Tuesday, January 17th, 2017

Time	Event
5:51p	DataBank Buys C7, Enters Salt Lake City Data Center Market DataBank, a Dallas-based data center provider, has acquired C7 Data Centers, adding Salt Lake City to the list of secondary data center markets it operates in, the companies announced Tuesday. The deal is the latest example of the ongoing consolidation in the data center provider industry, both in tier-one and tier-two markets. As demand for data center capacity grows, driven largely by video streaming services, providers have been expanding scale and geographic reach via acquisition. Both companies are privately owned; terms of the transaction were not disclosed. DataBank is owned by Digital Bridge Holdings, which acquired it in 2016. C7’s flagship Granite Point I data center is in Bluffdale, a town outside of Salt Lake City that’s also home to the well-known enormous NSA data center. A Granite Point II facility is nearby. The company also operates a data center in downtown Salt Lake City, which is a key carrier interconnection facility for the area. C7’s three interconnected data centers in the Salt Lake City market will become DataBank’s first footprint in western US. To date the company has been operating in Minneapolis; Kansas City, Kansas; and Dallas, its home base. Not counting C7’s footprint, DataBank operates more than 250,000 square feet of data center space. (Comment on this)
6:15p	Time for Automated Infrastructure Management (AIM) in the Data Center Claudia Lehmann is Product Marketing Manager at FNT. Cloud, mobility, the Internet of Things, and Industry 4.0 equals the next round wave of computing known as the Internet of Everything. This means huge growth in the volume of data that is transmitted, processed, stored and managed. To accommodate this growth, automated data center management systems are essential for provisioning and managing a large number of assets and connections. All activities and changes must be logged for later reference and auditing. Unauthorized changes should automatically generate alarms, thus enabling rapid fault location and correction. To optimize data center infrastructure operation and precise capacity planning, the system needs to provide tailored reports and analysis. Targeting Network Problems More than half of network problems are caused by physical layer issues. Issues in documentation, patching and stranded switch ports are the most common. Accurate manual documentation requires a high effort and accuracy is only as good as the person preforming this laborious task. Patching mistakes cause 28% of downtime in data centers due to insufficient work order management and high failure rates during MAC processes. Due to insufficient documentation, many switch ports may even be unused. Put simply, data center operators don’t have a complete understanding of the available ports. The AIM Solution Comprehensive Automated Infrastructure Management (AIM) solutions can offer both software and hardware monitoring assistance. From a software perspective, the benefits include a centralized database with an entire physical infrastructure inventory, the capability to control changes based on work order management, graphical illustrations of networks, and better use of installed capacity. Hardware benefits range from real-time physical connectivity monitoring, automatic updates of databases to ensure 100% accuracy of documentation, automatic tracking of all changes, and alerts on any unsolicited changes for greater security. How AIM Could Work in Your Environment Implementing professional AIM systems isn’t as difficult as you might think. To optimize data center infrastructure operation and precise capacity planning, you should implement an interface between hardware monitoring assets and your asset management system. A few vendors already provide such standard interfaces to simplify the implementation during daily data center operation. Network managers can then manage their physical infrastructure to be fully automatic by retrofit with just a small number of components such as patch cord connectors, sensorbars for patch panels, and analyzers for network cabinets. Overall, AIM systems empower network managers to have complete control of their physical network and perform work orders faster, more efficiently and with nearly zero fault rate. Thanks to the central documentation, infrastructure and operational decision makers have all the information they need to make better informed critical capacity and compliance decisions. This, therefore, increases data center efficiency and ensures networks are ready for any and all upcoming challenges. Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Penton. 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)
6:30p	2016 Was a Record Year for Data Center Acquisitions, but 2017 Will Be off the Charts Data center acquisition volume hit record levels in 2016, and that record will likely be smashed in 2017 when the Verizon and CenturyLink portfolio deals close. While there were a few larger deals in 2016 — mainly involving Equinix and Digital Realty Trust — majority of the sales were “small-ball,” a combination of many singles and a few triples averaging $65 million. According to a report just released by Charlotte, North Carolina-based Five 9s Digital, data center acquisitions more than doubled in 2016 to almost $1.7 billion. Notably, 2015 was a slow year with just $750 million in transactions. However, the $1.7 billion in 2016 eclipsed both 2014 and 2013 transaction dollar volumes of $1.2 billion and $1.3 billion, respectively. While the dollar value of sales doubled in 2016, the difference in aggregate square footage of data center acquisitions in 2016 