In a statement published on its website, Equinix said that the ransomware attack on its infrastructure disclosed earlier this month has been fully contained, with no customers affected and no data lost.

"Our mitigation efforts have yielded full containment of the recent security incident," the company said.

Equinix had said earlier that it was able to reach a milestone in its containment and mitigation efforts "that we believe will prevent the release of any data associated with this incident," and that all internal systems were close to being fully restored.

The company still hasn’t released details about the attack, but according to a report by BleepingComputer, the particular strain of ransomware involved was Netwalker, and attackers asked for $4.5 million in ransom. The attackers didn't just encrypt company systems and make them unusable, however. They also indicated that they stole files containing financial information, payroll, accounting, audits, and data center reports.

Equinix did not confirm any of these details in its statement. The company hasn’t responded to repeated requests for comment by DCK.

With 2019 revenue of $5.5 billion and around 200 data centers around the world, Equinix supports thousands of customers including many of the world’s largest corporations.

In August, a power outage at a London data center affected hundreds of Equinix clients, and there were many complaints about a lack of communication on the part of the data center provider. This time, however, Equinix posted regular updates about the attack and its response, even if the information provided was very limited.

In addition, there are no signs or public reports that any customers were affected, an indication that Equinix was well prepared for an attack of this type.

"Their internal systems were kept separate from clients' systems," said Katie Teitler, senior analyst at TAG Cyber, a security research firm. "This is one of the principles of zero trust, and one of the reasons zero trust has been so buzzworthy in the last few years. If Equinix's customers' systems had been touched, this would be an even bigger story."

What Is Netwalker?

The Netwalker ransomware that was allegedly used in the Equinix attack appears to have been involved in other recent high-profile attacks.

In June the University of California, San Francisco paid $1.14 million to attackers after ransomware took down servers at its school of medicine.

Netwalker is relatively new, having been active for about a year, according to a report by Heimdal Security, and was created by a group of Russian-speaking hackers.

In March it shifted to a ransomware-as-a-service model, and in April the group behind it started recruiting experienced network hackers to go after big targets like businesses, hospitals, and government agencies by looking for unpatched VPN appliances, weak Remote Desktop Protocol passwords, and exposed web applications.

The attackers use a pants-and-suspenders strategy to get their ransoms paid. They would first shut down systems, encrypt all the files on them, and delete all the backups they could find. But if their victims had a good, isolated set of backups and a robust recovery plan, they would have a second threat: they would post screenshots of the files they stole on their public website, and if the victims didn't pay up, they would expose the files themselves.

As a result, in March, April, May, June, and July the ransomware was used to extort $25 million from victims, according to McAfee.

For victims, the cost of the ransom is a small part of the total effect of the ransomware, as they lose business, pay for remediation, and incur other costs as part of their recovery efforts.

And then there's the part that nobody wants to talk about, said Caleb Barlow, president and CEO of CynergisTek, a privacy and security company. Barlow was previously an IBM security executive, leading the IBM X-Force Threat Intelligence organization.

"The real fear is not that they publish data, it’s that they change data," he said. "With the level of access required to wipe or publish data, you could also just as easily change it, and the problem for any company is that if you lose the integrity of your data, you then have to question everything moving forward."

In addition, the attackers could have established permanent footholds in your systems.

"If the adversary is still active on the network and you do not know where they are hiding, then further damage becomes a real concern," he said.

Ransomware Is On the Rise

Netwalker is just one of many active ransomware campaigns that have stepped up attacks recently.

According to the latest Beazley Breach Insights Report, the number of incidents involving ransomware in the first quarter of 2020 increased by 25 percent compared to the last quarter of 2019.

"Ransomware operations have kicked into high gear this year, hitting a number of large organizations," said Inga Goddijn, executive VP at Risk Based Security.

And no company is safe.

"The event at Equinix reinforces the old adage that no organization is immune from attack," she said. "Our researchers see hundreds of breach announcements every year that begin with the phrase ‘we take privacy and security seriously.’"

Often, the root cause comes down to basic security hygiene, since ransomware often comes in via unpatched systems, weak password, or phishing emails.

And data center providers are juicy targets.

"A cybercriminal group can minimally invest in a single human driver or automated ransomware attack but impact a large number of businesses – the data center's client base," said Francisco Donoso, director of global security strategy at Kudelski Security. "This means that their potential return on investment could be rather large. A single organization that was a client of the data center provider could pay for the decryption key, or the data center provider may be pressured to pay for the decryption key in order to restore critical services for their clients."

In April IT services and data center provider Cognizant was hit by a ransomware attack that could cost it between $50 million and $70 million, the company told investors in July.

This past Christmas Eve cloud hosting provider Data Resolution was brought down by a ransomware attack, according to security researcher Brian Krebs.

Also in December a ransomware attack hit CyrusOne's managed services division, affecting six customers at its New York data center.

Other data center providers hit by ransomware last year include SmarterASP.NET, A2 Hosting, and iNSYNQ. In all three cases, it took weeks to fully recover customer data.

On-prem enterprise data centers are also vulnerable.

In the spring of 2019 a ransomware attack against Oslo-based aluminum producer Norsk Hydro cost the company between $72 and $83 million, only $24 million of which was covered by cyber insurance, the company said in an annual report released earlier this year.

And the costliest ransomware attack so far this year was against Denmark-based facilities management company ISS World. In March the company told investors that it will cost between $71 and $127 million to recover.

"One of the main takeaways is that no organization or network is entirely safe from a ransomware attack," said Jamie Hart, cyber threat intelligence analyst at Digital Shadows, a San Francisco-based cybersecurity company. "Vulnerabilities can be found, systems can be misconfigured, and employees can be misled."

Data center managers should double-check that their remote desktop protocol servers are secure and do not allow open internet connections, he said, that they use multifactor authentication, that privileges are limited to the least needed, that the number of administration accounts is minimized, and that all software and systems are patched and updated.

Data centers should also have a response plan in place, practice that plan, and train employees to spot phishing attacks.

In May, when Equinix reported its first-quarter earnings, just a few weeks after California became the first state to issue wide-ranging lockdown orders in response to the pandemic, the company’s executives estimated that the crisis would add up to $50 million in costs for the full year. That estimate resulted from an exercise in “scenario planning,” Equinix CFO, Keith Taylor, said at the time.

Now that the scenario has played out over six more months, the company’s executives expect the impact to be in the $20 million to $30 million range, Taylor said on Equinix’s third-quarter earnings call Wednesday.

“Clearly, we’ve done meaningfully better than we originally anticipated,” he said.

The pandemic’s negative business impact appears to have been relatively limited for the largest publicly traded US-based data center providers overall. All have cited low “exposure” to the worst-hit industries, such as travel, hospitality, and retail, and the impact has come primarily as a combination of delayed payments by some of the hard-hit customers, some customers going out of business, additional remote-hands expenses to help customers who couldn’t physically get to their data center sites, and assistance for the data center providers’ own employees.

Revenue from Equinix’s colocation, interconnection, and managed infrastructure services grew in the third quarter, both sequentially and as compared to the same period last year. The company reported $1.52 billion in revenue for the quarter – up from $1.47 billion in the third quarter of 2019.

The shift to remote work and entertainment has driven massive spikes in traffic on the Equinix Internet Exchange, its global peering exchanges in data centers across 30-plus markets, and in the amount of network interconnections among the company’s customers customers.

Peak traffic on the IX has been up 43 percent year over year and 7 percent up from quarter to quarter, Equinix said. The company added 8,500 interconnections in the third quarter.

On the earnings call, its executives highlighted Equinix’s entry into India through the acquisition of GPX India, a data center provider with two sites in Mumbai, for $161 million. The deal was announced in August and is expected to close in the first quarter of 2021.

Taylor said Equinix has seen interest across all customer verticals it serves in the Mumbai market. Those verticals are network providers (24 percent of revenue), cloud and IT service providers (28 percent), content and digital media companies (14 percent), financial services (16 percent), and enterprises (18 percent).

Equinix president and CEO Charles Meyers said a single hyperscale client has agreed to lease the first phase of a data center in Japan that’s part of its joint venture with GIC, Singapore’s state-owned investment fund. The data center is part of xScale, Equinix’s program to build data centers specifically for hyperscale clients.

Other big developments in the third quarter were closing of Equinix’s acquisition of 12 Bell Canada data centers (acquisition of the 13th one in the $750 million deal is expected to close in December), and the launch of Equinix Metal, a bare-metal Infrastructure-as-a-Service offering built on technology developed by Packet, a startup Equinix acquired for $335 million at the start of the year.

Equinix has raised its full-year revenue guidance by $39 million at the midpoint of the forecasted range from its second-quarter guidance. The company now expects to drive between $5.99 billion and $6 billion in revenue for this year – an 8 percent increase from 2019.

Equinix in October went live with Equinix Metal, a fully automated and interconnected bare metal-as-a-service offering at its data centers in Silicon Valley, Ashburn, New York Metro, and Amsterdam. Since then, it's added Dallas and Singapore to the mix, with Frankfurt expected to be up and running in the near future.

This came almost exactly seven months after the firm announced it had finalized its $335 million purchase of the New York City-based bare metal startup Packet.

Equinix Metal expands the colocation giant's product portfolio. It also seems to put it in competition with cloud providers, which represent a sizable slice of its customer base.

"I don't think so," Zac Smith, Packet's founder and former CEO, told DCK when we asked about Equinix competing with its customers. "Do we offer a similar capability in terms of being able to take a computer and turn it on? I think so. Do we compete for the value proposition of a public cloud? I do not."

Smith has been managing director of bare metal at Equinix since March after nearly six years leading Packet. According to him, comparing Equinix's offering with what cloud providers are offering in the bare metal arena is something of an apples-to-oranges comparison.

"Most people are choosing and working with public clouds for their rich ecosystem of software applications," he said. "I don't think anybody goes to a public cloud specifically to buy CPU cycles; they go there so that they can have access to the rich amount of integrated applications like Redshift or like data pipelining."

Actually, the ability to fire up a bare metal instance to purchase some CPU cycles is not all that Equnix Metal offers, since their bare metal servers will be hooked-up to Cloud Exchange Fabric, which has now been rebranded as Equinix Fabric. 

"We've brought our Equinix Fabric capability all the way down to the bare metal compute layer, so within about 15 minutes from signing up on Equinix Metal you're going to be able to activate our fabric capability and interconnect with our thousands of fabric participants," Smith said.

This means customers will be able to seamlessly deploy hybrid multi-cloud architectures and quickly access thousands of networks, enterprises, and clouds on Platform Equinix.

The road map for now is to expand the bare metal availability into 14 regions by the end of the year. However, Smith said that in the long term plans are for bare metal as a service to be universally available at Equinix's colocation data centers.

"Over time, we hope that we can put the Equinix Metal capabilities in every single one of our regions," he said. "At this point we're focusing on how to give that capability to our 14 densest interconnection markets, and then expand that into other places where our customers have expressed interest."

Although some users will want to incorporate the service as a permanent part of their infrastructure, Smith said perhaps a bigger use case will be customers who want to try something on for size before committing racks of equipment to a colocation region. For example, a company that's seeing an uptick in business from Asia might want to see if it helps to have compute sitting in a data center in, say, Singapore or Tokyo to improve their customers' experience.

"We can do that virtually for you, and then if you choose that you want to do it in colocation and own your own infrastructure, that's great," he said.

Another use would be for burst compute capacity -- to handle the extra compute a retailer might temporarily need during the holiday shopping season or to help an accounting company at tax time.

Cloud bursting and a quick way to expand geographic reach also happen to be two of the primary use cases for public cloud platforms.

"We've seen a huge amount of that related to COVID, as people's workload just changed dramatically and showed up in different places for them," he said. "That's why we focused on not only bringing the programmatic access to metal, but making sure that it was tied deeply into our fabric. That way, as long as you're a colocation customer and you're on fabric, you can programmatically turn up access to low-latency bare metal in that same region and expand your footprint for one hour or for one year.

