Equinix Adds ‘Wholesale Lite’ Suite Offering
With its latest data center project in northern Virginia, Equinix is introducing a new product that offers enclosed data center suites for customers requiring larger footprints. This marks a change for Equinix, a colocation provider that typically offers space in cabinets and cages in an open data floor.
So is Equinix entering the wholesale data center business, where providers supply customers with turn-key suites and “pods” of finished data center space? Equinix says its new Business Suites offering represents a middle ground between the retail and wholesale markets, rather than a move to compete directly with wholesale providers like Digital Realty, DuPont Fabros and CoreSite.
‘Not a Shift in Strategy’
“This is not a shift in strategy rather, it is simply a way to meet the needs of our customers that have larger deployments that they need to tie into other deployments and ecosystems across our platform,” said Equinix spokesperson Ally Khantzis. “Business Suites is a product line extension that offers a solution for companies that bridges the gap between retail and wholesale colocation for customers that have mission-critical applications at a larger scale.”
Equinix has offered Business Suites in several markets in Europe and Asia, but the new DC10 data center in Ashburn, Virginia marks its introduction in the U.S. Business Suites are offered in fully-demised suites in footprints beginning at 281 kVa, the lower end of a range in which retail colocation and wholesale data center providers are frequently competing for customers.
This competition has increased as cost-conscious customers consider a wider range of options for their IT operations, with some wholesale providers targeting smaller deals that traditionally have been prime candidates for colocation. The economics of wholesale space have historically been most attractive to companies requiring at least 1 megawatt of power capacity for their data center. But over the past 18 months, wholesale suppliers have been competing for deals of 500 kilowatts and below.
Digital Realty to Build New Facility
An interesting wrinkle is that DC10 is being built by Digital Realty Trust (DLR), the world’s largest provider of wholesale data center space. Equinix has previously built its own data center space, partly due to the enhanced infrastructure it installs to ensure extraordinary reliability for customers.
“Digital Realty is collaborating with Equinix to build this IBX facility based on a customized set of Equinix specifications,” said Equinix CEO Steve Smith in a recent conference call with analysts.
Equinix is one of the largest tenants for Digital Realty, paying rent of about $30.7 million a year for about 725,000 square feet of space. Digital Realty builds its wholesale “pods” to offer 1.1 megawatts of power capacity, about four times the size of the smallest Equinix Business Suite.
Some industry watchers think the introduction of wholesale-style suites is a good move for Equinix.
“As a relatively conservative company, this move by Equinix is acknowledgement that growth in their retail colocation business may be slowing relative to the market,” said Everett Thompson on the WiredRE blog, who was among the first to note the new product offering. “Further, this move places Equinix in direct competition with larger turnkey wholesale providers, like DuPont and Digital, and early adopters of this hybrid strategy, namely CoreSite, RagingWire, and most regional providers.”
DeenabandhuPosted August 27th, 2011
what will happen to the existing Equinix large footprint customers, how to handle a price reduction request?
Good story Rich.
I have been advising the private equity and investor channels for the last year or so that EQIX would need to play defense from keeping some of their largest customers from leasing a wholesale offering from DLR/DFT/COR and keeping a small presence in EQIX for peering purposes only. This new strategy will keep many larger customers from migrating out. I think it is a wise move by EQIX.
In addition, I think in the very near future you will see an overlap of services offered by EQIX competitors and even the major data center developers as each broadens their services to a wider market.