versus 2015 was not nearly as large. The 2016 sales totaled about 6.2 million square feet, versus 4.4 million the prior year, a difference of 41 percent. Home Runs While the $3.6 billion Verizon data center portfolio sale to Equinix and the $2.3 billion sale of CenturyLink data centers to a group of investors were announced last year, they are scheduled to close in 2017. “If you take out the pending VZ and CenturyLink transactions, we anticipate normalized dollar volume to be between 2015 and 2016, in the low $1.2 billion range of total transactions, based upon some deals we are tracking that did not finalize by end of 2016, and general activity in the market,” Five 9s partner Doug Hollidge told Data Center Knowledge in an interview. Tacking $1.2 billion on to the $5.9 billion of home-run deals under contract would lead to a spike up to $7.1 billion in data center transactions for 2017. However, this can swing considerably over a 12-month period and one large portfolio deal or large single transaction can have a big impact on total volume. Read more: Why Equinix is Buying Verizon Data Centers for $3.6B Here’s What’s Next for CenturyLink’s Data Center Business ‘Small-Ball’ Deals “As a number of the larger tier-one long-term, single-tenant assets and other low hanging fruit have been acquired over the past several years, investors will spend more time evaluating multi-tenant data centers and investment opportunities in tier-two markets,” according to the Five 9s report. “Heading into 2017, we anticipate cap rates for single-tenant, good credit leases will be in the 6.25-7.25 percent range pending underlying lease dynamics. Data center assets lacking clear credit, shorter-term leases and/or multi-tenant occupancy are estimated to trade in 7.5-8.75 percent cap rate range with various factors that may affect the swing outside of these parameters.” The December boost in interest rates by the Fed and investor expectations of a rising rate environment in light of the incoming Donald Trump administration’s policy statements could serve to accelerate the number of deals closing during the first half of 2017. Purchasers will be looking to avoid higher rates anticipated later in the year. Tip Of the Iceberg? When the Verizon and CenturyLink portfolios close, it will skew 2017 results into uncharted territory for data center acquisitions. However, it will still be a drop in the bucket in comparison to the trillions of dollars of commercial real estate deals consummated each year. On the other hand, this boost in activity could be kicking off a “new normal” in sales activity for the data center asset class going forward. According to published reports, Silver Lake Partners-backed Vantage Data Centers is exploring strategic alternatives, as well as data center operator Cologix, backed by investors including Columbia Capital and Greenspring Associates. This could be the tip of the iceberg if additional private equity-backed data center operators look to cash in on high valuations and investor demand for this asset class. Additionally, there are still several remaining legacy telecom portfolios which are widely reported to be for sale. Notable 2016 US Deals Corporate Office Property Trust (OFC) contributed six data centers valued at about $150 million and reportedly leased to Amazon Web Services into a 50/50 joint venture with leading data center private equity shop GI Partners. QTS Realty purchased the former DuPont Fabros Technologies NJ1 data center campus in New Jersey for $125 million and is investing additional funds to make it easier to lease space to smaller colocation customers. The largest transaction by price was the GI Partners $276 million acquisition of the KOMO Plaza data center and office building in Seattle. The deal was completed in December of 2016 and totaled approximately 293,727 square feet. The largest single transaction by building size was the $210 million acquisition of the 733,000-square foot Garland Center building in Los Angeles. On the international front, Digital Realty Trust agreed to buy eight European data centers and operating business from Equinix for $874.4 million. This deal was driven by EU Commission competition requirements surrounding the Equinix purchase of competitor TelecityGroup. In a related but separate transaction, Equinix purchased the St. Denis, Paris data center campus along with the operating business from Digital Realty for $211 million. Equinix now owns the facilities which house its PA2 and PA3 IBX colocation data centers. Read more: Exclusive: Why QTS Expects to Win Where DuPont Fabros Failed GI Partners Buys Seattle’s KOMO Plaza, Including Data Center Hub Why Equinix Data Center Deal is a Huge Win for Digital Realty Will the Outsourcing Trend Continue? During 2016, Five 9s advised CME Group on the $130 million sale-leaseback of its 428,000-square foot data center in Aurora, Illinois, outside of Chicago to CyrusOne. Third-party enterprise data center outsourcing is part of a growing trend according to the report. “As corporations continue to transition workload to the cloud, corporate-owned facilities will continue to become a focal point within organizations,” Hollidge said. “Enterprise customers continue to evaluate data center sale-leaseback or partial leaseback where corporations are looking to get out of day-to-day data center ownership and operations and right-size their data center needs.” Five 9s Digital’s full 2016 data center acquisition report is available here. Corrected: A previous version of this article said 2016 was a record year for data center M&A deals. It was not. That was 2015, while last year was a record year for data center acquisitions. (Comment on this)