"It's incremental to us. We're offering hourly pricing or annual pricing, so that people can use it how they need to."

Currently Equinix Metal is supporting x86 (both Intel and AMD) and Arm architectures, Smith said.

"But we will continue to support multiple architectures as the opinions of our customers drive us there," he added.

Equinix this week is celebrating the first anniversary of its Packet acquisition by launching new features for Equinix Metal, the bare-metal-as-a-service offering that resulted from the $335 million deal. The enhancements focus mostly on hybrid cloud and DevOps use cases.

Equinix Metal, built on top of Packet's platform, provides access to bare-metal servers housed in Equinix data centers. That offering alone made Metal stand out in a world where most other IaaS platforms focus on virtual servers and lack the far-flung reach of Equinix's global data center network.

DevOps Integrations

Perhaps most interesting, especially for businesses looking for alternatives to conventional public clouds, is the addition of native Equinix Metal integrations with Mirantis Container Cloud and Cohesity. The former is a Kubernetes-based platform for deploying containerized applications, and the latter is a multi-cloud data management solution.

The integrations are meant to make Metal easier to use as part of modern multi-cloud environments. Equinix even said they would introduce a "DevOps-friendly approach for seamless deployment.”

It's arguably a bit much to point to Kubernetes and data management integrations alone as the ticket to a DevOps-friendly bare-metal-as-a-service. But the company said this was just the beginning. "We expect future additions by other partners throughout the rest of the year," Jacob Smith, VP of strategy for Equinix Metal and a Packet co-founder, told DCK.

"We continue to invest heavily in our open source ecosystem, especially with Terraform and Kubernetes," he added.

Integrations with DevOps-centric platforms like these won't exactly turn Equinix Metal into a public cloud in its own right. But they will make it much easier to deploy the same types of workloads on the platform that many businesses currently host on public clouds like AWS and Azure -- or to build hybrid environments that deploy some resources to public clouds and others to bare-metal Equinix servers.

Metal in More Data Centers

Equinix also announced this week that it has expanded Metal to a total of eighteen metropolitan regions in North America, Europe, and Asia (from around 10).

Combined with full support for Equinix Fabric, which offers speeds up to 100G, the expansion of Equinix Metal's data center availability increases its appeal for hosting edge workloads. 

"It’s often said that the edge 'is at the Equinix' due to the large concentration of networks, clouds and other ecosystems that interact at regional Equinix data centers," Smith said. "Equinix Metal provides programmatic access to 18 key global locations and unlocks interconnection through our native integration with Equinix Fabric."

Here again, the expansions give Equinix Metal a leg up over public clouds, which don't offer so many data center locations, certainly not with the broad bare-metal options of Equinix.

Conclusion

On the whole, the Equinix Metal updates unveiled this week are small in scale, amounting to a few new data center locations and a few new integrations.

But the bigger takeaway lies in what these additions say about Equinix's strategy. They underline the company's goal of building a bare-metal-as-a-service solution that offers the same performance and seamless deployment experience as public clouds but with levels of geographic reach and network performance that public clouds can't match.

While it’s hard to imagine many organizations moving their workloads from the public cloud to something like Equinix Metal entirely, many will view the latter as an attractive addition to their hybrid cloud or multi-cloud environments

While more businesses than ever are outsourcing data storage to cloud providers, there are plenty who have held back, citing concerns around security and privacy, performance, availability, governance and regulatory requirements.

Pure Storage and Equinix think they have the answer. The two companies have formed a mutually beneficial partnership that provides secure, single tenant storage from Pure, managed by the customer, on hardware hosted and managed by Equinix. All of the software and hardware functionality is specified by the customer and dedicated to them. That’s a different value proposition from what you would get with a public cloud provider, which is likely to run storage software on its own white box x86 servers.

Called Pure Storage on Equinix Metal, the solution is based on Equinix’s bare metal as a service offering that up until now included onlycompute and network delivered on demand, through a web portal in a fully automated fashion. The entire Pure Storage portfolio, including FlashArray, FlashBlade and Portworx, has been integrated into the Equinix Metal platform. Arrays are pre-enrolled and available for immediate, on-demand deployment of shared storage and available for consumption-based purchasing, explained Jack Hogan, Pure Storage’s vice president of technology strategy. Users can log into the Equinix Metal web portal to acquire and immediately start using the hosted, full stack (compute, storage and networking).

“For businesses that know they want a Pure Storage platform, this option gives them the exact capabilities they want as a service, and it looks like they are running it in-house. All they have to do is layer their applications on top and go from there,” said Eric Burgener, a vice president at IDC. “It’s an interesting option for businesses that want to outsource the management of the underlying hardware, and for those with workload requirements that aren’t well met with traditional web-scale public cloud-based infrastructures.”

There are several use cases for this service, including:

• Hybrid and edge cloud-native container storage
• High-performance, near-edge cloud storage
• Hybrid cloud and data recovery as a service for virtual environments

With the enterprise-class capability of the Pure storage array, Burgener said companies might be able to solve many of the challenges of storage in the public cloud. If a regulation requires a company to always know where its data is physically located, for example, the company knows exactly which facility it resides on, down to the particular piece of hardware. That’s not true with public cloud storage providers, which might move workloads to different availability zones.

The model is interesting enough, Burgener said, that he expects other storage vendors to pursue similar partnerships.

Here's a company name you didn't use to hear in conjunction with open source software release cycles but now increasingly will: Equinix.

When the colocation giant acquired Packet, a bare metal cloud provider, last year, the crown jewel was Packet's infrastructure automation technology, which made the experience of provisioning bare metal servers similar to that of provisioning VMs in a public cloud. The platform, called Tinkerbell, is open source, and Equinix says it uses it to provision thousands of servers daily for its bare metal-as-a-service business, now called Equinix Metal.

The company open sourced the software under the "permissive" Apache 2.0 license last May, allowing it to be included in proprietary commercial projects. In November, the software came under the umbrella of the Linux Foundation as a Cloud Native Computing Foundation project.

According to Mark Coleman, director of developer relations at Equinix Metal, there's been growing interest in Tinkerbell from enterprise users since the project became part of the CNCF.

"Before we went into the CNCF we had a lot of people kicking the tires, but the impression I got was that they were home-lab people," he said. "They were looking for a way to run a small number of servers at home or maybe in small companies. Since we joined the sandbox, the type of conversations we're having are much, much larger. You can see that in the dev stats about all the different companies that are contributing to this now. You've got VMware in there, Alibaba Cloud, and all sorts of larger companies starting to look at this more seriously.

"I think it's because of joining the CNCF... If you're going to install someone else's tool in such a critical area of your stack, you want to know that there's open governance and that you can get a seat at the table to make roadmap changes."

There is currently no commercial "enterprise" version of Tinkerbell, although that remains a future possibility. If that happens, however, it probably won't be coming from Equinix.

"There are no plans at the moment for any commercial side to this," Coleman said. "It's already hugely valuable to us and to the community anyway."

This week Equinix announced new Tinkerbell features and capabilities. The announcement was more of a progress report than a new release. Although all of the new features are functional, none of them have had enough battle testing to be considered production-ready. Equinix presented them as something akin to a beta release, or proof of concept, to spark developer interest.

Some of the new features are quite ambitious.

Hook, for example, is a new in-memory operating system installation environment intended to eventually replace OSIE (Operating System Installation Environment), one of the five microservices that makeup Tinkerbell. According to Coleman, Hook will reduce the time needed to deploy operating systems other than the ten or so that Tinkerbell is configured to support out-of-the-box.

"Hook helps us to do an awful lot of things," he said, "but one of the things that it has helped us do is add new operating systems more easily."

He said it can reduce the time it takes to add an unsupported operating system from a couple of weeks down to a couple of hours, and that Equinix expects to be using it by default sometime during the second quarter.

"It's a pluggable alternative, so you can use OSIE or Hook," he added. "Hook is a lot faster, but it hasn't yet been put under the kind of load that OSIE has. We're doing testing internally right now, and we expect that it's going to perform well under load."

Another new feature is Action Hub, for sharing "actions," or steps in the procurement process, by taking advantage of CNCF Artifact Hub, a CNCF project that allows projects to create hubs for sharing various types of software. This makes it possible for users to share and reuse common workflows.

"What we've wanted to do for a while is to make it possible for other people to consume our actions a bit like on the Docker Hub," Coleman said. "You can use anyone else's work, you can download it, you can inherit from it, you can change it, and then you can push up your version again if you want to. That's what we're doing with the Action Hub." 

Tinkerbell also now has tentative support for Cluster API -- Kubernetes-style APIs for cluster creation, configuration, and management.

"In this release, we've just put out the proof of concept for the custom API for Kubernetes," he said. "What you can now do with Tinkerbell is say, 'Here's a whole bunch of servers that I'm managing and I'd like to install a Kubernetes cluster on them.' The cluster API implementation will talk to Tinkerbell to get all those servers to a certain state, and then install Kubernetes on it."

"But that's very proof-of-concept now," he added. "We've added a bit of the interface so that people can go and test it, and then we're going to figure out exactly how that fits into the paradigm a little bit later, but there seems to be quite a lot of interest in going further than just provisioning and actually going all the way up to the full running stack, whatever that might be."

As more and more businesses pivot to hybrid cloud architectures, data center colocation providers are working to make sure their platforms jive with hybrid models. But they are doing so in different ways. To assess the state of hybrid cloud within the colocation market, Data Center Knowledge is interviewing a series of data center providers about their strategies for positioning their colocation platforms to enable customers’ hybrid cloud strategies.

This first article focuses on Equinix’s hybrid cloud strategy.

As the world's largest colocation provider, Equinix doesn't face as much pressure as its peers to leverage the hybrid cloud trend as a means of expanding its business. But it does need to cater to enterprise customers who are seeking flexible solutions for connecting workloads hosted in Equinix colocation facilities to public cloud services.

At the same time, Equinix remains keen to protect the unique identity that it has carved out for itself as a colocation provider that not only provides data center real estate, but also interconnection and, more recently, managed infrastructure offerings that allow customers to deploy workloads on preconfigured bare-metal servers in seconds.

Equinix is meeting this challenge by "building an ecosystem of solutions that enable customers to assemble and deploy hybrid cloud solutions on top of our global infrastructure," according to Jacob Smith, VP bare metal strategy at Equinix.

That means the company continues to invest in its core colocation platform while simultaneously expanding more novel services -- like Network Edge, Equinix Metal and Equinix Fabric  -- that give customers flexible deployment options for hybrid workloads.

Helping Enterprises Build Hybrid Cloud Faster

Asked about the pain points that Equinix aims to help colocation customers solve by supporting hybrid cloud architectures, Smith emphasized businesses' need to "move faster" first and foremost. The company's central goal is to deliver "an architecture that can evolve and scale over time in response to opportunities," he said.

He mentioned the importance of optimizing performance and costs, too, as considerations for enabling hybrid architectures, but he framed hybrid cloud primarily as a way for businesses to scale and adapt their existing workloads.

It would seem, then, that Equinix's key focus within the realm of hybrid cloud is on helping enterprises migrate from legacy architectures to hybrid alternatives in order to modernize their IT estates.

Smith did say that Equinix is seeing "strong growth from 'cloud natives going hybrid,'" meaning companies that already have agile cloud architectures in place but want to gain more control and better performance by extending them to hybrid architectures. Yet enterprises that want to "invest in moving faster and becoming more digital" are driving much of the interest in Equinix's hybrid offerings, he said.

Global Colocation Platform as a Key to Hybrid Cloud Success

Equinix, which in recent years has steadily expanded its global reach to include more than 200 data centers on five continents, aims to leverage the scale of its data center operation as a key differentiator for its hybrid cloud strategy.

