Friday, October 28th, 2016

Time	Event
12:00p	Oracle Has Made Best, Final Offer for NetSuite, CEO Hurd Says (Bloomberg) — Oracle Corp. Chief Executive Officer Mark Hurd said the company has made its “best and final offer” to buy NetSuite Inc. and will walk away if investors don’t endorse the deal because they want a higher price. “We think we’ve made a fair offer,” Hurd said in a televised interview on CNBC. “It’s our best and final offer. We’ll abide by what the shareholders say. If the shareholders don’t want to tender their shares, we’ll move on to other things.” Oracle earlier this month extended the deadline to Nov. 4 for NetSuite shareholders to approve the roughly $9 billion deal that puts the per-share price at $109. At the time, the company had just 22 percent of the stock needed to complete the transaction, which was announced in July. Oracle responded after at least one NetSuite shareholder expressed concerns that the deal undervalued the cloud software maker. The probability of Oracle closing the deal is now rated at 68 percent, down from about 75 percent earlier this week, according to data compiled by Bloomberg. After trading around Oracle’s offer price for several weeks, NetSuite shares have fallen this month by 10 percent. The stock fell 1.4 percent on Wednesday to $99.35. Oracle shares slipped less than 1 percent to $38.31. Read more: Larry Ellison Accepts the Dare: Oracle Will Purchase NetSuite (Comment on this)
5:17p	State Department Migrates From Leased to Modular Data Center The US State Department has traded leased data center space for a modular data center and so far, the division chief who oversees the agency’s operations is happy with the results, preparing to buy two more modules. The agency moved data from an 11,000-square foot leased facility into an 800-square foot modular data center, Melonie Parker-Hill, division chief for the department’s Enterprise Operations Center, told a conference in Washington, DC, Thursday, according to a report by MeriTalk. After receiving lots of attention several years ago, modular data centers of the kind State Department has deployed have moved to the background, but according to vendors who sell them, companies like Dell Technologies, Schneider Electric, and Emerson Network Power (soon to be rebranded as Vertiv), demand for them remains healthy. “We’ve shipped over 250 modular data centers in the last six years,” Jyeh Gan, Dell’s director of data center scalable solutions, told Data Center Knowledge in an interview in June. The space is still very active but it has evolved to where there are several distinct types of modular data centers, he explained. They can be containerized modules, as in shipping containers or similar boxes with IT racks, power, and cooling infrastructure inside; they can be modules that come together to form a larger data center building; they can also be dedicated power or cooling infrastructure modules. See also: Microsoft Moves Away from Data Center Containers The State Department mandated that it start using data centers on government-owned property two years ago, which is what prompted the switch to the modular data center approach, according to the report. The agency had to weigh the need to provide space for people versus space for IT when making the decision, Parker-Hill said. The move is part of the ongoing government-wide push to consolidate data centers and overhaul the way the federal government procures applications and IT infrastructure to support them. Outsourcing as many services as possible to commercial cloud providers is a big part of this effort. (Comment on this)
7:44p	EdgeConneX to Tap into Submarine Cables for Better Data Center Connectivity EdgeConneX’s strategy has revolved around solving lots of data center connectivity problems for customers, and the latest problem area the company is taking on is access to submarine cables. Moving your network traffic to and from submarine cable landing stations is notoriously difficult and expensive. Incumbent carrier consortia have been jealously guarding their role as gatekeepers to this crucial component of the internet and charging an arm and a leg for access. In recent years, however, their stranglehold on cross-continental connectivity has been weakening, with major end users getting increasingly involved in submarine cable builds to improve data center connectivity between the world’s regions they operate in. The trend started with the transpacific US-Japan Unity cable – funded in part by Google – which came online in 2010, and accelerated recently, with Google, Facebook, Microsoft, and Amazon making major investments in new submarine cable construction projects. Read more: Facebook and Google to Build Transpacific Submarine Cable Microsoft, Facebook Build Undersea Cable for Faster Internet Amazon’s Cloud Arm Makes Its First Big Submarine Cable Investment There has also been a push by some data center providers to make it easier for their customers to get access to existing landing stations from locations other than the main hubs they have traditionally accessed them from. On the East Coast, for example, New Jersey Fiber Exchange built a data center campus around a landing station in Manasquan, New Jersey, where companies can take colocation space and link to the landing station directly instead of going first to a big carrier hotel in Manhattan. In Puyallup, Washington, the Centeris Transpacific Hub, being built by Benaroya Company-backed Centeris, will provide access to submarine cable landing stations along the West Coast. EdgeConneX, which has focused on building data centers in underserved metros where content and cloud companies cache popular content and hand it off to last-mile ISPs for delivery to end users, is planning to make its San Diego data center a hub for accessing landing stations in Southern California, an alternative to carrier hotels in downtown Los Angeles. See also: With Microsoft Data Center Deal, EdgeConneX Takes On Wholesale Giants EdgeConneX will not be the one providing data center connectivity to the stations. That will be handled by its new partner, Electric Lightwave, which owns a fiber network that stretches across California and reaches into Oregon and Washington, as well as East, into Nevada and Arizona, and even includes a submarine cable system of its own in Southern California, although not a transoceanic one (see the map of Electric Lightwave’s network here). Vancouver, Washington-based Electric Lightwave was recently spun out from a company previously called Integra Telecom Holdings. Integra remained as a company focused on small and mid-size businesses. Traditionally, there has been two ways to get network traffic to Southern California landing stations: by paying for backhaul from one of the LA carrier hotels, such as