IO to Split into Two Separate Companies
Data center modules now manufactured by BaseLayer inside an IO data center. (Photo: IO)

IO to Split into Two Separate Companies

Management to create colo provider and technology vendor after deciding against IPO

IO, the Phoenix-based data center provider best known for its modular data center containers, is going to be split into two companies. One, called IO, will continue operating as a data center provider, while the other, called BaseLayer, will be a technology vendor, selling data center containers and data center infrastructure management software IO.OS.

The split will allow each of the companies to better focus on its core competency, said George Slessman, the company’s current CEO who will continue as CEO of the new IO after it is separated. He expects the separation process to be complete in the first quarter of 2015.

Management made the decision to split the company in the summer, when they decided not to pursue an IPO, he explained. IO filed for a public offering in September 2013. But the company decided against it because of softness in the high-tech stock market. “We were not satisfied with economics of the transaction,” Slessman said.

IO the Colo Company Will Stay the Course

IO will be a BaseLayer customer and continue to develop and operate data centers and provide both containerized and traditional raised-floor data center space. The company has large facilities in Phoenix, nearby Scottsdale, Edison, New Jersey, and Singapore, as well as a smaller data center in Ohio. A Slough, U.K., facility is in the works.

IO has a beta Infrastructure-as-a-Service offering for its colocation customers. The cloud is built using Open Compute hardware and OpenStack software.

It is not an Internet-facing cloud, as the company is not trying to compete with the large public clouds like Microsoft Azure or Amazon Web Services, Slessman said. The first full general release of the product with availability zones in Phoenix and Edison is slated for mid-January.

BaseLayer to Flex Engineering Muscle

IO’s current CTO William Slessman (George Slessman’s brother) will be CEO of BaseLayer. The company will focus on engineering, development, and production of data center containers and DCIM software.

It has data center modules for installation inside warehouses – the ones IO has been leasing space in – and “edge” modules, which can be installed outdoors in a location of the customer’s choice.

BaseLayer will be headquartered at the campus where IO’s current container factory is. That is where the company produces its modular data center containers before they are shipped to one of its warehouses or other customer locations.

Two High-Growth Companies

According to George Slessman, if you were to look at IO’s growth separately from assets that will become BaseLayer, the company has grown at an average of 50 percent per year since its inception in 2007. For BaseLayer, the average growth rate has been around 100 percent since 2012, he said.

The company’s leadership hopes that separately, the two firms will see accelerated growth.

Without mentioning specific numbers, Slessman said IO was a “nine-figure business,” and BaseLayer was expected to become a “nine-figure business” coming out of 2015.

IO to Focus on Expanding in Asia

The post-separation IO will focus on expanding in Asia. The company has been experiencing faster rate of take-up in its Singapore facility than it has seen anywhere else, Slessman said.

Within the region, IO is planning to aim primarily at India and China. The latter is an especially attractive market.

“The center of the Internet moved to China when Alibaba went public,” Slessman said, referring to September’s float by the Chinese Internet giant, which according to Reuters was the biggest IPO in history. He himself plans to relocate to Singapore in January.

Asia already has the largest number of Internet users in the world. It has the highest population but only about 35 percent Internet penetration rate, according to Internet World Stats. Growth in Internet penetration in Asia has grown at about 1,100 percent annually since 2000.

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