"We’re building an ecosystem of solutions that enable customers to assemble and deploy hybrid cloud solutions on top of our global infrastructure," Smith said, adding that the company's large footprint is valuable to customers because it allows them to "place data and trusted digital assets literally at the center of the clouds, users, and other providers about which they care."

Given that one key motivation for migrating to a hybrid cloud architecture is to improve performance for user bases located in geographies that the public cloud alone can't serve well, it's unsurprising that Equinix is working to capitalize on the scale of its colocation platform when delivering hybrid cloud solutions. It's a strength that relatively few other colo providers can match.

Partnerships Play Critical Role in Equinix’s Hybrid Cloud Strategy

Despite its behemoth status in the colocation industry and its investment in in-house hybrid cloud solutions like Metal and Fabric, Equinix is leaning heavily on partnerships to help build out its suite of hybrid cloud offerings.

"Staying true to our core value of neutrality, we see partners as the critical part of Equinix's hybrid cloud strategy," Smith said. Equinix's network of partners that offer services relevant for hybrid use cases include OEM and storage vendors like Dell, Cisco, and Pure Storage, as well as companies rooted in "the wide world of open source software, SaaS, and DevOps tooling, where we are investing heavily," according to Smith.

Interestingly, he didn't bring up public cloud vendors as key partners in Equinix's hybrid strategy. Equinix does work actively with these companies to bring platforms like AWS Outposts and Azure Arc to its customers. Equinix interconnect services also integrate seamlessly with public cloud platforms.

It's clear, though, that Equinix sees the hybrid cloud landscape as being about more than merely integrating with hybrid cloud services offered by the public cloud vendors. Equinix appears equally -- if not more -- interested in investing in a broader set of services and platforms that allow its customers to build hybrid architectures using a wide variety of configurations.

Conclusion

In short, Equinix's hybrid cloud strategy centers around blending in-house technologies with partner solutions, including but not limited to those of public cloud vendors. And although its major focus to date appears to be on helping enterprises move into hybrid architectures in order to gain speed and agility, the company is also eying businesses that already are cloud-native but want more performance and control than they can achieve through the public cloud alone.

When it rolled out its subscription service for on-prem storage earlier this month, Dell Technologies also said it would leverage Equinix data centers around the world to deploy these storage systems in, if that’s what customers desire.

The service, and other services that are or will be part of Dell’s push into selling computing infrastructure subscriptions, branded as Apex, aims to give enterprise customers a more cloud-like experience than buying Dell hardware on their own and getting it deployed in their own or colocation data centers.

Rather than buy and manage their own equipment, customers can subscribe to Apex Data Storage Services, and Dell will install and manage the storage hardware for them in data centers of the customers’ choice. Like traditional cloud infrastructure services, Dell will charge customers for the capacity they use, not total capacity deployed.

Apex Cloud Services, Dell’s EMC VxRail hyperconverged infrastructure as a service that was announced along with Apex storage, is not part of the Equinix agreement.

Equinix is the world’s largest colocation provider, with more than 220 data centers globally. Shifting the burden of installing and managing the storage equipment alone will make the Apex storage service attractive, Eric Schwartz, Equinix’s chief strategy and development officer, told DCK.

“I have yet to run across an enterprise technology group that has extra capacity to manage more stuff,” he said. “So, the ability to rely on Dell to deliver the comprehensive whole is a clear advantage.”

Existing Equinix customers will see value in their ability to locate Dell Apex infrastructure next to their existing infrastructure in Equinix facilities, he added.

Equinix gives Dell an easy way to roll Apex out globally while growing its own value proposition for customers, said Steve McDowell, a senior analyst at Moor Insights & Strategy. “Equinix takes care of the real estate, power, and air conditioning,” he said. “Equinix is already a big, key player, but having Dell as a partner increases its value proposition and visibility in the hosted, managed services space.”

Enterprise IT Giants Push Into Everything-as-a-Service

Dell, Hewlett-Packard Enterprise, Cisco Systems, and other hardware providers are all racing to make their products sold in the conventional way available through a subscription-based, as-a-service model.

Dell’s Apex strategy, announced in 2020, promises a single interface for provisioning public cloud services and its own on-premises products as a hybrid cloud.

Last year Dell partnered with the US data center provider Switch and FedEx to build small data centers at FedEx logistics centers to sell Dell products as a service in locations that could be considered “edge.”

HPE pledged in 2019 to make every product it sold available as a service under the HPE GreenLake brand within three years. Most recently, in April, Cisco announced its own as-a-service strategy. Among storage vendors, NetApp and Pure Storage both have as-a-service offerings, McDowell said.

Equinix has partnering with several of these companies to provide a data center platform for these new services, including HPE GreenLake, Schwartz said.

“It’s a similar proposition, where customers who are purchasing HPE GreenLake but want it located in an Equinix data center can get that packaged and delivered via HPE in the same way as Dell Apex,” he said.

In March Equinix partnered with Pure Storage to deliver a service that pairs Equinix’s bare-metal servers, called Equinix Metal, with Pure Storage hardware, Schwartz said.

How Dell’s Apex Storage Partnership with Equinix Works

Equinix operates data centers in more than 60 markets worldwide and together with Dell it has identified specific data centers in each market where Apex will be available to customers. That allows Dell to manage the Apex storage equipment more easily for customers, because it is grouped together in the same data centers, Schwartz said.

Through Dell’s Apex Console self-service portal customers can easily order block and file storage capacity with three performance levels to choose from, according to a recent Dell blog post. Dell promises that the equipment will be up and running within 14 days of order.

Dell, which owns and operates the hardware, equips a customer with 25 percent additional storage capacity above what they ordered. That way, customers can access additional storage whenever they need it without worrying about running out of capacity. Dell offers the base and on-demand capacity at a single rate, with no penalty or overage fees for the flexibility of on-demand, elastic usage, the blog post said.

The customers’ single point of contact is Dell, but in the background, Equinix provides support, Schwartz said. Equinix and Dell worked together to develop processes and frameworks to make sure customers enjoy a consistent and seamless experience, he said.  

“The combination of Dell Apex and Equinix infrastructure is a win-win because the combined value to the customer is better than what either of us would offer independently,” Schwartz said.

For example, Equinix Fabric provides direct, private network connections to major cloud providers for customers who want to deploy a hybrid cloud environment.

If a customer that uses Dell Apex within an Equinix data center wants to connect to a public cloud provider, the relationships are in place for Equinix staff to support Dell in helping that customer connect to the public cloud, Schwartz said.

Last week’s news of the sovereign wealth fund of Singapore committing to an additional $3.9 billion of investment in Equinix’ xScale global data center portfolio, in addition to the $3.0 billion it already invested, represents one of the most important commitments to the buildout of compact hyperscale capacity in the history of the data center industry. It’s like adding another whole space program, where “space” in this case means “real estate.”

Singapore’s GIC (Government of Singapore Investment Corp.) Sovereign Wealth Fund is a state-owned investment fund, answerable to the President of the country. It accumulates state fiscal surpluses together, reinvesting them strategically in assets with growing value. The revenues from these investments are then redirected mainly towards the country’s own national defense.

In March 2020, as the pandemic took hold, GIC posted its lowest 20-year annualized return on investment since 2009, at just 2.7 percent. That’s when its managers made the bold decision to diversify its investments even further, including in private markets, utilities providers, and most notably, data centers.

The agreement announced Monday, according to Equinix, will give GIC an 80 percent equity interest in all future joint ventures emerging from xScale, with Equinix retaining 20 percent interest. As our readers will recall, xScale was formed from a previous Equinix venture called the Hyperscale Infrastructure Team. Using Equinix’ talent for design and implementation, Singapore has been able to significantly boost the deployment of global hyperscale facilities. And from Equinix’ perspective, a one-fifth share of this huge pie may be better than total ownership of what it started out with.

But as an Equinix spokesperson told Data Center Knowledge, this does not mean xScale will be concentrating its interest principally on Singapore, or even just the Asia/Pacific region.

Specifically in Europe, Equinix told us, the FLAP quartet of Frankfurt, London, Amsterdam, and Paris collectively account for 80 percent of that continent’s total market demand. Frankfurt is expected to grow its private interconnection demand by a compound annual growth rate of 50 percent, up until 2023. Meanwhile, South America boasts one of the fastest growing Internet hot spots in all the world, with interconnection bandwidth in São Paulo growing at 51 percent CAGR over the same period.

“As one of the world’s 15 largest economies and the second largest in Latin America,” Equinix’ note to us reads, “Mexico remains a bright spot in LATAM’s digital economy. Mexico ranks 38th out of 193 countries in the UN’s Online Service Index (OSI). The Global Interconnection Index (GXI) estimates that the interconnection bandwidth capacity growth rate of Mexico City will reach a 53 percent CAGR by 2023. This reflects the high demand for interconnection in the region within the content and media and manufacturing industries. Mexico City will be the site of one xScale data center as a part of the new agreement with GIC.”

Meanwhile, the Asia/Pacific region, said the company, expects 49 percent annual growth in the same period, with Tokyo growing at 48 percent CAGR.

So, after examining this map, where does Equinix perceive to be the highest-priority cities for building new xScale facilities? The company responded with a list of eight metropolitan areas, in the following order: Frankfurt, Helsinki, Madrid, Milan, Paris, Warsaw, Mexico City, and São Paulo.

How will cloud service providers utilize the resources of xScale facilities, and what will make this utilization different than hyperscale as we’ve come to know it?

“With xScale data centers, hyperscale companies can add core deployments to their existing access-point footprints at Equinix,” the company responded, “enabling their growth on a single platform that can immediately span 63 global metros and offer direct interconnection, within a vibrant set of ecosystems, to their customers and strategic business partners.”

Equinix’ edge services will be tied directly to xScale’s access points, the note continued, thereby enabling higher-speed connections closer to end users. Hyperscale operators can consolidate both their core and access point deployments, the company continued, into a single provider.

During an Equinix Analyst Day Presentation Wednesday, Jennifer Ruch, who directs sustainability efforts for the global data center colocation leader, added further detail to the company’s stated commitments to reduce carbon emissions in line with objectives set by the Paris Climate Accords. Categorizing some efforts as “incremental energy efficiency improvements,” Ruch pointed to non-fossil diesel fuel and so-called “green hydrogen-powered fuel cells” as options on the table.

So-called Scope 1 emissions are attributable to operational by-products, including the company’s direct use of electricity to power and cool equipment. About two percent of emissions in this category, explained Ruch, are attributable to on-site backup generation, and the use of refrigerants in cooling.

Equinix has officially embraced the position of the global scientific community that it’s critically important for energy consumers to help reduce global warming rates to 1.5 degrees Celsius or lower. The actual milestone year has been a matter of some confusion in diplomatic circles — some have said 1.5 degrees by 2030, others 2035, while a few have taken the liberty of calling the target date “mid-century.” It’s such a point of contention that the United Nations’ own Web site now omits the target date entirely, leaving the target amount as 1.5 to 2.0 degrees, without specifying when.

For its part, Equinix has set the goal where the United States (which has re-entered the Paris accords under the present administration) refers to it: 2030.  “As part of its science-based target,” reads the company’s statement last week, “Equinix is aiming to reduce its Scope 1 and 2 emissions (direct and indirect from electricity) by 50% by 2030 against a 2019 baseline.”

“We envision that our operations will be green through a combination of large-scale, renewable energy purchasing, and incremental energy efficiency improvements,” Equinix’ Ruch stated Wednesday.  “New innovations like non-fossil diesel, or green hydrogen-powered fuel cells, may help reduce our remaining Scope 1 emissions.”

