa Clara Expansion Campus Silver Lake has retained Royal Bank of Canada and DH Capital to run an auction for Vantage, but the private equity firm may still decide against selling the data center company, sources told Reuters. (Comment on this)
12:00p	Cloud Fuels Unprecedented Data Center Boom in Northern Virginia North America represents 44 percent of the global data center market, and Northern Virginia’s Data Center Alley is the region’s crown jewel. A convergence of fiber networks, undersea cables, and its many existing data centers continue to attract a disproportionately large share of all data center construction and leasing leasing activity to the area, and today, the market is only getting hotter. Allen Tucker, managing director at the commercial real estate firm Jones Lang LaSalle, said a confluence of recent events has created a dramatic leap in leasing activity year-over-year in Northern Virginia. On the supply side, available land with favorable zoning and entitlements, sales tax incentives at the state level, and a proactive posture by Dominion Virginia Electric have all contributed to attractive pricing and record data center leasing. On the demand side, JLL sees expansion of cloud demand and managed services, growing at 61.3 percent and 16.6 percent annual rates, respectively, over the next five years. Across the US, Tucker foresees that newly constructed multi-tenant data center space will grow at an average 12.2 percent annually through 2018. Northern Virginia, he believes, will remain uniquely positioned to capture its share of the leasing bounty. Record Leasing Continues The Northern Virginia data center market had already notched 78MW of data center space by this year’s mid-point, eclipsing the record 62.2MW absorbed over the entirety of 2015, according to JLL. The average annual absorption since 2007 in NoVA has been 47MW of wholesale space, excluding power based building shells. Read More: Report: Data Center Market Trends ‘Strong Demand, Smart Growth’ Fast-forward to September, and JLL pegs NoVA leasing at 105MW year-to-date, with another 40MW under negotiation and expected to be signed between now and the end of the year. That estimate doesn’t include Amazon, which takes so much data center capacity, it merits its own category. PBB, or Power Base Building space, on the absorption chart below primarily reflects Amazon’s data center leasing: Source: Allen Tucker, JLL Amazon is responsible for about 90MW of PBB space, while the 105MW of multitenant data center capacity leased as of last month consisted of 17 transactions, including leases by Microsoft, Oracle, IBM Softlayer, Electronic Arts, World Bank, and Apple. Read More: Report: Microsoft and Oracle Gobble Up Data Center Space in Virginia Tucker explained that the 40MW expected to be signed by year-end 2016 reflected budgeted IT demand, mainly from enterprise users. He expects to see a flurry of activity after the November presidential election. Supply and Demand Remains Healthy The overall data center market in the region is vast, with over 8.4 million square feet of data center space and 671MW of power total. However, vacancy rates remain at 5.2 percent, according to JLL. The business-friendly environment in Virginia has attracted a bevy of publicly traded and privately owned data center operators. In addition to the “usual suspects,” which Tucker described as the Big 7 REITs (the six data center REITs and Corporate Office Property Trust), favorable market dynamics have attracted plenty of other large players: Source: Jones Lang LaSalle – Allen Tucker It’s worth noting that some analysts do include Iron Mountain among the big data center REITs, but the company’s business is much more diversified than its rivals in the data center market. Leasing Power Northern Virginia’s electric utility, Dominion Virginia Power, continues to make significant investments in infrastructure to provide substations, transmission lines, and a robust infrastructure design, while actually lowering the rate that it charges large data center customers. The current $0.52 per kWh rate in NoVA ranks it as one of the lowest-cost utility markets in the US. It is 40 percent lower than the $0.87 per kWh national average for the largest data center markets. These rates, combined with sales tax incentives for data center equipment at the state level, make the total cost of ownership for data centers in Northern Virginia quite compelling for large compute and storage customers. The Virginia sales-tax exemption program originally became effective in 2012 and was originally scheduled to expire in 2020. In March 2016, the state legislature granted a 15-year extension, which prolonged the program until 2035. While economic development officials often support data center projects, since they create substantial and steady tax revenue streams without placing much stress on municipal infrastructure and services, not all residents in Virginia