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Data Center Interconnect

Equinix Says It's All About the Network

In a booming and diverse data center market, Equinix still primarily exploits its heritage of rich network connections as its primary differentiator, according to public interviews with two executives.

The enterprise rush to the cloud is expanding the data center business considerably and that is attracting new entrants and types of data centers. But as Equinix Inc. (Nasdaq: EQIX) CFO Keith Taylor told the Goldman Sachs Communicopia conference Tuesday, every cloud needs connections.

"The cloud looks for the network," he said. "Every cloud needs to have good quality, low-latency networks and that is something Equinix does well."

Those comments reinforced statements made last week at Light Reading's NFV and Carrier SDN event in Denver by Bill Long, vice president of interconnection services. In a Q&A session with Heavy Reading Senior Analyst Rosalyn Roseboro, Long admitted there are now many kinds of data centers popping up, including those at the edge of the network, that compete with Equinix.

"Certainly, we have competitive retail colo providers with lower prices and the optics of our data centers can be very similar," Long stated. "We are focused on having an interconnection-rich data center and our core of differentiation is who you can connect to."

Equinix has a total of 1,400 networks connected to its global platform and they represent 24% of its revenue, Taylor said. And while this is the company's most mature market, there is still revenue growth in the segment, he added.

Overall Equinix growth is "disciplined," he added. The data center giant isn't interested in growth for its own sake, but more concerned with matching customers and their applications to the right data centers. Some customers require a higher degree of network connectivity than others.


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For example, Equinix operates multiple data centers in Silicon Valley and prices colocation differently at each, depending on what it offers in terms of network connectivity. It then strives to match the customer need to the appropriate data center and pricing, Taylor said, so that more valuable space isn't sold out to those who have lower connectivity needs.

And Taylor conceded there is a perception that there is some level of slowdown in growth for established players such as Equinix -- a perception he attributes to the fact that hyperscale companies are building their own massive data centers and some smaller players are winning more of that business. "I can't tell you why they are winning it, but my perception is that they are willing to make investments at price points that a more disciplined set of investors are unwilling to make," he commented.

As more business moves into the cloud, however, Equinix can capitalize on its combination of network connectivity and data center capacity. That is one thing it is doing with its current push in to the enterprise market, which to date contributes only 14% of the company's revenues.

"We have 2,600-plus IT and cloud companies inside our facilities, and there are more popping up every day," Taylor said. "A good portion of our business comes from SaaS [software as a service] versus IaaS and PaaS [infrastructure and platform as a service]. That's no surprise when you think about cloud and how it is transforming the marketplace."

As enterprises get more comfortable putting apps into the cloud, they are more interested in coming to an environment, like the Equinix data centers and the Cloud Exchange it offers, where there is a diverse set of customers and networks, and it's possible to get the quality of service they need for their business apps, he said.

"I don't think there is any better place you can serve that up, other than Equinix," Taylor said.

In his Denver discussion, Long said the data center company has been interested to see how its customers use the Equinix capabilities -- and admitted there have been some surprises in that regard.

Providing applications programming interfaces that enable physical and virtual connections to be more easily done has opened the door to new service possibilities Equinix hadn't considered, he said. Long cited the example of F5 using the Equinix Cloud Exchange to sell security services.

— Carol Wilson, Editor-at-Large, Light Reading

Mitch Wagner 9/22/2016 | 5:40:38 PM
Diplomatic "I can't tell you why they are winning it, but my perception is that they are willing to make investments at price points that a more disciplined set of investors are unwilling to make,"

That's a very diplomatic way of saying he thinks his competitors are throwing money away. 
tojofay 9/22/2016 | 9:38:57 AM
a fundamental truth "Every cloud needs to have good quality, low-latency networks and that is something Equinix does well." Equinix is an Infinera customer.
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