Biodiesel fuel refers to a class of energy source refined from feedstocks. It is not ethanol, because its production method is very different. Back in 2006, in a research project that has still been referenced recently, researchers with two Minnesota-based universities estimated that greenhouse gas emissions could be reduced by 12 percent through the production of ethanol, compared to the same energy-yielding amount of petrochemical fuel, while producing the same amount of biodiesel could reduce emissions by 41 percent.

Ethanol ends up providing a net energy gain of about 25 percent over the amount of energy consumed in its production, the Minnesota researchers determined — which, in the long run, is not a particularly sustainable option. Biodiesel, by comparison, yields 93 percent more energy than required to produce it. Some of that gain is on account of grain growers using fewer pesticides, since soybean crops don’t require as much as corn. What’s more, while burning ethanol does reduce carbon monoxide emissions, there are tradeoffs with higher emissions of sulfur and nitrogen oxides — emissions which are barely traceable from soy-based biodiesel.

Theoretically, companies assessing their carbon impacts over time could choose to classify carbon emissions from fuel production as Scope 3 — incidental by-products, similar to what Equinix does with the emissions cost of its employees driving to and from work. But at least thus far, it doesn’t appear Equinix is invoking any such tricks of accounting. It treats the carbon cost of backup fuel as Scope 1.

Equinix has been leveraging its position at the top of the data center service provider market to expand into new areas, such as data center infrastructure for next-gen mobile applications, subsea-cable landing stations, and hyperscale facilities.

On the latest episode of The Data Center Podcast, we interview Jim Poole, VP of business development at Equinix, about these initiatives, as well as its strategy around expanding in emerging markets, reaching data center sustainability, and more.

Take a listen here or anywhere you get your podcasts and be sure to subscribe!

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TRANSCRIPT

Jim Poole, VP of Business Development, Equinix, On The Data Center Podcast

Yevgeniy Sverdlik, DCK:
Hi, everybody. Welcome to the Data Center Podcast. This is Yevgeniy, editor in chief of Data Center Knowledge we have with us today, Jim Poole, he's VP of business development at Equinix. Jim, thank you so much for taking the time today.

Jim Poole, Equinix:
Thanks for having me.

Yevgeniy Sverdlik, DCK:
You have this little tagline on LinkedIn, responsible for the investigation and seeding of new digital ecosystems. What does that mean?

Jim Poole, Equinix:
Yes.

Yevgeniy Sverdlik, DCK:
What these new digital ecosystems and how do you see them?

Jim Poole, Equinix:
Yeah, no, that's a good question. So, I don't think it's lost on anybody that the secret sauce of Equinix is the ecosystem idea, right? We've essentially got a whole bunch of people who buy and sell to each other in the same building, right? That's what makes Equinix different than say a wholesale data center provider who gives you a lease and it gives you the keys and you walk away kind of thing. So our whole things is buy sell dynamics. So historically there is an inherent value proposition around something like peering, right? Peering was one network needs to do business with another network and they needed a commonplace to do it. So they came to our sites and the content guy showed up, right. Eventually that extended out of networking and content and went into financial, right?

Jim Poole, Equinix:
Because it became a low latency game. So if you go to Secaucus with us, or if you go to Tokyo or London we've got a whole bunch of algorithmic traders, all sitting right on top of each other. The most efficient way for one digital entity to talk to another digital entity, so say your IT infrastructure to talk to the cloud or one network to talk to another network is to do that through a cross-connect of some sort. That could be physical, could be just fiber that connects your cage to the other guy's cage. That's like the low latency trading environment. There's just a piece of cable between the two sites. Peering is usually more everybody's on the same router, and they're all talking to each other over the same router, because you're sharing routes, right? That's how the internet functions the network of networks because everybody shares everybody else's routes. And then, recently, it's more around automated private interconnection between say a network or an enterprise who sits in our facility in a cloud provider.

Jim Poole, Equinix:
So, now nobody wants to wait for some guy to go plug a cable in from one side to the other side, they want to do it automagically. SDN. Right? Everything's needs to be fast. So when we say digital ecosystems and I kind of gave you those examples, the last one being cloud, everybody wants to connect to cloud. Now those are really big headline, like everybody's conceptually, I think, gets that is, "Okay, yeah, I can see why AI needs to talk to B", but if you were to say, okay, well, how does the satellite business work in the context of that? Or how does the mobile network work in that environment? Or does subsea cables work in that environment? That's what I do. My job is to basically go look at this from a, how do I keep adding value to the ecosystem that is Equinix by making it easier for people who may not necessarily normally interact with somebody like us to help them see that, hey, there's a real value in being a customer of Equinix. And so that's what I work on basically.

Yevgeniy Sverdlik, DCK:
So maybe let's drill down into those few examples. So mobile. Have you been able to seed a mobile [crosstalk 00:03:36]

Jim Poole, Equinix:
Yeah. So, I would say that I would call that the in-process project. So, and the way to think about that is that mobile networks up until 5G are consumer constructs, right? 99.9% of the usage is for a cell phone. So it's just voice and people doing their thing. 5G as a network is intended as a business venture, right? It's to attract business usage onto the network because you could do a bunch of things that you couldn't do, like quality of service and very high throughput and very low latency, right? Stuff that the current mobile network, the 4G network doesn't support. However, Telecom Infrastructure in the existing mobile networks all sits inside of their buildings. And they back haul the traffic to places like us because latency wasn't ever a design consideration. The fact that it's 40 to 50 milliseconds doesn't bother any consumer on a cell phone.

Jim Poole, Equinix:
Netflix works just fine. Right? Everybody's happy. However, if I wanted to do something that say had much lower latency, or I didn't want to transport traffic huge, huge distances, hundreds of miles, then I would need to start breaking traffic out more locally. And I would need to do it at a place where the applications that want to have access to that traffic live well that's a place like Equinix. And that's not, like I said, as much as everybody would think, oh, every network already knows how to get into every data center, that's not actually how it works.A lot of networks, wireline networks show up in places like Equinix and they connect. However, the mobile networks never did that. And so what we do now is we're looking at various different paths that says, "Okay, how do you make it possible to deliver a 5G service to an application that sits inside of an Equinix data center?"

Jim Poole, Equinix:
So that's one big area that I work on as an example. The second I think that I mentioned to you was subsea cables, right? And I've read a couple of your articles, you did nice job. And in the subsea cable business, the thing that's changed in the last say decade is that it used to be 99% of all cables were run by consortium's or big individual telcos. They would go build a cable under the ocean for hundreds of millions of dollars, and then they'd go wholesale it out to a whole bunch of different people. Now just fast forward to 2021, 60% plus of the cables are invested by the hyperscale companies. And they have a very different view of what they want to do with that capacity than say a telco who's trying to monetize it by selling it there. They're doing it for traffic engineering purposes, right.

Jim Poole, Equinix:
They're trying to do it to cater to the fact that their business needs a big giant network. So what they like to do is invest, say with a telco they co-invest, and then they want to bring all that capacity into a place where it's easy to break it out to all the various different people who own it together. And then they don't have to deal with each other after that makes it a lot easier. So the aquaponics environment, which is a multitenant environment lends itself much better to that dynamic. And the fact that most of the wired line terrestrial networks already sit inside of Equinix facilities.

Jim Poole, Equinix:
So if I'm just trying to connect, say a brand new cable that comes in from Europe and connects in Virginia Beach, what they'll do is they'll put the power feed equipment in Virginia Beach, but they put the laser that powers that in Ashburn. And because Ashburn is where they meet all of their partners. And so we do that to the tune of, I think, we've done 40 different cable projects in the last five years. We did 10, just this last year as an example, under various different types of scenarios, but at the highest [crosstalk 00:07:25]

Yevgeniy Sverdlik, DCK:
...by cable projects, you mean projects related to a cable landing?

Jim Poole, Equinix:
To a cable landing in a particular Metro because...

Yevgeniy Sverdlik, DCK:
Enabling that connection from the opposite shore to the terrestrial networks on the shore that you're on.

Jim Poole, Equinix:
And the fancy thing we just did to make it even more fun was we had a customer who was landing in a place that didn't have existing cables landing there. So there was no existing asset to sweat. And so this was Bordeaux, France. So we deployed a brand new data center of Bordeaux France, except this is not a quote unquote, stick-built like we go and pour a slab and build walls and do all the normal things you do to build a big giant data center. This was actually a modular data center design. So it's built in a factory. That's one of the use cases we look at in our business because our businesses is really driven by interconnection.

Jim Poole, Equinix:
So the thing we're trying to do is say, well, cables, subsea cables draw a lot of interconnection, right? People want access to the cable to put their traffic across whatever body of water that they're trying to get across, plan at 70% water. Right? So, when you don't necessarily have a place where you have an existing data center and you have a short time you want to deliver, then modular facilities make a lot of sense because you can do it a lot faster. In this particular case, that was the desire. The company that we were dealing with wanted to be there quick. And so we were able to do that.

Yevgeniy Sverdlik, DCK:
And this was the first time Equinix deployed in this kind of prefabricated modular fashion. And others have done it over the years. This is a first for Equinix. In a way, this is kind of Equinix's response to the network operators wanting a more distributed edge to have these interconnection points in more locations than kind of the traditional metros, right?

Jim Poole, Equinix:
Yeah. Well, it's another interesting example of how take the subsidy example, how it's changed in the sense that it used to be because the application was predominantly voice. It was very much driven by big population centered to big population center. So if you looked at all the trans Atlantic cables, they went from London to New York. Why? Because there's lots of people in both places and they wanted to talk to each other right? Now, well, what's the biggest internet exchange point on the east coast? It's not New York, it's Ashburn, it's Virginia, right? And there are other interconnect points along the coast.

Jim Poole, Equinix:
And so what's happening now is these new cables don't go from just New York to London. They go from Virginia to Bordeaux or from multiple places, Boca Raton, down to Fortaleza Brazil, right. Things that hadn't been done before. So a lot of these interconnections are now more direct, straight shots because the technology allows for it now. There's been improvements in how the cables get built. And so that means there's an interest in diversity. Not everybody wants to all be necessarily in one place. There's some advantage to doing that. But at some point you want to get to other big cities, right. France is a big place.

Yevgeniy Sverdlik, DCK:
So the connection to Bordeaux is interesting because of Bordeaux, not because of some other element or some other city nearby, or... Tell me why Bordeaux? Why is this cable landing in Bordeaux?

Jim Poole, Equinix:
Well, there's access to... It's an alternative route, right? It's not any one of the existing sort of well-used routes. So it's a net new landing. There's also an interest in our part of we have customers who very much pursue a land and expand behavior with us. They are our customers. And then when they go to new markets, they go to markets that we exist in, because it's where the path of least resistance if they want to keep expanding. So, for a long time, France just happens to be a country in which we only operated in Paris, even though we would constantly be asked about other large cities in France. And so the nice coincidence of, hey, a hyperscaler investing in a subsea cable who wants a net new landing place and Equinix who has got customer demand to be in a brand new Metro in a place like France. So nice coincidence. We can go ahead and solve that problem by deploying the modular facilities, and that's basically what happened in that case.

Yevgeniy Sverdlik, DCK:
And modular, for you guys, is a way to reduce risk exposure or maybe right sized capacity for that market, because maybe Bordeaux is in a huge market, right? But in case it turns out to be huge, or bigger than this particular deployment, you can add [crosstalk 00:12:09]

Jim Poole, Equinix:
...more flexibility in terms of the normal data center operator behavior, as you build a shell, that's capable of say supporting 10, 20 megawatts of capacity. Then you spend years filling it up in stages. But you still have to build that big shell, right? In this particular case, like you said, Bordeaux is a smaller market the use cases for that cable or transport in some amount of caching infrastructure, but it's not necessarily going to be like Paris, right. It's not going to [crosstalk 00:12:40]

Yevgeniy Sverdlik, DCK:
Unless all the wineries have a massive digital transformation.

