WSS: More from earnings season demonstrates stability and momentum of sector as more investments, builds and leases made on global basis
The past week saw more from earnings season and we looked at more of the results coming from cloud and managed infrastructure providers such as Rackspace, Digital Ocean and Fastly, after covering Akamai last week. DigitalOcean and Rackspace are not direct competitors and play in different parts of the ecosystem, but most notably, they are currently headed in different directions. Rackspace continues to struggle as attrition continues to hit its traditional legacy offerings and this is not being offset fast enough by its next-generation offerings like managed public cloud. The improvements in public cloud growth rates, which Rackspace relies on, have not had a positive spin-off effect just yet. This will take time to materialize and there were a few data points and signs that this could be gradually emerging. DigitalOcean, on the other hand, is showing steady and consistent growth as it approaches $800m in ARR. DigitalOcean has a solid installed base that is being augmented with new products and services. DigitalOcean is a direct competitor to public cloud and does not necessarily depend on that ecosystem. But wider sector trends around AI and GPU cloud hosting is creating a widening TAM that it has been taking advantage of.
Turning back to Rackspace … MSPs and managed infrastructure providers face headwinds when it comes to legacy raw infrastructure services that are starting the long process of decline. One of the ways to offset this attrition is to drive value through add-on services around security, compliance and enterprise application support. Rackspace recently won a large healthcare deal for Epic Systems, and we look at a deal that Lemongrass Consulting won for a managed SAP on AWS deployment.
Energy companies continue to share data points and demand numbers that preview the emerging pipeline of demand coming from hyperscalers and those data centre operators that serve them. The investments being made in transmission speak volumes and we look at some of the this activity and metrics around data centres reported by AEP in Ohio.
These days there are less data centre operating companies trading in the public markets, but American Tower still reports specifics about the CoreSite colocation and interconnection business and we delve into it a bit more. Growth is steady and American Tower shared CoreSite CapEx numbers that are climbing in the face of more opportunity and demand.
We know about the demand coming from hyperscalers, but GPU cloud providers and AI companies are also in need of massive volumes of infrastructure. One of the emerging providers is TensorWave and it made a GW-level commitment to new operator TECfusions, which has multiple sites and is enabling its facilities with a combination of utility power and on-site power generation. This has enabled time-to-market that was a key selling point in this recent deal.
We have seen a lot of strategic activity over the last several months and things have not slowed down. Most of the activity in the past week or so was in Europe. The Nabiax business was acquired by European asset manager Aermont, Cordiant acquired a stake in Belgium’s Datacenter United and Northern Data raised more capital. On top of M&A, the growing market continues to encourage new company formation. In Italy, MediTerra Datacenters entered the market in Rome, backed by DFW, and it used acquisition of an existing data centre as a vehicle.
Finally, there has been a lot of activity in Thailand these past few weeks as Southeast Asia really starts to spread its wings. Southeast Asia is home to a number of markets that are just starting to scratch the surface of what they will ultimately become. We recently looked at the Equinix and EDGNEX entries into the Bangkok market and Google’s investment plans. Just in the past week, GDS confirmed its plans to enter the market and Empyrion Digital in Singapore also has plans for a new data centre there. Bangkok is easily a sub-100MW market that is in the very early stage of a massive hyperscale cloud build-out, potentially accelerated by an AI expansion wave that is starting to land in APAC and will have to eventually start moving out beyond its current centre in Johor. Could the next AI destination in SEA be in Bangkok? We may soon see.
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