Ethernet Executive Council Q&A: Equinix
Equinix increased revenues 26 percent year-over-year and 6 percent quarter-over-quarter to nearly $418 million in the third quarter of 2011. A uniquely positioned interconnection player with a global footprint, Equinix has increasingly focused on accelerating the growth of the cloud services market by bringing together Ethernet cloud carriers, cloud service providers, and cloud buyers within its Platform Equinix environment.
Heavy Reading: Jim, when I see what you are doing with Platform Equinix and the Marketplace, it looks like your strategy is to interconnect and strengthen communities within the larger IT and telecom community. Is that an accurate view?
Jim Poole: That’s a good description at a high level. We have every vertical inside our footprint -- finance, cloud, IT, digital media and networks -- and all of these connect with each other there. But within various sub-communities, we also see a platform effect with interconnected ecosystems. For example, we see a lot of demand within the algorithmic trading community for access to each other. These players can transmit traffic between themselves without ever having the traffic leave the building. They only need an inexpensive cross-connect. This creates a huge amount of efficiency and improves security because they are using a private fiber. Gaming companies, advertising companies, and others also can conglomerate within the data center.
We believe the companies that become part of the interconnected ecosystems will be the most successful. Carriers in tune with the data center trend should get lots of business. We estimate our non-network customers spend about $6 billion a year for business running over our networks. We just enable it. We can create the efficiencies and accelerate commerce. We are able to build more buildings and fill them up without taxing the community.
Heavy Reading: Let’s turn to the direct connect deal you announced with Amazon a couple of months ago. What are the basic details of the Amazon/Equinix relationship?
Poole: Amazon and Equinix are working together to enable private network connectivity to the AWS platform. Until now, AWS services were only delivered over the Internet. However, as cloud becomes a more mainstream solution for business, there's a growing demand to attach platforms such as AWS to a corporation's private network infrastructure.
Take, for example, our Ashburn campus. There are any number of SaaS providers there. Many use Amazon. Previously, you uploaded content to the Internet and had to pay an ISP even though you were physically in the same location as Amazon. A large number of Amazon customers were perfectly comfortable with the idea of having certain assets in the cloud, but they did not want to use the Internet for uploads and downloads. They were looking for a direct connection that bypasses the Internet.
Heavy Reading: You and your chief marketing officer, Jarrett Appleby, have talked a lot about bringing cloud players and network providers together. What does the availability of Amazon Web Services Direct Connect in Equinix data centers mean for network service providers?
Poole: This is hugely beneficial for networks. Private data networks, such as Ethernet and MPLS, are some of the highest margin services in a service provider’s portfolio. The ability to attach a popular cloud service, such as AWS, means more traffic on corporate networks. More traffic means more business for the carriers.
Heavy Reading: Recent feedback from Ethernet Executive Council members indicates a lot of them are in the midst of developing their cloud strategies and creating partnerships with cloud providers. What specific challenges or pain points will AWS Direct Connect help service providers solve?
Poole: There are a great number of 'pure play' network service providers in the market. That is, network providers who do not offer their own flavor of cloud service. For them, this development allows them to directly participate in the growing cloud marketplace in a very relevant manner.
Heavy Reading: What are the key benefits of AWS Direct Connect for enterprises?
Poole: Most corporate IT resources are transported over private WAN infrastructure. CIOs are generally not willing to put their most valuable information across the Internet, due to performance and security concerns. The AWS Direct Connect effectively turns AWS into an on-net corporate resource, avoiding the Internet.
Heavy Reading: What are the implications of this partnership for the broader cloud and networks industries?
Poole: The obvious implication is that cloud providers and network providers need to harmonize their offerings in such a way as to make it easy for corporations to leverage their existing corporate networks. Fortunately, this is exactly what Equinix helps its customers do every day. As the largest interconnection service provider to both cloud and network companies, we feel that this is a critical component to fulfill the market potential of cloud.
Heavy Reading: Thanks for the time, Jim.
— Stan "EtherMan" Hubbard, Senior Analyst, Heavy Reading, and Chairman, Ethernet Europe 2012