are happy about the data center boom. Investor Takeaway The conundrum facing investors and management teams is trying to determine what the “new normal” will be for leasing demand in Northern Virginia. Tucker referred to the current leasing barrage in 2016 as being a “Mickey Mantle” year. In addition to regional and international connectivity, this market has an economic advantage over New York and Northern New Jersey when it comes to attracting large-scale financial sector deployments and has a large defense and contractor component. However, it appears that monitoring the demand by the hyperscale cloud providers in 2017 and beyond will be essential for investors trying to model earnings growth of the publicly traded REITs. Discussions by REIT management on upcoming Q3 2016 earnings calls are likely to provide the best opportunity for investors to glean information regarding their leasing pipeline. (Comment on this)
4:25p	The Impacts of Cooling and Energy Efficiency on Today’s Data Center Design Phillip Koblence is COO of NYI. It’s 2016, yet IT experts are still challenged with how to effectively and efficiently cool their data center. The cooling process accounts for 40 percent of all power consumed by data centers, so this question is top of mind for operators. Ensuring optimal cooling in a data center not only lowers operational expenditure, but reduces the strain on equipment cooling mechanisms, extending the lifespan of the hardware; and freeing up power for IT equipment, increasing equipment uptime. The decision to invest in cooling infrastructure is easy, however choosing the method with which you regulate temperature within the data center can be more challenging. Cooling and efficiency strategies are constantly evolving, with companies like Microsoft going so far as to drop a self-contained data center into the ocean. However, you do not need to plunge your equipment into the sea or move to the Arctic to keep yours cool. Hot-aisle containment (HAC) and cold-aisle containment (CAC) are the primary method in which leading businesses are reducing the use of energy and optimizing equipment performance within the data center. This proven and highly effective methodology of cooling has emerged as a new best practice within the industry. Cooling and Energy Efficiency Legacy data centers pose a challenge to containment due to the full separation of the supply and return airflow, which has evolved over time with the design of the room and equipment footprint. In these situations custom containment solutions are often required to address the issues plaguing the existing footprint, such as computer rows without opposing cold or hot aisles and isolated equipment that is not configured in a hot/cold aisle format. HAC and CAC configurations within a data center ensure optimal efficiency by separating the cold supply airflow from the hot equipment exhaust air. By minimizing the mixing of hot and cold air, a uniform and predictable supply temperature is created and distributed to the intake of IT equipment. This results in a warmer, drier return air to the AC coil. By increasing air efficiencies, containment systems increase uptimes, extend hardware life and result in valuable cost and energy savings. Furthermore, HAC and CAC containment systems are known for their ease of installation and limit the impact on existing infrastructure within a facility, which is important given floor space in a data center can be expensive. That said, it is important to understand the source of the supply airflow and return airflow when designing a HAC or CAC system. The room and equipment layout should dictate the design of the containment, dictating whether the aisle will be cold or hot. For instance, rooms with drop ceiling voids can be used to return air directly back to the CRAC without mixing with the room’s ambient airflow. Containing Energy and Cost Containment effectively reduces the power consumption of a data center and can result in significant cost benefits. The benefits can always be measured at the cooling intake of the servers. Before and after measurements show that the intake temperate can drop 10°. Additionally, return air temperatures increase 10°, which in turn increases the CRAC cooling capacity by over 50 percent. The cost savings can be calculated directly from temperature within the data center. For every 1°F in temperature rise, the gain is 2 percent in cost savings for cooling. Additionally, containment allows data center providers to use the top 15 percent of the rack that is often left unpopulated due to inconsistent air supply temperatures, which results in an immediate savings that can run into the millions. Before and after computational fluid dynamics (CFD) models can assist customers in predicting their energy savings and building an ROI model that improves the value of the containment investment. 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. (Comment on this)
