- Customers today consider moving a viable option - the move to virtualized environments and converged architecture make it easier for data center users to migrate to a new facility. This is amplified by the fact that many customers are currently implementing these solutions and require some type of migration - either in place or to a new facility.
- There is an efficient marketplace - the emergence of national/international databases, reporting, and competitive placement have made it very easy for customers to understand what market rates are and to obtain competing proposals.
- Capacity is not constrained in most markets - the facility expansions of recent years combined with improvements to many facilities mean that there is available capacity in most markets.
Friday, October 22, 2010
On October 5, Equinix announced that both their third quarter and full year revenues for 2010 would be 1 to 2 percent lower than previously forecast, although their EBITDA would be higher than previously forecast. The stated reasons include (i)"underestimated churn assumptions in Equinix's forecast models in North America", (ii) "greater than expected discounting to secure longer term contract renewals," and (iii)"lower than expected revenues attributable to the Switch and Data business acquired in April 2010."
So, what does this mean for the industry?
At first cut, it appears to be primarily the result of the shortcomings of Equinix's integration of Switch and Data, but I do think that this highlights some core trends that the industry needs to be aware of:
My takeaway is that it is finally time that the pure infrastructure companies need to start climbing the services stack. This will be the only way to maintain revenue and profit growth in the current developed markets in the US and Western Europe.