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One of Digital Realty Trust's London data centers. Digital Realty Trust
One of Digital Realty Trust's London data centers.

Digital Realty Charts Course to Becoming a ‘Platform Company’

But what does a platform play look like for a data center REIT?

Digital Realty Trust wants to be a “platform company.” What that means for a real estate investment trust, albeit one that’s technology oriented, is not very straight-forward.

When people think of platform companies, they typically think of Uber, Facebook, or Airbnb – their platforms connect suppliers with consumers – not of companies that build buildings and lease them out. In the enterprise technology world, we talk about platforms that abstract low-level infrastructure complexities customers can build on top of.

But how do you turn a company whose essence, historically, has been about development – the combination of construction, real-estate, supply-chain management, and finance savvy – into a platform company?

That’s the question Tony Bishop came to Digital Realty to answer earlier this year. In March, he filled the company’s newly created role of senior VP for platform and ecosystem strategy – after five years at its top competitor Equinix – to “drive our evolution to becoming a platform company.”

Today, at its MarketplaceLIVE event in New York City’s swanky Spring Studios, Digital Realty executives are unveiling what they think it means for the company, the world’s second-largest data center provider, after Equinix, to create a platform.

MarketplaceLIVE is an appropriate event name for the occasion. A marketplace is an essential attribute of any platform. In Digital’s case, the marketplace will be a global network of interconnected data centers, where enterprises can keep their servers, data storage, and networking equipment and easily connect to cloud platforms, network carriers, and other service providers.

It’s a strategic shift from being “campus and asset-centric” to interconnecting the entire platform globally, Bishop explained. If it sounds a lot like what Equinix is doing, that’s because it is – at least the interconnection part. Some aspects Digital has had all along and some it’s adding now set its platform model apart, according to Bishop.

One of them is the wholesale data center footprint around the world, a lot of it housing massive nodes of the hyperscale cloud platforms. Another is a new set of blueprints designed for specific use cases to speed up the process of deploying customer equipment in Digital’s data centers. Further out on the platform roadmap are things like edge deployment options and a centralized management plane for customers’ global infrastructure.

‘Centers of Data Exchange’

Computing is getting distributed, and enterprises going through digital transformation are finding themselves in need of infrastructure in more places than ever before. They need wide geographic reach both to serve their employees and customers and to ingest data from the ballooning number of connected devices.

After studying hundreds of customer deployments – the likes of Uber, LinkedIn, Adobe, and Morgan Stanley – Digital’s team identified some patterns and commonalities, one of the biggest ones being that companies today were building what Bishop described as “centers of data exchange.”

“Data is being generated outside of the cloud, it’s being generated outside of the legacy data center,” he said. A company needs centers of data exchange to enable business workflows that utilize that data. They are where the data is collected and stored but also where cloud services and enterprises’ own systems can access it for analytics or other types of processing.

To date, Digital’s “campus” model has rested on interconnecting its data centers in each metro via a dedicated private network. Thus, a customer in one data center within a metro can easily connect their network to a customer in another data center in the same metro. Within the same campuses, large customers can buy direct private links to hyperscale cloud platforms.

Using Digital partner Megaport’s software-defined interconnection platform, customers can also provision virtual links between their networks within the campuses. As part of the new platform push, Digital is planning to interconnect its campuses globally, to make it easier for companies to link with their partners, service providers, or their own infrastructure in different places around the world. (Equinix announced a similar initiative earlier this year.)

Digital is currently working with carriers and some of its customers to find ways to “piggyback” off their backhaul networks that interconnect metros and regions to add “industrialized-strength” connectivity between its metros and regions, Bishop said.

The Blueprints

The company designed data center deployment blueprints for five common use cases:

  • Network Hub for rewiring the network: consolidates and localizes traffic into ingress/egress points to optimize network performance and cost
  • Control Hub for implementing hybrid IT controls: hosts adjacent security and IT controls to improve security posture and IT operations, tailored infrastructure deployments matching hyper-converged infrastructure configurations, and density requirements for control points
  • Data Hub for optimizing data exchange: localizes data aggregation, staging, analytics, streaming, and data management to optimize data exchange and maintain data compliance
  • SX Fabric for interconnecting global workflows: adds SDN overlay to service-chain multi-cloud and B2B application ecosystems. Connects hubs across metros and regions to enable secure, highly-efficient, and distributed workflows

For each of the use cases, Digital now has a standard, optimized package of pre-designed data center space, power, cooling, and connectivity. A Network Hub, for example, is two cabinets – one primary and the other redundant – powered by about 5kW, in a 125-square foot cage, Bishop said.

The Data Hub, on the other hand, is where a customer would deploy their storage arrays or data warehouse systems, such as Hadoop clusters, NetApp, Dell EMC, or Oracle Exadata hardware. These are “large, contiguous spaces,” designed for higher power densities and specialized cooling requirements, with about 500kW of power capacity.

Digital is partnering with other vendors to develop IT architecture for these deployments. The first three partners, announced today, are Cisco, IBM, and the edge data center company Vapor IO, each with its own flavor of Network Hub.

Cisco’s Secure Agile Exchange solution is for coordinating traffic exchange, virtualizing the network edge at the hub, standing up a network fabric, and enabling virtual network functions. IBM’s solution is for its Cloud Direct Link, which is a way to interconnect with IBM Cloud and its service provider ecosystem. IBM is also offering hybrid IT solutions for cloud, mainframes, blockchain, and Watson.

The Vapor IO solution plugs the customer’s network into Vapor’s Kinetic Edge networks of edge data centers. The startup is currently in the middle of deploying these networks in several metros around the US. According to Vapor’s announcement last week, its partnership with Digital starts in two cities – Atlanta and Chicago – where customers will be able to participate in its new edge peering exchanges.

Interconnection Is a Platform’s Lifeblood

While historically Digital’s focus has been on wholesale data center development and leasing, in recent years the REIT has been aggressively expanding its retail colocation and interconnection business, mostly via acquisition. To that end, it followed its massive 2015 acquisition of Telx, a leading US interconnection player, with the purchase of eight Equinix data centers in Europe the following year. (Equinix was forced to sell them by antitrust regulators.) Last week, it announced a massive deal to acquire Interxion, one of Europe’s largest interconnection players, but the deal has yet to close.

The interconnection bit is crucial to Digital’s current platform building exercise. It is what makes a data center a marketplace, while a global network of interconnection hubs makes the marketplace global. The Interxion acquisition, if closed successfully, will help a lot in that department.

One of the measures of success for platform companies of the more mainstream variety is getting to a point where your platform is so pervasive in a market, it’s impossible to avoid. Can you build a successful media brand without a Facebook page and a Twitter account? How about a hotel business without competing with Airbnb?

In the colocation and interconnection world, Equinix is arguably closer than any other company to having that kind of presence, having focused on nurturing interconnection communities inside its data centers since its birth. As enterprises outsource more and more of their IT infrastructure, both Equinix and Digital (and many others) are racing to take a bigger bite out of that growing pie. Digital now has to convince enterprises that it has the more robust platform that can be the one-stop shop for all their modern infrastructure needs.

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