7:42p	Space Laser Network to Beam Bandwidth into Equinix Data Centers Laser Light Communications, one of the first companies to attempt to commercialize network connectivity via laser beams from satellites orbiting the Earth, has chosen Equinix data centers to act as the first hubs where companies will be able to access the hybrid space-terrestrial network it is planning to launch, the companies announced Tuesday. The world’s bandwidth needs continue to skyrocket, but not every place on the planet is easily accessible for construction of terrestrial networks, prompting some companies to invest in commercializing connectivity via optical signals sent through the air, or, in Laser Light’s case, through the atmosphere. The technology, called free-space optical communication, was born out of decades of research by government space and defense agencies in the US, Europe, and Japan, according to Laser Light. It is capable of transmitting a lot more bandwidth than radio-based satellite tech in use today. Laser Light’s plan is to beam IP network bandwidth from eight to 12 Medium Earth Orbit satellites, forming what the company dubbed the HALO constellation. The satellites will transmit data to each other via 200Gbps optical crosslinks and send data to ground sites via 100Gbps links. The intra-satellite speed is about 100 times faster than radio links can offer. Equinix’s DC11 data center in Ashburn, Virginia, will be the first such ground site. Laser Light expects to add more Points of Presence in Equinix facilities in South America, Europe, Middle East, and Asia Pacific in the future. A hallway inside Equinix’s DC11 data center in Ashburn, Virginia (Photo: Equinix) It is crucial for the space network to have many ground sites to beam connectivity into because of interference caused by clouds and optical turbulence, according to a 2014 presentation by Laser Light at a telco conference in Honolulu. “Multiple geographically diverse ground sites are required to mitigate the impact of atmospherics,” one of the slides read. In other words, if weather prevents one site from getting a clear satellite signal, the signal is picked up by a backup site. The space network will augment terrestrial networks, providing not only more bandwidth but also backup links in cases of terrestrial network failures, such as broken submarine cables. Laser Light’s HALO Communications optical satellite system architecture. (Source: Laser Light Communications presentation at Pacific Telecommunications Conference in January 2014 in Honolulu) Eventually, Laser Light, a subsidiary of Pegasus Global Holdings, expects to cover most of the world’s interconnection hubs, such as carrier hotels and submarine cable landing stations. The deal with Equinix will not only enable the company to distribute the terrestrial portion of its network through the global footprint of the world’s largest data center provider, it will enable it to sell its services, brand SpaceCable, to carriers, enterprises, and government agencies that host equipment in Equinix facilities. (Comment on this)
10:25p	Report: BC Partners Lead Bidder on CenturyLink Data Centers European investment firm BC Partners is currently leading among companies bidding on the CenturyLink data center portfolio the Monroe, Louisiana-based telco has been shopping around since last year, Reuters reported, citing anonymous sources. CenturyLink hopes to get more than $2.5 billion for the portfolio of properties it started building with the acquisition of data center provider Savvis in 2011, also for $2.5 billion. The company has substantially grown the portfolio since the acquisition by both expanding in existing locations and adding new ones. The news comes almost one week after a report that another major US telco, Verizon Communications, is nearing a deal to sell its data center portfolio, the bulk of which it also gained through an acquisition of a data center provider in 2011. Equinix is reportedly the most likely buyer of Verizon’s $3.5 billion portfolio of data centers, consisting primarily of facilities gained in the telco’s $1.4 billion acquisition of Terremark. See also: CenturyLink Data Center Team Keeps Eye on the Ball Despite Uncertain Future Earlier this week, a report surfaced that another data center provider, albeit a much smaller one, may soon change hands as well. Silver Lake Partners, the private equity firm that owns Santa Clara, California-based Vantage Data Centers, has reportedly hired Royal Bank of Canada and DH capital to explore the possibility of offloading Vantage through an auction. A private equity consortium, comprising of GTCR, Charlesbank Capital Partners, Berkshire Partners, and Stonepeak Infrastructure Partners, which was pursuing the CenturyLink assets earlier, broke apart, according to Reuters. Sources told the news wire service that CenturyLink’s attempt to divest the data centers has been complicated by the fact that it leases