One Wilshire, or by collocating directly at the stations, Don MacNeil, EdgeConneX CTO, explained in an interview with Data Center Knowledge. Both options, provided by incumbents like AT&T and Verizon, will cost you, but fees for the second one are astronomical, he said. Fees for the first option have come down somewhat, since projects like the Unity cable have started to pop up. Before Unity, at the peak, backhauling traffic from downtown LA to a landing station in San Luis Obispo could cost as much as it cost to move it from that landing station all the way to Asia, MacNeil said. The Unity project not only changed the carrier-consortium model, it also eliminated the two-step process of having to make one deal to take traffic from LA to the coast and another one to take it across the ocean. Unity made the process of moving traffic from US to Asia seamless for the customer, and the recent submarine cable construction projects have adopted a similar model, MacNeil said. EdgeConneX’s arrangement with Electric Lightwave doesn’t necessarily mean there will be a similar seamless option, but it does mean there will be an additional location outside of LA for access to landing stations and there will be a service provider other than incumbent carriers who will make it easier to move traffic to those landing stations from San Diego, MacNeil said. The data center provider will make money by selling colocation space to companies interested in tapping into Electric Lightwave’s network and by charging them cross-connect fees ($100 per cross-connect per month) to connect to Electric Lightwave’s equipment. This is the first of several such arrangements EdgeConneX is planning to make in multiple locations, including on the East Coast, in South America, and in Europe. “We have several proposals in flight to enable this similar construct for other cables,” MacNeil said. Today, the company has data centers in the US and Europe but not yet in South America. However, “we go where our customers need us, so we’re constantly assessing market opportunities,” he said. (Comment on this)
11:08p	Alphabet’s Big Bets Shift to Cloud, Away From Moonshots (Bloomberg) — Alphabet Inc. will focus its biggest bets next year on the staid world of business software and cloud computing, a marked departure from lofty “moonshots” of recent years, such as burrito-carrying drones and super-fast internet service. Alphabet was formed last year, in part, to insulate the lucrative online advertising business of its Google division from riskier, more capital-intensive projects now called Other Bets. The strategy was on display in the company’s third-quarter results, released on Thursday. The technology giant culled investment in Other Bets and doubled down on Google’s cloud and artificial-intelligence initiatives. Those investments will only accelerate next year, executives told analysts during a conference call that followed a strong third-quarter report, driven largely by growth in Google’s main digital ad business. The shares rose 1.1 percent to $825.98 at 9:44 a.m. in New York Friday. Google Chief Executive Officer Sundar Pichai said the cloud business is building a team focused on machine learning, an important branch of AI, and is hiring aggressively. “As we head into 2017,” he said on the earnings call, “I expect cloud to be one of our largest areas of investment and growth.” See also: Here’s Google’s Plan for Calming Enterprise Cloud Anxiety Cloud Growth Google is racing against Amazon.com Inc., Microsoft Corp. and other big technology companies to provide AI-powered services over the internet from remote data centers. The combination of these technologies may produce powerful and lucrative new products for consumers and business customers. Google doesn’t disclose the performance of its cloud business. But its “other revenue” line, which includes this unit along with the Google app store and hardware sales, saw revenue grow 39 percent to $2.4 billion in the third quarter. Chief Financial Officer Ruth Porat said the cloud division is “generating substantial revenue growth.” Cloud chief Diane Greene has helped win new corporate customers for its data-processing, analysis and storage services this year. Google is still behind market leader Amazon.com Inc. which posted a 55 percent gain in cloud revenue on Thursday, reaching $3.2 billion for the third quarter. However, Google executives’ rhetoric suggests Alphabet is plowing money into businesses capable of generating strong returns, and cutting investment from projects with more questionable financial potential. Porat also cautioned investors that marketing spending will rise in the fourth quarter to promote new Google hardware like its Pixel smartphones. Pichai and Porat have told investors before that Alphabet’s biggest bets are inside Google. Pichai oversees most of the company’s AI and virtual reality efforts, along with its costly data centers. Yet shout-outs for the cloud business came amid a pullback from Alphabet’s Other Bets, particularly its Google Fiber internet service and Nest connected-device subsidiary. Other Bets Trimmed The Other Bets segment, which also includes the autonomous vehicle project and two biotech research initiatives, lost $865 million in the third quarter, narrowing from a $980 million loss a year ago. Growth in capital expenditures on these businesses also slowed down from the prior two quarters. Porat stressed that Other Best are on a “longer time horizon,” but also said Alphabet is resetting some of them as they strive to find business models. Earlier in the week, the Fiber internet service announced a retreat from eight major proposed markets as well as jobs cuts and the loss of its top executive. That followed a string of high-level departures from Other Bets companies. “News that Fiber has been ‘paused’ should be welcomed by investors concerned over rising CapEx,” Daniel Salmon, an analyst at BMO Capital Markets, wrote in a note to investors. Porat said Fiber had made “important breakthroughs” in wireless technology, but is re-evaluating expansion plans. “We wanted to focus on the potential with these efforts before we re-accelerate deployment,” she said. Pichai shrugged off the executive exits. He also dismissed concern about other notable departures from Alphabet, including a team of veteran engineers from its self-driving car project, who were recently acquired by Uber, and Niantic Labs, the company behind the viral mobile game Pokemon Go. “We generally want to create a culture of innovation, and that’s what we focus on and it is fine that some of them happen outside,” he said. The CEO also noted “world-class products” from Alphabet that serve over one billion users. All of them come from Google. (Comment on this)

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