Equinix acquires Packet for bare metal edge automation

Equinix said Tuesday it has signed a "definitive agreement" to acquire bare metal provider Packet, to enhance multicloud and edge services for Equinix's enterprise customers.

Packet provides bare metal computing as a service for developers, from more than 20 data center locations worldwide, many at the bases of cell towers. "Equinix intends to leverage the Packet offering to accelerate the development and delivery of its interconnected edge services," Equinix said in its statement announcing the deal Tuesday. Equinix sees the Packet acquisition as enabling on-demand deployment, to build and operate low-latency services at the edge, reducing capital expenditures and resource requirements. Packet's bare metal servers could potentially be assets that Equinix deploys throughout its data center network as resources for its enterprise, service provider and cloud customers.

Equinix's engine for future growth is its interconnect service, providing connectivity between enterprise, service provider and cloud networks, with network connections in more than 200 data centers worldwide in Equinix's International Business Exchange. "Platform Equinix contains the highest share of the world's public cloud on-ramps and the most physically and virtually interconnected ecosystems in the world," the company brags in a statement announcing the Packet deal.

Learn more about how edge networking is transforming service providers at Light Reading's Edge content channel.

Heavy Reading Analyst Jennifer Clark says Packet's "main point" is that it provides dedicated servers in the cloud for individual customers. The Packet acquisition will give Equinix the ability to provide single-tenant physical implementations for customers requiring that, as opposed to multitenant implementations that are more common in the cloud. "It's part of a general blurring of the line between public and private cloud," Clark says.

Enterprises frequently require dedicated, single-tenant servers for regulatory, security and contractual reasons, to maintain greater control of their own resources, Clark says.

The Packet acquisition allows Equinix to provide bare metal capabilities without having to bring in another hardware vendor as a partner, says Ovum Analyst Mike Sapien.

Equinix may follow up with a software acquisition to deploy and manage edge resources, Ovum Analyst Roy Illsley says.

Equinix expects to disclose additional details of the deal upon completion of the acquisition, by the end of the first quarter of fiscal 2020, in March.

Packet is funded through Series B at $36.6 million, and was founded in 2014, according to CrunchBase. Investors include Dell Technologies Capital, SoftBank, Third Point, Battery Ventures and Samsung. Its financial valuation was $100 to $500 million as of September 2018.

Packet's founders are twins, Zac and Jacob Smith. (Zac Smith? I bet he never gets any "Danger Will Robinson!" jokes.) The company's mission is to provide hardware automation that helps developers build complex, real-time applications, enabled by emerging mobile technologies such as 5G and CBRS, using decentralized, specialized, diverse infrastructure.

Packet's approach contrasts with the centralized, generic compute and storage available from hypercloud providers.

Packet gives other organizations access to high-performance bare-metal server technologies that the biggest hypercloud providers now build for themselves, according to Ihab Tarazi, who was then Packet's CTO, in a 2018 Light Reading interview. Even some of the biggest service providers and enterprises in the world lack the resources of Amazon, Microsoft, and that ilk, to build their own hardware; Packet's mission is to fill that gap.

Prior to joining Packet, Tarazi was CTO of Equinix, and is now CTO of networking and solutions at Packet investor Dell Technologies. Small world, eh?

Packet's work complements companies including Vapor IO, EdgeConneX -- both Packet partners -- and EdgeMicro, who build physical spaces for edge data centers, initially targeting cell towers. Packet buys colocation in those edge data centers and uses that space to deploy its bare metal cloud.

Packet's reference customers include Sprint, as well as a variety of enterprise and developer service providers, such as fly.io, which provides a global JavaScript platform to build content delivery networks (CDN), and DNSFilter, which provides web content filtering and threat protection for IT and managed service provides.

Competitors also offering bare metal services include Google Cloud, Rackspace and OVHcloud

Equinix launched a joint venture in October, initially in Europe, to build data centers for the dozen biggest hypercloud providers in the world, including Amazon Web Services, Microsoft Azure and Google. The JV initially targets Europe, in partnership with GIC, Singapore's sovereign wealth fund, and is valued at $1 billion.

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— Mitch Wagner Executive Editor, Light Reading