7:51p	Automated Traders Take Over Bitcoin as Easy Money Beckons (Bloomberg) — Zhou Shuoji is not a bitcoin believer. He says the cryptocurrency will never replace its traditional forebears, and he calls most of its proponents fanatics. But for Zhou, a 35-year-old high-speed trader in Beijing, bitcoin is also too good to resist. His computers trade it 24 hours a day, seven days a week. Using lightning quick orders, they profit from tiny price discrepancies on the myriad venues where it changes hands. “It’s the golden age to be in the bitcoin market, because it’s imperfect,” said Zhou, a former IBM technology consultant whose firm, Fintech Blockchain Group, runs a bitcoin hedge fund and venture capital fund. Forget libertarians, speculative individual investors and Chinese savers trying to spirit money overseas. The reality is that professionals armed with cutting-edge technology now drive as much as 80 percent of bitcoin trading, mimicking strategies honed by some of the biggest players on Wall Street. To them, bitcoin is just the latest asset class ripe for conquering with machines. See also: Immersion Cooling Finds its Second Big Application: Bitcoin Mining Data Centers The cryptocurrency’s market structure ticks all the right boxes: arbitrage opportunities across multiple exchanges, zero transaction costs on Chinese venues that host most of the world’s turnover, round-the-clock trading, and co-location services allowing participants to place their servers right next to those of the exchange. With volumes tracked by Bitcoinity.org surging to a record this month, there’s been no shortage of chances for high-speed traders to turn a profit. Exactly how much they’re making is hard to pin down, because the vast majority aren’t required to disclose performance figures (Zhou declined to comment on his). Chinese banks were banned from trading bitcoin in 2013, while capital controls mean foreign firms have a small presence on China’s exchanges. One of the few traders willing to talk about their returns is Chen Zhenguo, who founded China’s largest platform for facilitating automated bitcoin strategies. Chen says he’s generated annualized gains of 50 percent for his own account, though he declined a Bloomberg News request to provide transaction details verifying his claims, saying they’re private. “Bitcoin has a natural advantage when it comes to automated trading,” said Chen, 30, whose Beijing-based BotVS allows clients to run live trials of their bitcoin algorithms on 23 exchanges. The cryptocurrency gained 6.9 percent to $890.77 at 10:18 a.m. in London. Like all markets, the one for bitcoin comes with risks. At least two exchanges, Bitfinex and Mt. Gox, have suffered cyber attacks that saddled traders with losses since 2011. The cryptocurrency’s extreme price swings — average daily moves over the past year were three times bigger than those in the S&P 500 Index — have deterred some high-speed firms, while the increasing dominance of sophisticated traders begs the question of how long the juiciest arbitrage opportunities will last. There’s also growing concern over a regulatory crackdown in China, where authorities are wary of any investment vehicle that might help citizens move wealth overseas. The nation’s central bank conducted on-site inspections at some of the biggest bitcoin exchanges this month, looking for evidence of violations including market manipulation and money laundering. Similar scrutiny of stock-index futures in 2015 led to trading restrictions that cut volumes by 99 percent. Still, policy makers could decide the bitcoin market is too small to warrant intervention. Its current market value is about $13.5 billion, versus $6.5 trillion for Chinese equities. Rather than moving money out of the country, most automated traders in China are focused on cross-exchange arbitrage, said Arthur Hayes, a former market maker at Citigroup Inc. who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. They can transact multiple times per second, reacting to price changes caused by individual investors and other speculators who often use technical patterns to guide their buying and selling decisions, Hayes said. ‘Walk Away’ OkCoin, one of China’s three biggest bitcoin exchanges, estimates 60 percent of its transactions are executed by automated traders, while Huobi and BTC China put the figure at around 80 percent. China is home to about 10 significant bitcoin venues, with a majority of trades executed on the top three, according to Neil Woodfine, the chief operating officer of Remitsy, a cross-border payment system. Instead of charging transaction costs, exchanges in China make money by levying a fee when clients withdraw bitcoin from their accounts; they also offer services including co-location and margin trading. Fintech Blockchain’s Zhou, who sees more long-term potential in the distributed ledger technology underpinning bitcoin than the cryptocurrency itself, says he can’t predict what the market will look like in a few years because it’s still young and subject to Chinese regulatory risk. For now, though, he plans to keep trading. “If the market is here and I can see a chance to make money, I will,” Zhou said. “If the market is gone, I’ll just walk away.” (Comment on this)
