M&A, Europe, interconnection, asset-light, application hosting
It was a bit of a mixed bag this week, but a number of interesting themes stood out.
The M&A arena was quieter, but we had a chance to get more perspective on Equinix’s recent moves in Europe. We were also able to attend the Interxion Analyst Day in Paris, France and some of the same themes around Equinix’s moves are driving Interxion in France. Interxion and Equinix are primary examples of two shifts in the colocation market: 1) the transition from pure ping, power and pipe to interconnection-based value-add; and 2) the strategic addition of wholesale colocation to retail/interconnection-oriented colocation deployments. Driving all of this: cloud.
The rise of cloud continues to have an impact up and down the infrastructure value chain. We chatted with Daisy in the UK recently and it is moving more to an asset-light model, with growing quantities of customer-facing and internal workloads running on Azure. Its data centre footprint is already being shrunk as a result.
Another prominent theme these past few weeks was China. Digital Realty noted on its recent earnings call that it was seeing demand and closing deals for China-based cloud providers (in US and Europe-based data centres) and it surely isn’t the only data centre operator with an eye on this market’s potential. The reality of more providers competing in wholesale is intense competition for a much shorter list of clients. China-based clients present an opportunity and one with especially large capacity requirements. While Chinese clouds are moving outside China, others are moving there as well. Microsoft, for example, is set to expand its capacity in China.
The global cloud build out mostly saw activity in the APAC region these past few weeks. Google expanded and added a Dedicated Interconnection node in Mumbai, India, while Alibaba opened its first Malaysia-based data centre. Meanwhile, AWS added more edge nodes in Tokyo.
A couple of somewhat random themes stood out this past week. Infrastructure providers continue to do well in compliance-sensitive industries such as healthcare. Online Tech and Aligned Energy were among these disclosing wins in this sector. Meanwhile, there continues to be wide-ranging momentum towards service-based delivery of software. Veritas management commented on its recent moves, Symmetry recently added a hosted OpEx-based version of SAP and OneNeck is pushing forward with hosted Microsoft Dynamics AX.
Earnings season continues and we took a closer look at the results of two providers on the SMB side of the game. Both Endurance and Web.com have slowed of late, but are seemingly moving in different directions now. We also have a useful data point on Azure’s usage growth from Microsoft’s earnings call.
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