Pandemic, earnings, hyperscale expansions, SMB, managed cloud
It was another busy week with earnings season providing a window into the early impact of the COVID-19 pandemic on operating results.
For data centre operators like QTS it has been business as usual. Guidance was unchanged and performance is going to be about vertical exposure and housing hyperscale platforms – as QTS does – provides meaningful upside. The hyperscale clouds are doing even better and pushing through the pandemic even if there are certain areas where they have been negatively impacted. We saw this last week when Amazon reported its results and there were similar dynamics with Google’s cloud business.
One of the important areas to follow will be the impact of the pandemic on hyperscale CapEx. Facebook has halted some construction projects and reduced CapEx guidance, while Google has done the same at a more modest level. The likes of Facebook and Google are starting to face supply chain and personnel issues and this will have an impact when building and expanding at the level of scale only hyperscale can. Colocation providers may not be as heavily impacted. QTS, for example, kept CapEx guidance in place and has had minimal supply chain issues. With more public data centre providers reporting, this will be something to keep a close eye on.
While there will be some bumps in the road, hyperscale cloud is continuing to expand and is pushing into the second tier of markets. Google Cloud confirmed its Las Vegas expansion and Compass Datacenters purchased land in Toronto that will be home to a campus sure to host hyperscale tenants.
The SMB market has been a bit quiet of late but there were a number of notable developments. WP Engine opened a new office in Poland and Hostopia and Open-Xchange brought in new executive leadership. Hostopia’s new GM is overseeing the ANZ region and Rackspace also opened an office and hired a country manager in New Zealand.
Managed third party cloud services continue to populate data centre and MSP portfolios and in the past week Flexential rolled out new offerings built on AWS and Azure. Meanwhile, the vendors that build technology to help deliver these services were doubling down through M&A. Storage provider NetApp acquired DaaS provider CloudJumper and its managed third party cloud capabilities, while security vendor Rapid7 acquired DivvyCloud.
As the pandemic-driven new normal emerges, there are going to plenty of changes in the way infrastructure service providers operate. The health of employees and their ability to safely be on-site is going to be paramount. To that end, Involta began using new technology to power an employee wellness program. Expect to see more of this in the coming months and this could well be one of the lasting impacts of the coronavirus pandemic.
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