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T1R Industry Insight Internet Data Center Selection and Supply

T1R Industry Insight Internet Data Center Selection and Supply. Daniel Golding. Vice President and Research Director. Overview. Tier 1 Research specializes in hosting, Internet infrastructure, Software as a Service (Saas), IT Services, content delivery networks

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T1R Industry Insight Internet Data Center Selection and Supply

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  1. T1R Industry InsightInternet Data Center Selection and Supply Daniel Golding Vice President and Research Director

  2. Overview • Tier 1 Research specializes in hosting, Internet infrastructure, Software as a Service (Saas), IT Services, content delivery networks • Daniel Golding, Vice President and Research Director • 10 Years of experience at major Carriers and ISPs • Global Peering Manager for AOL during major expansion • Currently Chairman of Global Peering Forum • Expert in colocation, data centers, Internet infrastructure, content delivery

  3. What is Colocation • What is colocation? • Outsourced data center • Space, power, possibly managed services • Not conventional IT outsourcing • Not running your data center - its their own facility • Two flavors • Carrier - RBOCs and PTTs • Carrier Neutral

  4. What is colocation Carrier Carrier Neutral

  5. What is Colocation • Carrier vendors provide traditional managed hosting - • Server management • Database • Storage • Carrier neutral vendors may provide: • Traditional managed services • Internet interconnection services

  6. What is not Colocation • Shared hosting and dedicated hosting • “Private Rack” -style dedicated hosting • IT outsourcing • How to tell? • Physical access to equipment • Who owns equipment…usually • Ability to put in whatever hardware is desired

  7. Colocation Pricing • Space (square foot or cabinet) • $600 to $1600 per cabinet • $25 to $60 per square foot • These are all monthly prices - not annual • Prices vary based on market, quality, carrier neutrality • Supply/Demand drivers in charge, not cost of goods

  8. Colocation Pricing • Power • Frequently sold on a per amp basis - 20 or 30 amp circuits • Metering getting more common • True utilization of power is tough to gage without a meter • Managed Services • Remote hands • Managed network, security, database, OS

  9. Colocation Quality • Significant quality differences in colocation facilities • Premium Colocation facilities • Power at least N+1 in all components • UPS, Generator sets, transformers • N+1 Cooling • Multiple fiber entrance facilities • Modern fire suppression and detection • 24x7 staffing and security • Tier III/IV, roughly

  10. Colocation Quality • Significant quality differences in colocation facilities • Standard Colocation facilities • Less than Premium • Generally less power redundancy • Older facilities • Generally Tier II • If there are not n+1 generators, its not premium

  11. How to pick a colocation facility • Selecting a colo facility is entirely requirement-driven • What are your requirements? • Profiles • Enterprise • Carrier • Content Provider/CDN • Software as a Service

  12. How to pick a colocation facility • Enterprises want: • High level of reliability • Cost is less important • High touch customer support • Longer leases/contracts • More managed services • Carrier choices (but not peering) • Enterprise profile: F500/G2000 through SMB

  13. How to pick a colocation facility • Service providers and CDNs want: • Reliability less important • Cost more important - very price sensitive • Shorter leases - 1 year • No managed services, prefer automated customer service systems • Need space available! • High power density (CDN) • Profile: AT&T, Verizon, Akamai, BT

  14. How to pick a colocation facility • Software as a Service Providers want: • Carrier choice - more is better • Managed services - SaaS specific • Developer playgrounds • Marketing assistance • Merchant banking • Enterprise-style customer service • Many SaaS providers would be better off with a full managed hosting solution

  15. A Trip in the WayBack Machine • 1999: Boomtime, selling pet food on the Internet: Build data centers • 2001: Bottom drops out: New data centers are empty • 2003: Recovery starts, data centers acquired for pennies on the dollar • 2005: Data centers start to fill up, but no new cash for sector

  16. Colocation Status, Summer 2007 • Market for colocation space is tightly constrained • Primary constrains are power and cooling, not floor plate • Most highly utilized colocation facilities: • Premium Quality • Carrier Neutral • Top Markets

  17. Colocation Growth Drivers • Carriers and content providers • Internet is growing - 75% to 100% a year • Driven by video and media • Move to VoIP • Enterprises and integrators • SOX, Disaster Recovery, Business Continuity • Obsolescence of enterprise data centers • High cost of construction

  18. Supply/Demand

  19. Colocation Status, Summer 2007 • Supply is up, but demand is up faster • In North America, demand up 14.7%, supply up 6.5% • Utilization numbers seem low, but are deceptive • Packing issues • Power/cooling issues • Installation issues • Will never reach 100%

  20. Colocation Status, Summer 2007 Top Global Colocation Markets

  21. Supply/Demand

  22. Supply/Demand

  23. Why is there a shortage? • If there’s such a demand, why isn’t supply following? • It will eventually • Its too early - capital not willing enough • What’s hold the money back? • Memories of the bust • Concerns about an overbuild - condos • Cost of construction - $1200 - $1300 sq ft

  24. Why is there a shortage? • Why are they so expensive to build? • Not just a shell ($50/sq ft) • Generators, UPS, HVAC • Expensive and a long wait • The right location is important • Cost of land, power • Availability of optical fiber • Server-Hugging behaviors influence location

  25. But I heard there was a glut! • During June 2007, rumors of a “data center glut” started • T1R believes these were started by a Wall Street research analyst • Either foolish or uninformed • There is not glut because a massive data center construction boom never started • There may be a glut one day - but not yet

  26. Colocation Futures • What are the trends for new colocation construction? • Higher quality - most new starts are premium - Tier III-ish • Higher power density - 120 to 250w/sq ft • Larger - most new sites are ~100k sq ft + • Some are “shells” with multiple phases • Carrier neutrality is prized • These trends are set for 3-5 years

  27. Major New Facilities Equinix

  28. Major New Facilities 365 Main

  29. Major New Facilities Savvis

  30. More New Facilities • London: Interxion and IXEurope • Paris: IXEurope • Atlanta: Quality Technology • Phoenix: I/O Data Centers • New facilities on the way, but too few • We haven’t seen the end of explosive demand growth

  31. Conclusion • Thanks! Any Questions? • Daniel Golding Dgolding@t1r.com

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