Jim Poole, Equinix:
There you go. That could happen. Then we'd have to go to the south of France too, I guess I'll have to take that down as a [crosstalk 00:12:51]

Yevgeniy Sverdlik, DCK:
What a terrible perspective. I wanted to ask you about the X scale, which is kind of the hyperscale initiative. So Equinix has built an extremely successful business on this laser-focused strategy of retail co-location and interconnection. A few years ago Equinix got into this hyperscale business leasing by megawatts, plural at low costs, relatively low, to what you guys are used to leasing space for. And then and you've had some success there most recently, pre-leasing huge buildings in their entirety to hyperscalers in Dublin and London. Can you just explain why Equinix is in this cutthroat low margin, high upfront investment business of building data centers for hyperscale platforms when it's been so thriving in the interconnection retail colomarket?

Jim Poole, Equinix:
Sure. Yeah. Yeah, no, that's a good question. So, fundamentally the focus of the company has not changed, right. We still make the majority of our revenue and spend the majority of our time on the retail co-location business. We sell by the rack, right? Not by multi megawatts. However, if you think about just the growth of cloud market, any individual cloud company, although this is starting to change outside of the US was not necessarily anywhere near as big as what they would build in the US. And so they've been customers of ours for a very long time, not just like in the US they're their customers for gateway infrastructure and caching infrastructure, but their AZs sit in their own facilities next to hydroelectric dams where power super cheap, right? That's their normal. And wholesalers built that for them, and we haven't.

Jim Poole, Equinix:
And so what was happening was we had some regular server capacity in a lot of our overseas, and they would come to us and say, "Hey, I'm ready to go big. I want more. And I love the Equinix footprint", right? One throat to choke in all of these various different countries. I don't want to have to go to local company ABC because and although it's starting to change, we're still the biggest multi-country international player. And so the question was, for us, how could we satisfy the customer, but not necessarily completely change focus of the company. And so the way we did that is basically through this JV structure. So the reason we call it X scale is to call out the fact that it is different than the rest of the business. And so when we do this, what's happening is we own 20% of the JV and we have an 80% investment partner, in the case of the, the one that we've got set up right now is GIC, which is Singaporean sovereign wealth fund, basically.

Jim Poole, Equinix:
And so we get a fee for managing the facility. We have operational control of the facility. So we get paid fees for that, for managing that, but it sits off balance sheet because it's a JV and only our percentage of the profits from whatever the JV generates comes onto balance sheet. So it doesn't dilute, right? It doesn't drag down the margin profile of the core business, because it's essentially, it's a financial way of solving, and for us just strategically, it means that in a lot of these overseas markets where we want to maybe extend, or maybe even go into a new market at some point. We have a way of doing that in conjunction with say a big hyperscale customer who will go there with us, right? And that makes it attractive. So it's primarily a financial thing, but we can do it and we can do it in a way that it like, say it doesn't fundamentally change. It's actually run as a separate business unit.

Yevgeniy Sverdlik, DCK:
Another piece of recent news is Equinix's partnership with Dell around Apex, which is Dell's new on-demand subscription-based hardware as a service offering. This particular deal is focused on storage. Dell is basically offering storage as a service in an Equinix facility of their choice to a customer, whichever Equinix facility a customer chooses, they can use Dell storage. How does this work from your side? Did Dell lease or reserve a bunch of capacity in a bunch of Equinix data centers? Are they deploying storage hardware before customers subscribed to the service?

Jim Poole, Equinix:
I mean, basically it's like many people who do business out of Equinix, they buy space from us. They've got a roadmap for places they want to go. And then they use our fabric interconnection services to then reach the counter parties, because what they're trying to cater to from a use case perspective, and this was in their press releases. And we see this a lot, right. Is this idea of private storage, public compute, right? People don't want the data to sit in the public cloud. They want to maintain ownership of that. But buying independent storage that is not part of a hyperscale cloud offering has not been something easy to do at scale.

Jim Poole, Equinix:
So essentially the sort of enhanced level of cooperation between us is the fact that they're customer who's on fabric, who is actively selling this for this particular use case. We have lots of customers who will set up inside of Equinix to do business and not necessarily come on fabric and not necessarily even talk to us about going to market together and that kind of thing. So there's more collaboration because we both see a tremendous amount of value in this for the enterprise customer, but the relationship is a relatively standard relationship.

Yevgeniy Sverdlik, DCK:
So this is basically Dell acting as a cloud service provider and using Equinix data centers.

Jim Poole, Equinix:
Correct. Yep.

Yevgeniy Sverdlik, DCK:
Yeah. These Apex services overall, the way they're marketing them is you can deploy any Dell infrastructure in any location. It could be your own data center. It could be a colo of your choice in this case, they're actually proactively taking down space and building out this infrastructure, which they're then offering as a basic, like a cloud service.

Jim Poole, Equinix:
Yeah. It's recognition of the fact that like say on that continuum of private data center, co-location facility, public cloud, there's a great movement toward co-location public cloud. All the corporate data centers are closing down. So, yes, obviously they'll continue to do what they've always done, which is ship stuff, wherever you'd like it to go. However, it's not lost on anybody that since we have the biggest base of enterprise customers, that we're a really good place to do that business because we also have all the networks and all the cloud gateways sitting in our facility. So if you're building a hybrid cloud scenario, which is what most of our enterprise customers do, then Equinix is kind of the place to do it at. And so Dell certainly recognizes that that's the value of being in an Equinix facility.

Yevgeniy Sverdlik, DCK:
Is there any kind of flexibility in this partnership with Dell in terms of capacity? I imagine they don't have great amount of visibility into what demand is going to be like for the service, because it's brand new or where it's going to be. Is there any kind of freedom they have to, I don't know, scale up and down in different markets as they kind of get rolling [crosstalk 00:20:19].

Jim Poole, Equinix:
...that part, I'm not, I couldn't say I haven't been the guy who's been dealing with the details of it. So I don't know how they're thinking about how they're doing capacity planning against all the various markets. I know that they have a rollout schedule on multiple markets on our side, but I don't know the details of how they're thinking about it. It is a new service, I assume, that we'll all learn that along the way.

Yevgeniy Sverdlik, DCK:
Okay. Fair enough. And so they're not the only big hardware that's doing this, and HPE has their GreenLake service trying to also sell everything as a service. Everything is a subscription. Does Equinix have similar deals with any of these other vendors? Or do you expect this trend to drive a lot of revenue for Equinix?

Jim Poole, Equinix:
Oh, there's a ton. I mean, well, I guess the way I would say if I had to characterize how the market has changed, let's think of it that way, is historically the folks that came into our facilities that were doing sort of managed compute infrastructure were sort of what you would think of as a traditional MSP, managed service provider. Right? So, a systems integrator, somebody like that would come in and do deployments for customers and they'd buy space for that customer to do that deployment. And then they'd manage it on their behalf. That's been a part of our business since the day we opened the doors. That's very traditional. What has changed a lot now is that a lot of the traditional appliance, and software licensing companies are looking for different business models, right. They're trying to figure out how they do MRR, right. They want OPEX solutions for their customers because that's what cloud did, right. Cloud gave everybody an OPEX answer. So yes, we are increasingly seeing companies come to us and say, "I need to figure out how to deliver what I do as a service." So that's always an interesting dynamic.

Jim Poole, Equinix:
And that is new. That is, I can think of companies I might've talked to 10 years ago said, "Oh, well, why don't you proactively put a bunch of stuff in our facilities?" And they would've said no, by default. Now a lot of companies are, are thinking about it. And we have other products that kind of take advantage of that dynamic. So for example, we have a service called Network Edge, which is an NFPI platform. And essentially that allows an enterprise customer to bring their own license. They can deploy a VNF from a curated set of it's all the common guys like Cisco and Vilo and CloudGenix and Palo Alto and so on and so forth. But nobody wants to own the box anymore. They just want to deploy the VNF on infrastructure. That's sitting in the place that they need it. And so we've accommodated that kind of emotion. So, yes, everybody, there is a huge amount of interest in as a service [crosstalk 00:23:21]

Yevgeniy Sverdlik, DCK:
Right. So Cisco is also moving in this direction. Right. And then Juniper. And so I guess they're also deploying hardware in all these colo's, and then they want to become software as a service companies.

Jim Poole, Equinix:
Yeah. I mean, every, I'm trying to think of good examples, like if you see Zoom, right? Or if you see all the UC companies, right? Same thing. Used to be companies bought MCUs right. The old mixers, nobody does that anymore. Everybody buys these types of services and these types of services that have a huge dependency on networking tend to land in our facilities because we have so many networks in an individual facility.

Yevgeniy Sverdlik, DCK:
Okay. So you're saying this Dell deal is basically part of a trend that's been going on for awhile across the industry?

Jim Poole, Equinix:
Yeah, yeah. Yes, yes. I mean certainly the bigger guys are now I think more interested in it as evidenced by what Dell's doing, but it's been happening for a while. And I imagine that it will continue to accelerate, like we'll have I give you another good example of a public, another public customer, would be Nokia, right? So, Nokia, everybody knows Nokia as a company that builds routers, right? Optical equipment, radio equipment...

Yevgeniy Sverdlik, DCK:
Cell phones.

Jim Poole, Equinix:
Cell phones. I mean, they've built lots of, lots of different things, but they built the componentry to go do these things. And so a couple of years ago, what they did with us was they announced a service called Wing and Wing is essentially an IOT grid as a service. So the idea is that they'll do all the data collection off of all of the devices across their own network that is highly distributed around the world so that they can take care of say, IOT business for a geographically bound operator who has devices that go everywhere. Right? You always hear these cases in telecom of somebody launching an IOT service in Sweden and then turn it on, and they start getting telemetry from 75 countries. And so the question is, well, how do I collect all that data? That's a real pain in the ass.

Jim Poole, Equinix:
And so normally the way the technology vendors dealt with that was they would go sell the operators a bunch of boxes and a bunch of software and say, "Hey, I'll integrate all this for you by operator and build, build each operator, its own snowflake", right? Everybody gets their own thing. Now they've taken a bunch of those piece, part components that they normally would have sold on an independent basis. And they pulled it together as a global, as a service offer. It is an IOT management offer that exists in a whole bunch of Equinix facilities all around the world. And they sell that basically to operators who want that sort of global comprehensive offering and don't want to go build it. That would be another example.

Yevgeniy Sverdlik, DCK:
And I want to go back to this modular deployment in Bordeaux, just briefly. So this was the first one. How big of a business do you think this type of deployments will become for Equinix?

Jim Poole, Equinix:
It's really we're taking it as we see it. There is another project that we're working on in Europe that is likely to, and in fact, I think, actually, yeah, we did announce it, it's in Genoa. It's a similar situation. And so these do come up like say we're tracking, I guess the way to think about it is we're probably tracking an incremental 60 subsea cable projects over the next two to three years. So we are in the very, very sort of top of a building boom, that's been going on for the last few years and it's going to continue to go on for the next few years. So in part we developed the solution to be able to react to those, but subsea cable projects are interesting. They take years to develop. An individual project will take two, three years. So at the point at which the project is conceived, they don't even necessarily know where it's going to land. They figure that out as they go along, because there's a whole lot of regulatory and environmental and other things that they have to [crosstalk 00:27:38]

Yevgeniy Sverdlik, DCK:
...they know the general [crosstalk 00:27:40] ...region, they just don't have a specific location.

Jim Poole, Equinix:
Yeah. And so so we are reacting to a situation that says, "Hey, I can be flexible within my business model." And I want a business model, like I said, that it's a nice coincidence of sort of our normal multi-tenant retail demand and this subsea cable. We're not in the business of just building subsea landing stations for the sake of building Atlantic station. That's not very exciting. However, we are interested in markets, we do acquisitions, we grow, we do it organically. So it's just another tool, basically.

