Change and transition are the dominant themes across the sector, but there is a palpable sense that things are accelerating. Edge compute has moved from the drawing board to reality on the ground, hyperscale is extending its footprint across the globe and the managed third party cloud market is showing real signs of maturity.
The changes reflect very clearly in the results
of service providers. The international revenue bucket continues to grow and existing customer growth is increasingly crucial. Meanwhile, new service lines like interconnection, application hosting and private cloud are healthier, while traditional services like retail colocation and bare metal are slowing more visibly.
Amid the change, providers are focusing even more closely on value-add. In the cloud, it is less about selling storage and compute and more on selling machine learning tools and managed services. MSPs are approaching things in the same way as they move more customers to cloud platforms and take advantage of the innovation they have at their disposal. On the colocation side, it is less about space and power and more about interconnection and the ability to connect to cloud compute resources. The carrier-neutral world has given way to a cloud-neutral world.
The infrastructure landscape is fiercely competitive and this has manifested in new ways of late. In the recent quarter, we saw Microsoft and Oracle pursue cloud interoperability as a bulwark against AWS dominance. This could be a harbinger of things to come.
But even with the threat of AWS dominance, there is still plenty of opportunity on the table for various parts of the ecosystem and this continues to attract investment interest. Capital requirements needed to build out the infrastructure world have never been higher and this has drawn in infra- structure funds and real estate firms more than willing to support the growth amid the disruption it is causing in traditional industries.