New CDNs Not Winning Live Streaming Deals

Dan Rayburn has an interesting item that looks at recent trends in top-dollar content delivery deals, in which Limelight Networks (LLNW) has fared quite well. Limelight’s biggest win has been the deal to be the primary CDN for NBC’s online Olympics video at NBCOlympics.com. Significantly, these deals appear to be reinforcing the existing power structure in the CDN sector, despite the recent emergence of new players:

Many of the newer CDNs on the market have been talking for some time now about how they are only focusing on live delivery and how their “next generation” networks are so much better for live streaming than an Akamai or Limelight. But to date, I have yet to see any recently launched CDN win any of the big contracts for all of the live events that have happened or will soon take place. The Olympics, NCAA March Madness, Presidential Debates, Operation MySpace, Oprah’s Online Classes, Democratic National Convention, US Open for golf and tennis and the NFL Sunday Night Games amongst others. Akamai, Limelight and Level 3 combined are responsible for doing the delivery for all of these events.

Some of these newer CDNs are picking up smaller live streaming deals. But can these smaller players make their VC-funded business plans work if the “Big Three” continue to snare all the big-ticket deals?

[2N+1] Readies New Boston Data Center

Two veterans of the Boston-area data center community are building a new facility. Vincent Bono and Will Locandro have formed [2N+1] (yes, the brackets are part of the company name) to build a new 45,000 square foot data center in a fiber-rich neighborhood in Somerville, Mass., according to Xconomy. The new colocation center is across the street from a local utility NSTAR, which is providing 12 megawatts of power to support power density of 250 watts per square foot.

[2N+1] is described as “something of a boutique operation” targeting customers needing between 250 and 5,000 square feet of colocation space. “Those are the customers that are historically the least amount of trouble to work with,” said Bono, who worked as a data center designer for HarvardNet and Boston Datacenters.. “Very large companies want you to offer all of these ancillary managed services that we don’t want to get into. And very small customers want you to essentially be their IT team, and we don’t want to do that, either.” The new data center is scheduled to open for business next month.

Traders Betting on EMC Spinoff of VMware

Is EMC ready to spin off VMware? These rumors have been around before, and got a lot of attention following the surprise exit of VMware CEO Diane Greene. The New York Times called Greene’s dismissal a “dramatic gesture” by EMC to silence talks off a spinoff.

If so, it didn’t work. Wall Street watchers are again focused on VMware spinoff rumors after an unusual surge in purchases of call options in EMC stock, according to the Wall Street Journal. Call options are a bet that shares will rise in value. On Wednesday traders bought more than 350,000 EMC calls, outnumbering bearish “puts” more than three to one. “Somebody is taking a huge bet that these shares are about to rally,” Joe Kinahan, chief derivatives strategist with Thinkorswim, told the Journal.

Savvis Shares Surge After Earnings Report

Shares of Savvis Inc. (SVVS) soared 20 percent Wednesday after the managed hosting firm reported strong second quarter earnings, prompting an upgrade from an analyst. On Tuesday Savvis announced second quarter revenue of $212.9 million, a 13 percent improvement from the same period a year earlier (not counting asset sales that boosted 2Q07 results). Revenue from the company’s new data centers doubled to $14.2 million.

The strong performance reassured analysts, including one who had downgraded the stock in April after disappointing first quarter earnings. Jefferies analyst Jonathan Schildkraut increased his rating of Savvis from Hold to Buy and set a $20 price target for the stock. Schildkraut said he now has “increased confidence in management’s ‘08 outlook.” Savvis shares gained $2.79 to $16.43 Wednesday, a gain of 20.5 percent.

In the wake of a vigorous expansion of the company’s data center network, analysts have been focused on Savvis’ ability to lease space in the new facilities, while continuing to generate revenue from older sites. The company had good news on both fronts.

“We continue to see an attractive fill rate on the new data centers with about 67 percent of the colo space in the Phase I data centers sold,” said Savvis CEO Phil Koen. “We also opened the Singapore data center in July, and together with the Boston, Chicago and Dallas data centers, we’ve sold about 32% of the colo space in those centers. Our expansion IDCs (Internet data centers) continued to generate colo prices averaging just under $70 per square foot per month, while the yield per square foot, including managed hosting and network services is just over $80 per square foot in those centers.”