Yevgeniy Sverdlik, DCK:
In case of lending stations, especially in new markets, if you are kind of the first facility where that lending station or where that new cable connects to you kind of become the gateway to that market. And so then anybody else that comes in is almost going to have to come and take space [crosstalk 00:28:34]

Jim Poole, Equinix:
This certainly would be an argument for path of least resistance. And that would be something we would consider as part of the attractiveness of a project or not. So, yeah.

Yevgeniy Sverdlik, DCK:
Kind of what interaction did in Marseille?

Jim Poole, Equinix:
Right. Yeah, no, I mean, that was the classic example was probably one of the first points that developed around that sort of, hey, the guy who runs the landing station is an independent operator he's not one of the participants in the system, right? So it used to be... Like, I used to work at cable and wireless years ago. So we deployed subsea cables as a big part of our business. And we owned the landing station usually with another telco. And so it was a game because I could basically charge whatever I could get to take you from the landing station to wherever the closest pop was. And that's what the hyperscalers, and the new market demand doesn't want to deal with. Nobody wants to be beholden to one or two people who can charge you whatever they want to get you from the landing station back to the city pop. If essentially, if the interconnect point is the landing station, then that solves that problem. I can take capacity and do what I'm going to going to do, so.

Yevgeniy Sverdlik, DCK:
Okay. So, this modular solution was developed specifically for this landing station use case?

Jim Poole, Equinix:
Well, it was designed to be able to satisfy that kind of use case, right? So that use case where you needed less scaled down capacity, right? Not scale up. We're really good at building multi megawatt facilities. We know how to do that [crosstalk 00:30:10]

Yevgeniy Sverdlik, DCK:
It's scaled down because these cables tend to land in [crosstalk 00:30:13]

Jim Poole, Equinix:
...they tend to be smaller, [crosstalk 00:30:15] but we could go into smaller scenarios as they develop if more developed. But right now what we see is cable landing station. So that's what we're working on.

Yevgeniy Sverdlik, DCK:
Another new thing for Equinix are green bonds. The company priced one point $35 billion in green bonds last year. Another 1.1 billion euros earlier this year. And from what I understand, this is basically a way to borrow capital, which you commit to using to fund sustainability projects, renewable energy, energy efficiency improvements in data centers. There is now a lot more appetite from investors in this sort of offering, give us an overview of how Equinix is spending this money. What sorts of projects is it going towards specifically? And then also whether anything has materialized already from that first green bond offering last year.

Jim Poole, Equinix:
Yeah. I mean, we've got various different projects that we're working on at any given time. So how do we become more efficient in our use of water? How do we become more efficient in our procurement of building materials? How do we procure building materials that have a lower carbon footprint than traditional building materials? Where do we source our power from? How do we do power delivery, right? You don't always have to necessarily buy it from a power grid. So all of those types of projects require some level of capital. And so what we've committed to basically do, and we recently did this, we've had an objective for a long time internally to be carbon neutral by 2030. And so recently we joined one of the European groups that basically have the same objective [crosstalk 00:32:09]

Yevgeniy Sverdlik, DCK:
...The EU green [crosstalk 00:32:10] pact?

Jim Poole, Equinix:
Yes, yes, exactly. And so essentially the green bonds are a way to invest in what we have to do to all of our physical infrastructure to go ahead and get to that goal. And good news for us is this has been a project, although it's obviously something people are paying more attention to now, this has been something we've been working on for a long time. So we're already at 91% green and so from our perspective this is what our customers want, right?

Yevgeniy Sverdlik, DCK:
91% green meaning there's an equivalent number of carbon [crosstalk 00:32:49].

Jim Poole, Equinix:
...yeah. It's a combination. Yes. Yeah. So there's obviously the case where you can buy direct a supplier. There's the case where you're buying directly a rec, right. And then there's a VPP piece, where it's getting bundled up because you're investing in other parts of the grid to get to gain that. And so generally in big developed markets like Europe and the US North America, it's easy to do. And we very aggressively do that. In other parts of the world, it's a bit harder. So we we're not at a hundred percent, but that is obviously the objective.

Yevgeniy Sverdlik, DCK:
And it sounds like now that Google is kind of aggressively pursuing this green energy around the clock goal saying that just buying recs that are an unbundled from actual energy, isn't that effective. And so they really want to figure this out.

Jim Poole, Equinix:
Yeah. You've seen it. There's more of an interest in like, say the virtual power purchase agreements because in the virtual power purchase agreement scenario, you're adding capacity, green capacity, to the system. Right? And so the idea is that if you've got all these very large consumers of power like us or hyperscaler doing that, then essentially what you're doing is making it cheaper and cheaper and cheaper to buy green energy on a global basis. Even though there will be locations parts of the country where like wind isn't available everywhere, certain parts of even the United States are predominantly, still fossil fuel based systems. And people are making investments and figuring out the ways to do it, but it's not available today, so.

Yevgeniy Sverdlik, DCK:
Is there ever a situation where, okay, I'm looking at this location and I am say a Google or another, or maybe a software company, and I'm looking at this data center here, but unfortunately there's not, there's not a way to get a bunch of wind power in that location. Has there been a situation where that's a deal breaker?

Jim Poole, Equinix:
I don't know if I've ever heard of somebody not going to a place where there was demand. Like I said, I think the industry is trying to build up, like I said, enough capacity and to drive down the cost of actually doing the builds in various different ways and different parts of the country. Like I said, if you're in the middle of the country, wind is great. If you're off the coast you always hear about now they're putting wind farms that are far enough out that you don't see them from the beach, but when you see wave generation, there's all sorts of things that are being invested in.

Jim Poole, Equinix:
So I don't think the industry's at a point where it's going to say, "Oh, I'm not going to build in a place specifically." But certainly there's a huge amount of interest on our part. And other companies like us to kind of lead in this space and convert to green energy. And so now I think there's more tools I mean, we didn't have green bonds several years ago now we do. So it's growing in importance, I think, not just to companies like us, but others, you see more and more companies now joining various different initiatives.

Yevgeniy Sverdlik, DCK:
And we talk a lot about emerging data center markets on DCK the US is pretty well saturated. And that's the story with data center infrastructure. And there is much faster growth happening in markets where there haven't been that many data centers before, such as Bordeaux. Equinix has been one of the companies driving this trend for a few years. Now, you guys are expanding in Latin America recently entered Mexico in Asia Equinix recently entered India. Can you, well first explain what was the rationale for entering Mexico when you did, and how do you expect things to progress in that market going forward?

Jim Poole, Equinix:
Yeah, so that's a really good question. So the thing about our customer base that I think people don't necessarily appreciate, I guess, it's in our materials, it's public information, but it's very important to how we think. And so if you thought about our customer base, 88% of our customers are in more than one Metro. 74% are in more than one region and the regions being the Americas, EMEA and APAC, right, so big regions, right? And then 62% of our customers are in all regions. Right? So, like I said, it goes back to that land and expand kind of a thing. We have a very high affinity for multinational companies, right. And multinational companies do business in big cities all over the planet, not just in the United States or Western Europe, or certain big cities in Asia. So we're always looking, obviously, I think the good example, like you said, would be Mexico, right? Mexico City is a big, big, big city, right? Mumbai is a big, big, big, [crosstalk 00:38:01]

Yevgeniy Sverdlik, DCK:
So, what drove you guys to Mexico? What was it there? Was it a customer? Was it a critical mass of customers that wanted to be there?

Jim Poole, Equinix:
It was just constant, we're always assessing demand. So, we'd already been asked about that and we finally were able to get a deal that we wanted to get done. We did, in that particular case, we went in organically and did a purchase, with Axtel to take over their facilities. It's not, say, it's that different than what we just did in Canada. We've been in Canada for a very long time, but just in Toronto. So, we were in one city, the biggest city, but just one city in the entire country. And like what's happened in other examples of telecom in North America. A lot of the operators have decided that being in the data center business and being a network operator are not the same thing. In the same way that we bought Verizon's data centers, so we bought Bell's data centers. So similar with Mexico. So, when you can... We've always got, given who our customers are, we've always got demand against these places that we're not, the question is can you find the right deal? So we're always looking.

Yevgeniy Sverdlik, DCK:
I see. And so same question about India. You also went in there through an acquisition and it was a similar deal, there's always demand, except now you guys found inappropriate deal to as a point of entry.

Jim Poole, Equinix:
Yeah. No. And we've, yeah, that was a good point of entry. And we've been very open about the fact that we're continuing to look at other large cities in India. So, it's not a secret that we probably will end up in more places over the next several years in India than we are today.

Yevgeniy Sverdlik, DCK:
Okay, Jim, that's all I have. Thank you so much.

Jim Poole, Equinix:
Well, thanks for having me. It's been fun.

Mobile carriers keep most of the equipment that powers their networks in their own facilities. To serve a YouTube video to a subscriber, for example, a carrier “backhauls” the data from a YouTube data center to one of its central offices and pushes it out to the subscriber over its LTE network.

But 5G connectivity is meant to enable ultra-low-latency applications, for which this traditional architecture doesn’t work. For Equinix, the world’s largest data center provider by revenue, this is an opportunity to attract a whole new class of customer to its facilities.

To deliver low-latency applications over 5G networks to their users, mobile carriers may have to install a lot of their network equipment in facilities operated by the likes of Equinix, where they can connect their networks directly to the companies that create those applications.

“Netflix works just fine. Right? Everybody's happy,” Jim Poole, VP of business development at Equinix, said. “However, if I wanted to do something that, say, had much lower latency, or I didn't want to transport traffic [over] huge, huge distances, hundreds of miles, then I would need to start breaking traffic out more locally. And I would need to do it at a place where the applications that want to have access to that traffic live. Well, that's a place like Equinix.”

Equinix’s business revolves around the concept of “ecosystems.” Instead of simply providing space, power, cooling, and a network connection to its customers, it creates digital-services marketplaces of sorts inside its buildings. Simply put, it’s where companies can connect their networks to each other to do business together.

Poole’s main job is to find opportunities to “seed” new kinds of ecosystems, and he sees the need for 5G network operators to be physically close to application providers as one. The effort, he admitted, is in its very early stages.

Recent moves by large mobile carriers and cloud providers illustrate how 5G blurs the boundaries between mobile infrastructure and traditional cloud infrastructure. Dish Network has a deal with AWS to run its core 5G network on Amazon’s cloud. AT&T sold its 5G mobile network to Microsoft last month to have the cloud provider operate it on Azure.

We recently spoke with Poole about this effort and other new market opportunities Equinix is pursuing on The Data Center Podcast (Apple Podcasts | Spotify | Google Podcasts | Stitcher):

AWS has been standing up Local Zones, or data center sites smaller than its core cloud facilities, in highly populated areas, such as Los Angeles and Las Vegas, to serve applications that use Verizon’s 5G wireless network. Azure has been doing something similar with its Edge Zones.

Many of these deployments, however, are essentially small data centers sitting inside carrier switching facilities. The challenge for Poole, Equinix, and anyone else in the data center business hoping to ride this wave of digital-infrastructure investment is to convince the big players that colocation data centers are more suitable.

This is where Equinix’s ecosystem strategy comes into play. Instead of just having an AWS cluster inside its central office, Verizon may find it attractive to place its 5G equipment in a data center where all the big cloud providers are present.

Many companies accelerated their move to the cloud during the pandemic – including cloud-based computing, and, with SASE, cloud-based networking and security as well. But not every company can move all its systems into the cloud.

Businesses keep systems on-prem because of legacy infrastructure, security or compliance requirements, or specific technical needs.

Catchpoint, which helps companies see how all their networks are doing, falls into the latter two categories.

Federal agencies, for example, require a great deal of control over their data, said Nik Koutsoukos, the company's CMO and strategy and product leader. If the services were hosted in a public cloud, federal agencies wouldn't do business with Catchpoint.

"There's always going to be a need for infrastructure that is not public, that is not visible to everyone, for reasons of security and privacy," he told Data Center Knowledge.