many of its facilities from Digital Realty Trust, a San Francisco-based REIT and one of the world’s largest data center providers. CenturyLink is the REIT’s second-biggest tenant by annualized rent, leasing about 2.3 million square feet across 51 locations, according to Digital’s second-quarter 2016 investor presentation. Last year, AT&T changed its mind about selling its multi-billion-dollar data center portfolio for the same reason, according to Reuters. AT&T is Digital’s fifth-largest tenant, leasing space in 44 locations. BC specializes in buyouts, focusing on large businesses primarily in Europe and “selectively” in North America. The company has done 91 acquisitions since its inception in 1986 and is currently advising funds totaling more than €12 billion. BC did not respond to a request for comment in time for publication. A CenturyLink spokesperson sent us a statement saying: As we stated in our second-quarter earnings call in early August, our strategic review process continues to progress well and we expect to complete the process by the end of this year. We are exploring a full range of options including, but not limited to, a partnership or joint venture, a sale of all or a portion of the data centers, as well as keeping these assets as part of CenturyLink’s portfolio. During this process, we remain focused on operating our data centers to provide our customers with the high-quality service and support they deserve. Read more: Why CenturyLink Doesn’t Want to Own Data Centers (Comment on this)
10:52p	Rackspace Going Public Again a ‘Likely’ Scenario, Co-Founder Says Brought to You by Talkin’ Cloud Rackspace co-founder and chairman Graham Weston thinks that the San Antonio-based cloud computing company could go public again, and it could happen as soon as the next five to seven years. In an interview with the San Antonio Express-News, Weston said that Rackspace will “likely” go public again after going private in August in a $4.3 billion deal with Apollo Global Management. Weston also said that Apollo was the “high bidder for a reason” and spent a lot of time “studying Rackspace and the opportunity of Rackspace’s future.” Part of that opportunity, according to Weston, has a lot to do with the value and the differentiation that Rackspace’s professional sales team brings to the table. “I think so many of our competitors didn’t believe in having live people to help customers make decisions and decide what to buy,” he said in the interview. “These systems are new, they’re still evolving. Amazon last year launched 750 different features. How do customers find their way through that number of features to figure out what to do?” In an interview in August after the deal with Apollo was announced, Rackspace CTO John Engates told Talkin’ Cloud that the investment firm sees a huge opportunity in the transition from on-premises data centers to the cloud. Read the full interview with Rackspace co-founder Weston at the San Antonio Express-News. This first ran at http://talkincloud.com/iaas/rackspace-going-public-again-likely-scenario-co-founder-says (Comment on this)
10:57p	Oracle Taps Verizon for Secure Cloud Connections Brought to You by Talkin’ Cloud Oracle is helping enterprises move workloads to the Oracle Cloud securely through a new partnership with Verizon. According to an announcement on Tuesday, Verizon Secure Cloud Interconnect services for Oracle FastConnect enable customers to connect to Oracle Cloud data center sites across the U.S. and Europe. Verizon Secure Cloud Interconnect is part of Oracle’s portfolio of Fast Connect services which allow customers to establish secure high-speed private MPLS connections between existing infrastructure and Oracle Cloud resources. “With Verizon’s leading Secure Cloud Interconnect service, Oracle customers can benefit from the latest in networking technology as they continually groom their networks to handle the demands of their business,” Diby Malakar, vice president of product management at Oracle said in a statement. “We are providing multiple ways for our customers to deploy their applications in the way that makes good business sense via what is arguably one of the industry’s most reliable networking platforms.” With Oracle, Verizon Secure Cloud Interconnect now offers access to nine cloud providers, including AWS, Google, and IBM Cloud SoftLayer. “Verizon Secure Cloud Interconnect for Oracle FastConnect allows users to connect to applications simply, securely and reliably,” Shawn Hakl, vice president of enterprise networking and innovation at Verizon said. “With SDN at the heart of our Secure Cloud Interconnect solution, Oracle customers will find it can deliver an unbeatable combination of performance, control and efficiency to enable their digital transformation.” This first ran at http://talkincloud.com/iaas/oracle-taps-verizon-secure-cloud-connections (Comment on this)

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