Q3 2018: Infrastructure Quarterly Report

$1,800.00 USD

Internet Infrastructure Sector Overview Q3 2018

Executive Summary

The inflection point that has dominated the industry narrative increasingly looks like
it has been reached and the future of the infrastructure services market is coming into
clearer view.

It is a brave new world with hyperscale at the centre and the value chain building off this foundation. MSPs are building on top of hyperscale, interconnection extends to it and data centre colocation supports it. The impact is being felt throughout the sector as operators change their strategies and operating models. We have spent a lot of time on the managed third party cloud model. That continues to push forward. But another shift in strategy is being taken by operators on the data centre side. Colocation providers have zeroed in on adding value to infrastructure through interconnection. And enhancing that value proposition now means going deeper on infrastructure and over to the wholesale-hyperscale side of the ledger. It makes for a new and very different set of data centre product portfolios.

This hyperscale-centric world is just the first inflection point. There is another that is on
the horizon: decentralization and the edge. Hyperscale nodes tend to cluster around major metros. But as adoption spreads and users get further out, hyperscale becomes less optimal
for supporting them. Enter the edge. Small increments of infrastructure are moving out closer to end users and this will have a big impact on how applications are architected.

It is a bit counterintuitive. Hyperscale saw a rapid rise. But as the Internet matures and becomes more sophisticated, it is also quickly showing its shortcomings. The old and new is at the heart of the sector. The M&A landscape continues to see consolidation of traditional providers, but also acquisitions of technology that are about building for the future.

The infrastructure services market has always had this pushing and pulling from the old
to the new. Each step has been gradual and incremental and that is not likely to change. But the pace of that change is picking up. There are just too many different pieces in motion at once to avoid this.