But Catchpoint also has technical reasons to be on-prem – the software runs on bare metal.

"We need to have complete access to the hardware," Koutsoukos said. In addition, because the company monitors network performance everywhere its business clients have employees or customers, it needs to have servers in very specific locations, connected to many different service providers.

"Cloud providers don't have that," he said.

Public infrastructure providers do offer significant benefits, including the ability to scale up and down quickly, and to avoid upfront capital expenditures.

Catchpoint has found that it can get the best of both worlds by using on-prem-as-a-service.

With this approach, the hardware is owned by the service provider, so upfront capital expenses are replaced by operating expenses. Scaling up and down is easy. And the on-prem-as-a-service provider handles all the installation, maintenance, networking, and other aspects of running a data center. Meanwhile, Catchpoint retains full control over its own servers, down to bare metal.

"We need the flexibility as we are expanding," Koutsoukos said. "We're adding servers in other cities around the world. It's the perfect use for it."

Catchpoint currently has 1,400 locations globally, vantage points that its clients can use to run tests on their networks.

Using on-prem-as-a-service has also protected the company from recent supply chain shortages.

Koutsoukos said that he is very aware of the disruptions that are affecting the technology hardware markets.

"We haven't been impacted severely," he said. "Having that ability to scale without having to worry about going to the open market and source, that's a good thing."

Supply chain challenges

According to a recent report by Insight Enterprises, 91% of IT decision makers have been impacted by IT supply chain disruption. To cope, 44% are shifting processing to the cloud, 43% are avoiding ad-hoc or last-minute purchases, and 42% are trying to improve their forecasting ability to be able to plan better for future technology needs.

"The ‘buy and try’ days are over," said Megan Amdahl, senior vice president of partner alliances and operations at Insight, a Tempe-based technology consultancy.

In addition,many companies don't have the in-house skill sets to stay on top of what's happening with industry inventories, she told Data Center Knowledge.

"We're seeing those chip shortages," confirmed Isaac Gould, global technology expert at Nucleus Research.

The companies farther along on the technology curve that are ready to move to the cloud, will move to the cloud, he told Data Center Knowledge.

Those that run their own data centers and aren't ready to move to the cloud will move to models like on-prem-as-a-service, he said.

Where to get on-prem-as-a-service

Many technology vendors are getting into the space. Insight, for example, partners with companies that provide on-prem-as-a-service, including Pure Storage, NetApp Keystone, Cisco Plus, HPe GreenLake, Dell APEX and others, said Kent Christensen, virtualization practice director for cloud and data center transformation at Insight.

The hardware can be located on premises or hosted, but the original equipment manufacturer owns the title to it, he said. The customer uses the equipment without having to own it.

Terms typically range from one to five years, he said.

This isn't the same thing as a lease.

"A lease is a way to finance a capital expense purchase," he said. "It is still a fixed asset and does not allow flexibility."

On-prem-as-a-service is specifically designed not to be a lease. It's a service that provides computing, memory, networking – everything required to run a workload, plus the ability to adjust services up and down.

The difference between leasing and on-prem-as-a-service is like the difference between buying drinks and renting out a whole bar for the night, said Tim Rehac, cloud infrastructure and strategy leader at Ernst & Young Americas.

"When you purchase compute as a service or data center as a service you have the ability to expand up or down depending on the specifics of the deal you negotiate with the vendor," he told Data Center Knowledge. "It's on a per-drink basis."

That means that you can burst for six or eight weeks, or lower usage, he said.

"Clients are saying, I'm not paying CapEx anymore," Rehac added. "Give me a data center or server as a service, and it's the only way I’m going to buy it."

He said that he sees clients looking to place the actual hardware both in their own on-prem data centers and in colocation facilities.

"But the predominant model I'm seeing in my clients is that mostly they're looking for solutions within cloud exchange points," he said. "Colo, but very near, from a latency perspective, to a cloud point of presence."

That allows customers to put applications in the cloud and connect to those applications with low latency, he said.

Equinix's Bare Metal is an on-prem-as-a-service offering

Equinix, the world's largest data center provider by revenue, is able to offer all the advantages of on-prem-as-a-service to its customers. With data centers around the world, it can offer convenient cloud on-ramps. And with its scale, it can purchase hardware in quantity, and far in advance, so customers are mostly isolated from the supply chain issues.

Even companies that invest millions of dollars in equipment are too small to handle today's supply chain challenges, said Jacob Smith, VP of bare metal marketing and strategy at Equinix.

Historically, he said, Equinix has been a colocation provider, with 230 data centers around the world with hundreds of thousands of racks where customers – and their partners – own and run the equipment.

"But they've been pushing us more to an operated model," Smith said. "Everything has to be a service. That's how people want it."

"We'll run the colo," he said. "We'll build the cages. We'll put the infrastructure inside the cages, the networking, the servers. It's our responsibility to fix it if it breaks. And we automate it so you can deploy it and put an operating system on it."

Equinix partners with both Dell and HP, he said. "We will actually own and control the Pure Storage box for you, but deliver it as a service."

Smith declined to give specific numbers for the company’s on-prem-as-a-service business, but did say that it's been growing faster than expected.

"We're growing by multiples each year," he said.

Equinix is still honing product market fit, and packaging it the right way, he added.

And while Equinix has been affected by supply chain disruptions, it hasn’t suffered to the same extent as individual companies, since it buys hardware one or two years in advance.

Individual companies were used to ordering, say, switches, and getting them in six to eight weeks. "It became 12 to 14 months," Smith said. "That caught people off-guard. You can get servers, but if you don't have switches, it doesn't matter. And even with servers, if one component is delayed, it's all delayed."

Another thing that has changed is how hardware suppliers are getting paid, he said.

"A year ago, you could say, I want to buy it – get it to me and then I'll pay you. Now you have to pay for it right away."

EllaLink, the first high-capacity submarine cable to provide direct connections between South America and Europe, is now fully operational.

The project, part-funded by the European Commission, connects Brazil and Portugal – where it continues as a direct terrestrial link to Madrid, Spain.

In all three locations, the cables terminate at Equinix International Business Exchange (IBX) data centers.

The 5,700-mile route will enable Internet traffic to bypass North America, and its owners say it will deliver a 50 percent increase in network performance between data centers in Brazil, Portugal, and Spain.

"Offering one-hop connections between Latin America and Europe with a 60ms latency is a game changer from a transatlantic latency perspective,” said Diego Matas, chief operating officer at EllaLink.

Better late than never

EllaLink (previously EulaLink) was established in 2012 as a partnership between Spanish submarine cable operator IslaLink and Brazilian state-owned telecoms provider Telebras, with Alcatel Submarine Networks responsible for the infrastructure. By late 2019, Telebras had withdrawn from the project, citing a lack of resources.

EllaLink then found another financial backer, the Marguerite II equity fund, which covered most of the cost, estimated at around €150 million.

Initially, the cable offers 72Tbps of capacity over four direct fiber pairs.

To complete the installation, EllaLink partnered with Equinix – one of the world’s largest data center operators that participates in more than 40 major submarine cable projects.

"More data is being produced and processed today than ever before—and almost every byte of data that moves over the internet touches a subsea cable,” said Jim Poole, vice president of Business Development at Equinix.

“As a result, organizations require access to high-capacity, low-latency networks capable of connecting them to data centers across oceans with the highest levels of reliability. This is where Equinix plays a critical role and offers a huge advantage to customers.”

Equinix is not the only data center specialist working on the project: in September, EllaLink partnered with infrastructure and connectivity provider BSO, which runs a network with more than 240 Points of Presence across 33 geographic markets. The company was tasked with developing opportunities in finance between Europe and Latin America in order to commercialize low latency services.

“Our work to connect those in emerging markets with other trading networks around the globe has garnered significant results for the regions, even at this early stage,” said Michael Ourabah, chief executive officer at BSO.

There are other, less obvious benefits to EllaLink, besides lower latency and higher bandwidth: the project took shape in 2014, soon after Edward Snowden revealed the extent of digital surveillance by the US National Security Agency (NSA).

At the time, the submarine cable project was seen as a means of escaping the watchful eye of the US and ensuring the neutrality of the Internet.

“We have to respect privacy, human rights and the sovereignty of nations. We don’t want businesses to be spied upon,” Dilma Rousseff, then president of Brazil, said when she announced the cable in 2014.

Equinix Inc. is acquiring West African digital infrastructure firm MainOne Cable Co Ltd. at a valuation of $320 million, one of the continent’s biggest tech deals this year, allowing the U.S. data-center investor to tap into a regional boom. 

MainOne, founded by entrepreneur Funke Opeke, is the owner of three data centers in Nigeria, Ivory Coast and Ghana, while a fourth is under construction. The company also previously raised funding to lay a sub-sea cable stretching from Portugal to West Africa. 

The deal includes MainOne’s land, “which is probably enough to build another 10 data centers,” Judith Gardiner, Equinix vice president for emerging markets, said in an interview. “There is an expansion plan that will come online next year and we will be concentrating on the region.”

The cash transaction is the first move into Africa for California-based Equinix, taking advantage of a predominantly young population with increasing access to the internet. 

Tech giants such as Amazon.com Inc. and Microsoft Corp. have also invested in data centers in African countries in recent years as demand for storage grows. The continent accounts for just 1% of global data center capacity even though that capacity has doubled in the past three years, according to Xalam Analytics.

Equinix shares are up almost 12% this year, valuing the company at $71.7 billion. 

For MainOne, the transaction provides the group with access to capital and networks to bolster its expansion plans, said Opeke, who will still be heading the firm. “We plan to continue to build out our infrastructure to meet the data consumption needs in the region,” she said. 

“This deal signifies a landmark for our ecosystem as the single largest tech deal this year,” African Business Angel Network President Tomi Davies said by text message. That Opeke “is staying at the helm is not surprising remembering she once helped run MTN Nigeria as chief technology officer.”

MainOne generates about $60 million a year in sales and provides services to major tech firms including Google and Facebook Inc. Nasdaq-listed Equinix owns 237 data centers and operates in 27 countries. 

Read more: Fintechs Displace Banks as Target for Private Equity in Africa

“There have been few deals on the acquisition front for real value,” Abake Adenle, chief executive officer of Ajala, a startup focused on speech recognition technologies for African languages, said by phone from London. “Most deals have been in the private equity or venture capital space. And having this valuation signals a maturation of the tech space.” 

The Equinix-MainOne transaction is expected to close at the end of the first quarter next year, subject to regulatory approvals.

(Bloomberg) -- In modern trading, where billionths of a second matter, knowing where exchanges stash their computers is crucial.

So when Nasdaq Inc. recently decided to start shifting its North American markets to the cloud, that raised the possibility traders would have a harder time sorting where to put their machines, and also force them to reroute wireless communications networks that serve as the backbone of finance. That’s because cloud platforms usually are based out of multiple data centers.

Nasdaq is dispelling those worries. On Wednesday, the company is set to announce a multiyear deal that keeps the exchange operating out of the same Equinix Inc. data center in Carteret, New Jersey, where the machines running its markets have been housed for more than a decade.

Equinix is modernizing the facility and agreed to provide more space to let Nasdaq clients grow their footprint within Carteret, executives told Bloomberg. It’s also allowing Amazon Web Services to implement its cloud infrastructure in the space. Financial terms of the deal weren’t disclosed.

“Carteret is not just a center of gravity for Nasdaq’s transaction services,” Tal Cohen, executive vice president and head of North American markets at New York-based Nasdaq, said in an interview. “Now it’s an ecosystem for capital markets that is more robust and resilient than what otherwise existed.”

U.S. stock trading mostly takes place in a trio of New Jersey data centers, including the Equinix facility where Nasdaq exchanges are run. Meanwhile, the country’s main derivatives exchange, CME Group Inc., operates in a building just outside Chicago. Much of 21st century finance depends on traders telling a computer in one of those data centers – or others around the world– to buy or sell after noticing prices have moved in another data center.

