Q1 2018: Infrastructure Quarterly Report

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Internet Infrastructure Sector Overview Q1 2018

Executive Summary

Transformation in the infrastructure services market is a given these days. But as we move further into 2018, it is clear the pace of that change is starting to accelerate.

We know where the roots of this change originate: the public cloud. The rise of public cloud has forced MSPs and service providers to resell and manage on top of cloud. And this has pushed them to an increasingly asset-light posture. Where is the evidence of accelerating change? In the past quarter, GoDaddy declared that it would eventually go all-in on the AWS cloud, while new companies that are entering the market are now very commonly asset-light.

What other evidence can we point to? The rise of edge infrastructure is starting to demon- strate just how fast things are changing. It was not long ago data centres were moving to secondary markets to get closer to the ‘gaps on the map’. That is still happening of course. But the recent moves from the likes of Vapor IO and EdgeMicro show that the concept of an edge data centre is already starting to shift.

The modular data centre concept of recent vintage did not take off. But maybe it just needed something like the edge to provide a market opportunity. Smaller micro data centres, deployed at the base of cell towers, are basically modular data centres moved out to the edge. Things have quickly moved beyond reaching eyeballs to getting closer to actual devices and where data and applications are processed.

Change is rampant across the sector. Data centre requirements are increasingly global, third party applications that are supported and managed are multiplying and the managed third party cloud market is moving in new directions.

The proverbial inflect point has been reached. The contours of the new world are emerging with more clarity and this in turn, has kicked off a wave of innovation and development that is reshaping the sector as we have known it.