HostingCon 2008 Roundup

HostingCon 2008 has wrapped up after a three-day run in Chicago. Here’s a roundup of some of the news and reviews from the event:

• One of the most interesting panels each year is the session on hosting mergers and acquisitions by Hilary Stiff of Cheval Capital and Joe Bardenheier of Endurance International Group. If you missed it, Hilary has posted their presentation: Valuing and Structuring Hosting Company Acquisitions. For historic perspective, you can check out my writeups for Netcraft of the 2005 and 2006 HostingCon M&A sessions.
• Parallels CEO Serguei Beloussov is never dull, and his interview with Michael Halligan is no exception. “Google is going to eat the growth in the hosting market,” Serguei predicts. “Honestly I believe Google is a true evil empire. Google is very closed, and very focused on direct control of the end customer.” Microsoft, on the other hand, is “very real and very partner friendly.” Beloussov says Parallels’ current focus is integrating its recent acquisitions. “We’re like a Python right now,” he said. “We just ate a lot, and now we’re absorbing. We’re looking at 12-24 months to digest what we’ve swallowed.”

Google: No Plans Yet for Blythewood, SC Site

It’s now been more than a year since Google announced any new data centers. That’s a big change from 2007, when the search giant unveiled four new data centers in six months, announcing $600 million projects in North Carolina, South Carolina, Oklahoma and Iowa.

There have been rumors that Google was planning data centers in Greenburg, Kansas (not true, the company says), Denver, Colorado and Lithuania, and Google has reportedly been scouting sites in several Asian countries. Rumors fly, but we’ve seen no announcements.

How about Blythewood, South Carolina, where Google has already bought 466 acres of land and filed site plans for a potential future data center? “We have no development plans for the Blythewood site to announce at this time,” said a Google spokesperson. “However, we regularly review our resources and customer needs, and will keep the community informed if and when new plans develop.”

New Facilities Boost Switch and Data Earnings

Strong demand for new data center space in Dallas, Toronto and Sunnyvale, Calif. helped Switch and Data (SDXC) post strong earnings for the second quarter of 2008. Total revenues grew to $41.9 million, up 26 percent from 2007, and net income was $1.1 million, or $0.03 per share.

“The second quarter was the best sales quarter ever for Switch and Data,” said CEO Keith Olsen, who noted that it was the sixth straight quarter of growth since the company’s IPO. Two-thirds of the company’s bookings for the quarter came from the new space, he said. The improvement was seen in larger deals, including expansions by Amazon.com Comcast, and more deals in which customers added space in multiple Switch and Data facilities.

Iron Mountain’s Natural Cooling Advantage

With a growing number of providers building underground data bunkers, a leading name in data storage is entering the game in a more substantial fashion. Iron Mountain, which has been a market leader in storage of documents and backup tapes, is beginning to lease data center space in its huge facility located 220 feet underground in a limestone cave outside Pittsburgh.

CIO recently reported that Marriott will become the largest private customer operating a data center in Iron Mountain’s 145-acre facility, which has its own fire company, water treatment plant and 24-hour security and maintenance force. Marriott is leasing 12,500 square feet of data center space from Iron Mountain for a disaster recovery “hot site.” Here’s some additional background:

The company calculated that the 10-year cost of colocating a new data center at Iron Mountain’s underground facility would be cost neutral compared to its existing agreement for disaster recovery, according to a spokesperson. Plus, the opportunity to improve energy efficiency would bring significant savings and help the company to achieve its environmental goals.

Those savings were driven by the cooling advantages of an underground facility, where the cooler temperature allows tenants to spend save money on air conditioning.

How VESDA Smoke Detection Works

If you’ve toured a few data centers, you’ve likely heard of VESDA smoke detectors, which is short for Very Early Smoke Detection Apparatus. This video provides an introduction to VESDA air sampling technology and illustrates how the technology works. This video runs about 2 minutes.

For additional video, check out our DCK video archive and the Data Center Videos channel on YouTube.

Universities Are Early Adopters on Containers

Today’s HP-Yahoo-Intel initiative on cloud computing highlights the importance of the academic and research communities in the development of cloud technologies and the wokforce to implement them. But universities are also proving to be an important emerging market for data center containers.

The University of California at San Diego has purchased one Sun MD (Blackbox) portable data center in a shipping container, and will soon purchase another. The container deals were made possible by $2 million in funding from the National Science Foundation. UC San Diego’s use of containers was detailed in a blog post this week about its Project GreenLight initiative to connect scientists and their labs to more energy-efficient “green” computer processing and storage systems using photonics.