8:15p	Report: Layoffs Underway at Dell Technologies Brought to you by MSPmentor Layoffs are reportedly underway at Dell Technologies, where cuts of redundant supply chain and administrative positions had been anticipated since shortly after the finalization of last year’s record-setting merger between Dell and EMC Inc. The $60-plus billion deal represents the largest-ever tech acquisition. A day after the deal went final on Sept. 7, Dell founder Michael Dell reiterated that the merger was about accretion, but acknowledged that a small number of the combined firms’ 140,000 workers would be trimmed. “There are some overlapping functions and that sort of thing – that’s not the primary feature of this, but there is some of that,” Dell was quoted as saying at the time. There has been wide speculation for weeks about where and when the layoffs would occur. News of the current round of layoffs was first reported Thursday by U.K.’s The Register technology publication, citing an unnamed company spokesperson and posts to an unauthorized blog about high-profile layoffs. The Register report claimed nearly 80 workers had been let go from the company’s Hopkinton, Mass., facility. That report contained addresses of a number of EMC facilities in Northern California that posters also claimed are being considered for closure. The Register also conveyed that the layoffs would occur over three rounds. An unidentified Dell Technologies spokesperson was quoted by The Register as saying: “While streamlining is never our first alternative, and we strive to minimize it as course of action, in a merger of this size it is necessary given some overlap in functions. Over time, we expect revenue gains will far outweigh any cost savings, and revenue growth drives employment growth.” Previous published reports have said the new company is seeking to eliminate redundancies and realize any possible savings in the wake of the record purchase. “Most of the cuts will come in the U.S. and in areas such as supply chain and general and administrative positions, as well as some marketing jobs,” Bloomberg reported in September, citing unnamed sources. “Dell is looking for cost savings of about $1.7 billion in the first 18 months after the transaction, but is largely focused on using the deal to boost sales by several times that amount.” Update: Dell Technologies spokesman Dave Farmer has confirmed to the Austin American-Statesman newspaper that layoffs are underway. Dell Technologies is headquartered in nearby Round Rock, Texas. “As is common with mergers of this size, there is a need to manage some overlapping job functions,” Farmer is quoted as saying. “We hope to minimize the impact on jobs and expect that revenue gains will outweigh resulting cost savings, with revenue growth driving future employment.” This article first appeared here, on MSPmentor. (Comment on this)
8:45p	Analysts: Global Political Uncertainty Will Slow IT Spending Growth in 2017 By The VAR Guy Analyst firm Gartner has scaled back its 2017 IT spending forecast in light of global political uncertainty that’s prompting many tech companies to put a hold on new projects. According to its latest report, Gartner has expects worldwide corporate spending on hardware, software, IT services and telecom to grow by 2.7 percent, down from previous projections of three percent. Similarly, last week Forrester lowered its projection for how IT spending in 2017 from a growth rate of 3.6 percent to 3.2 percent. “2017 was poised to be a rebound year in IT spending. Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence. Normally, this would have pushed IT spending much higher than 2.7 percent growth,” said John-David Lovelock, research vice president at Gartner. “However, some of the political uncertainty in global markets has fostered a wait-and-see approach causing many enterprises to forestall IT investments.” The U.K.’s decision to exit the European Union and the election in the U.S. of Donald Trump have caused tumult in the international markets as the future of trade agreements is thrown into uncertainty, and rising nationalist sentiment throughout Europe indicates a possible widespread abandonment of the sort of economic globalism that has ruled worldwide trade since WWII. Forrester’s report cited Trump’s “aggressive trade policies” that “would definitely hurt economic growth and thus lead to lower tech spending than in our forecast.” Meanwhile, at the World Economic Forum in Davos on Tuesday, China’s president Xi Jinping expressed a willingness to fill the void left by the U.S. if President-elect Trump pulls back from free trade agreements. Gartner said it expects a flat demand for PCs, tablets and smartphones this year, which may be discouraging for traditional VARs still reliant upon box sales for the bulk of their revenue. However, as price competition grows more fierce, the firm expects a strong replacement cycle to take effect in 2018. Forrester is more optimistic, projecting a 3 percent year-over-year increase in PC spend this year, and a whopping 10 percent increase in the sales of tablets. In other mixed news, the Gartner report forecast a 3 percent drop in demand for some types of storage hardware while increasing its global server forecast to 5.6 percent growth this year. Forrester also expects corporations to increase spend on servers in 2017 to $72 billion, which is up 3 percent over last year The sharp increase in cloud-based software investment will further separate leaders Amazon, Microsoft and Google from the rest of the pack, wrote Lovelock. But as companies rent more cloud storage from the big public providers, they’ll invest in fewer servers and less hardware. “The range of spending growth from the high to low is much larger in 2017 than in past years. Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty,” said Mr. Lovelock. “The result of that uncertainty is a division between individuals and corporations that will spend more — due to opportunities arising — and those that will retract or pause IT spending.” This article originally appeared here, on The VAR Guy. (Comment on this)

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