What is the Equinix Cloud Exchange?

Anyone following Equinix has heard a lot about Cloud Exchange over the last few quarters.  Cloud Exchange seems to be a magic potion that finally helped Equinix jumpstart growth in sales to enterprise customers, but what is it and is it really important and durable as a product?

Cloud Exchange is based on a large, high capacity Ethernet switching fabric in select Equinix data centers.  Cloud Exchange is separate and distinct from the Equinix network exchange product.  It appears that part of the impetus for the Cloud Exchange came from an investment that Equinix made in Ethernet equipment to support a VPN product several years ago, and Equinix states that "Equinix Cloud Exchange leverages the Equinix Ethernet Exchange Platform."

Cloud Exchange is being offered by Equinix as an all optical product with available port sizes of 1 G Multi-mode, 1 G Single-mode, and 10 G Single-mode.  Unlike the Internet Exchange product, Cloud Exchange allows for creation of Virtual Circuits to a given providers at speeds of 200 Mbps, 500 Mbps, or 1 Gbps.  All of these services are provided under the Equinix Ethernet Exchange SLA of 99.999% uptime.

Now that we have a perspective on what the Cloud Exchange product is, we can examine who the users are, how they are using it, and how important it is long-term.

The enterprise use cases seem to be driven by one or more of the following three concepts:

1. Existing WAN (typically) MPLS is available at Equinix - These are customers that currently have some or all of their data center footprint in an Equinix facility and, more significantly, have established the Equinix facility as a node on their Wide Area Network (WAN).  Since WAN performance is established and understood at the location, it makes for a logical location to connect to and integrate external cloud resources.
2. Installing Private (or Hybrid) cloud within Equinix - If an enterprise intends to closely integrate their own systems with a cloud provider as may be done in a hybrid cloud installation, locating that equipment in an Equinix facility with Cloud Exchange is going to be an effective and cost efficient way to provide a reliable, low latency connection to the public cloud provider(s).
3. Implementing a Cloud Data Replication strategy - In response to the challenges of ownership, security, and back-up of data, many enterprise customers are installing their own infrastructure to maintain a record copy of the data from their cloud providers.  Sometimes this is set up as continuous replication, while other times it is done at regular intervals.  Locating the equipment to do this in a high quality data center with direct cloud access increases the integrity of the implementation.

All of these have combined to help boost Equinix enterprise business, which is important to them as a business as Enterprise customers tend to be fairly high margin and less sensitive to squeezing out cost as many service providers have become.

Direct connectivity is an option to Cloud Exchange that some customers, particularly larger ones, utilize.  As it sounds, this is a dedicated connection to a cloud provider access point either through a cross connect in a data center or through a network connection between two separate facilities.  Direct Connectivity lacks the "try before you buy" and ease of switching of the Cloud Exchange.

In general, all of these products as well as others not yet in the market, will grow as cloud adoption moves forward.  In particular, I would expect one or more network providers to establish a cloud exchange within the network that would have some of the same characteristics and similar Service Level Agreements.  This would allow customers to be data center independent and give them even more flexibility.