That’s led major trading firms including Jump Trading Group, DRW and Virtu Financial Inc. as well as telecom companies like McKay Brothers to spend the past decade constructing wireless networks -- using microwaves and other radio frequencies -- to fling instructions to buy or sell between those buildings at close to the universal speed limit: the speed of light.

A typical cloud partnership – with the computing done in many data centers, not a single one – could upend that, since it would be much harder for traders to build wireless networks stitching all that infrastructure together. Staying in the Equinix data center in Carteret eliminates that threat, at least as it relates to Nasdaq’s exchanges.

CME also struck a cloud deal recently, with plans to migrate to Google Cloud. But moving its trading systems -- currently housed in a CyrusOne Inc. data center in Aurora, Illinois -- appears years away. Nasdaq is shifting beginning in 2022 with one of its options exchanges.

“The migration to the cloud doesn’t change the need for the infrastructure to be positioned near existing partners,” Jon Lin, president of Americas at Equinix, said in an interview.

Cloud computing allows companies to outsource computer processing and data storage to big tech firms rather than operating the systems in-house. “Cloud is using data centers like ours. It needs to live somewhere,” Lin added. “Our job is to make sure we’re providing the infrastructure that underlays and supports Nasdaq’s growth and the entire trading economy.” 

While transferring capital markets to cloud-based platforms could help exchanges reduce costs and has been held up as a remote goal for years, the technology challenges are enormous. The aim is to “mitigate disruption, offer choice and ensure that performance is as good, if not better, as we move along the migration to the cloud,” Nasdaq’s Cohen said.

Colocation giant Equinix has opened its fourth data center near Munich.

The carrier-neutral facility in Ashen, located in the Dornach industrial park, is codenamed MU4 and initially offers 2,250 square meters (~24,000 sq. ft.) of colocation space and more than 825 cabinets of capacity

It features several advanced sustainability features that go beyond simply purchasing renewable power.

Putting money where the mouth is

Like other new Equinix builds in Germany, MU4 will have a green façade and partially planted roof – the company says the greenery acts as additional natural insulation and cooling, also ensuring the building blends into the cityscape.

The next construction phase of the data center will see the installation of an Aquifer Thermal Energy Storage (ATES) system – which will enable the facility to tap into a groundwater aquifer for its cooling systems.

As reported by Data Center Knowledge, Equinix first experimented with ATES in 2012, when it was building AM3 in Amsterdam's Science Park. The approach enables the data center to be less reliant on chillers, large refrigeration units that require a hefty amount of electricity to operate, and as a result, slashes its electricity cost for much of the year.

A research paper published by German academics in 2015 suggested that such systems can “drastically” reduce data center power consumption – and even be profitable “in some cases for DC operators when energy efficiency programs of the German government are used.”

Equinix is also “exploring options” to reuse the heat it generates on the site.

And of course, MU4 will be powered by renewables – albeit purchased through renewable energy certificates from regional supplier Mainova.

“We provide companies in Munich with the most dynamic digital infrastructure platform available, and want it to be as climate-friendly as feasible,” said Jens-Peter Feidner, managing director for Germany at Equinix.

“As the first operator in the industry to commit to science-based climate targets, we continuously explore and invest in new climate friendly technologies to further reduce emissions and save resources. On a local level, we are committed to working with operators, political decision-makers, and energy providers to target the long-term challenges of sustainable digitization to the benefit of the surrounding community. This includes design aspects such as the use of greened facades as well as potential measures supporting the energy transition like the use of waste heat.”

Colocation giant Equinix is considerably expanding its presence in South America through the acquisition of several data centers from Empresa Nacional De Telecomunicaciones (Entel), Chile’s largest telecommunications company.

Equinix is expected to pay approximately $705 million for three facilities in Santiago, including the capital’s largest multi-tenant data center. Unusually, the deal “may also include one data center in Peru pending finalization of a definitive agreement,” states the press release.

The acquisition is expected to close in the second quarter of 2022, subject to customary closing conditions.

More Equinix data centers

Equinix is the world’ largest data center operator by revenue, responsible for a staggering 18.3 percent share of the overall colocation market at the end of 2021, according to research by analyst firm Omdia. It operates more than 200 data centers worldwide, including facilities in Brazil, Colombia, and Mexico.

The latest acquisition would allow the company to expand into new, rapidly growing economies: according to IDC, overall enterprise edge spending in Latin America is expected to reach $8.573 billion by 2024.

“Latin America holds enormous potential, and our commitment to the region has exponentially grown since we entered back in 2011,” said Charles Meyers, president and CEO of Equinix.

“Chilean, Peruvian and multinational companies are thirsting for the digital infrastructure required to thrive in today’s economy; with today’s expansion, we’re broadening digital access and accelerating digital transformation across Latin America, while supporting growth in a responsible and sustainable manner.”

Equinix said the four facilities currently generate approximately $53 million in annualized revenue from more than 100 customers.

Under the terms of the deal, around 120 Entel employees and contractors are expected to become Equinix employees or contractors. The two businesses will continue their relationship as strategic partners.

“Entel has transformed over the years, and this partnership, which is more than an infrastructure transaction, is intended to set an important milestone in our strategic plan to extend our offerings into delivering digital services and provide expertise with new solutions that will accelerate our client’s digital transformation,” said Antonio Büchi, CEO at Entel.

Colocation giant Equinix– the world’s largest multi-tenant data center operator by revenue – has once again reported a profitable quarter.

The company earned just over $1.7 billion in the first three months of 2022, increasing revenue 2% quarter-on-quarter and marking a record-breaking 77th consecutive period of revenue growth.

In the earnings report, Equinix said it signed more than 4,200 deals with more than 3,100 customers in the past three months, and added 8,900 new interconnections. The company said it was working on 43 new data center projects across 20 countries.

“Underlying demand for digital infrastructure continues to rise as enterprises in diverse sectors across the globe prioritize digital transformation and service providers continue to innovate, distribute and scale their infrastructure globally in response to that demand," said Charles Meyers, president and CEO at Equinix.

Equinix keeps getting bigger

Equinix is a data center heavyweight, responsible for a staggering 18.3 percent share of the overall colocation market at the end of 2021, according to research by analyst firm Omdia. It operates more than 240 data centers in 30 countries.

The company is always expanding, both through its own construction projects, and through acquisitions: the recently announced deals include the $320 million purchase of MainOne, and its four data centers across Nigeria, Ghana and Côte d'Ivoire. The transaction was announced in December 2021, and MainOne is already contributing to the new parent’s bottom line.

“This acquisition represents the first step in Equinix's long-term strategy to extend its global carrier-neutral digital infrastructure platform to Africa,” the company said.

Another notable recent development is the $710 million investment that will buy Equinix at least three data centers in Chile and Peru, previously owned by Entel, Chile’s largest telecommunications company.

Find the episode and subscribe to Uptime with DCK on Apple Podcasts and Spotify.

In the latest episode of Uptime with Data Center Knowledge, we look at the evolution of bare metal servers.

To find out more about the subject, we chat to bothers Jacob and Zachary Smith – co-founders of Packet, a bare metal hosting service that was acquired by data center giant Equinix in 2020, in a deal worth $335 million. Packet became the foundation of the new Equinix Metal business, led by Zac as its managing director, and Jacob – as the VP of bare metal strategy and marketing

Correction: Soon after we recorded this episode, Zac was promoted to head of edge infrastructure services at Equinix, and Jacob – to interim lead of the digital services go-to-market.

According to the Smiths, the key attractions of bare metal are speed and performance: Equinix Metal can be set up in any supported facility in as little as 15 minutes, to run almost any workload on dedicated, physical servers. The process is considerably different from handling servers used to run public cloud applications, where the hardware is often shared between multiple users.

Jacob himself jokes that “no one really cares about servers” – but there are plenty of applications that benefit from bare metal, especially in organizations that value automation and are heavily invested in custom software stacks.

For such customers, bare metal represents choice – a dedicated server is a blank canvas, unburdened by multiple layers of complex software that enables typical cloud workloads. The customer alone will decide what the machine will do, and how it will do it.

We also discuss:

• Open Source software development at Equinix
• Why Equinix Metal doesn’t manage Kubernetes
• How to improve sustainability at the server level

Full transcript below:

Max Smolaks: Hello and welcome to Uptime with Data Center Knowledge, the podcast that brings you the news and views from the global data center industry. My name is Max Smolaks, editor at Data Center Knowledge, and in this episode we will discuss bare metal computing and its role in the modern digital infrastructure landscape.

To look at the subject in detail, I'm pleased to welcome brothers Jacob and Zac Smith, co-founders of Packet, a bare metal hosting specialist that was acquired by Equinix in 2020, and now serves as the foundation of the company's new Equinix Metal service. Today, Zac is managing director of Equinix Metal, and Jacob is VP of bare metal strategy and marketing at Equinix. Hello, Jacob, Zac.

Zac Smith: Hey, Max, thanks for having us.

MS: It's fantastic to have you here. Because I've been following Packet for several years, it always seemed like a very exciting business. I've met Jacob before on the show floor. So I was pleased to see that the world's largest data center operator was taking an interest in this, and putting their money where their mouth is. So I guess my first question is, how is life at Equinix? Because, you know, it's the world's largest data center operator, what are some of the challenges or changes that have happened at Packet as it transitioned from being a startup to a corporate division?

Jacob Smith: Cool, Zac, you want to take the startup to scale up question first?

ZS: Sure, you mentioned it well, Max. I mean, Equinix is a big company, I think we have over 10,000 employees, we're active in 240-plus data centers, and 65 markets. So it's big, right. And the one thing that Packet was, it was small. Startups, you know, prioritize agility, and I'm gonna call it quick decisioning, mainly because they have no other advantages, they have no scale, they have very few customers, you know, you don't have he kind of ‘oomph’ of the industry behind you.

And so the transition into being at a market leader, from what was a startup, which is naturally kind of a disrupter role, has been a transition for me. And certainly, it's exciting in certain ways, because you can see much more of the industry, your impact can be way greater. But culturally, you have to adopt different strategies. And so, you know, I've certainly had to adapt as a leader, from a founder and CEO of a small business, to an executive at a big global company. So that's certainly been a personal journey for me.

JS: Yeah, I'll add to it. I mean, the culture part is huge, but really an exciting one. Equinix has a great culture of being really grounded in some of the shared values, that we had at Packet around neutrality and staying foundational, serving the technology ecosystem, but doing it with a certain purpose in mind. And I think that that kind of founding value that Equinix has in its name, has really helped with the integration of two really different kinds of companies.

I mean, certainly, Packet is not the whole story, Metal is not the whole story, it's been part of a larger strategy, which is how do we look at digital infrastructure? How do we provide Equinix value in a new way? You know, when maybe you don't want to rack and stack your own servers in colo? How do you deliver that? And that requires thinking about new customers, building a lot of software. And those changes are big within the company. So I think it's actually been pretty exciting.

From that side, you learn a lot, as Zac said, but externally, it's been huge. I mean, we're able to have a much bigger reach, that just the sort of trust that sits with the Equinix brand in the market. You know, when you're saying, “hey, do you want to move your stuff over to my infrastructure?” Most people don't want to do that lightly. You know, it's really an important decision, foundational, so having trust and scale behind that, I think is just a requirement.

ZS: But let's talk about the actual hardest issue, which is we had to go from G Suite to office 365.

JS: Don’t bring it up, Zac. I mean, PowerPoint...

ZS: Google Slides to PowerPoint, it was a very big transition. We're still working through therapy.

MS: I can relate, that's a big one. So I’ve chatted with with Jacob, and just for our listeners: Equinix Metal is live in 18 sites today, and is going to be 27 before the end of the year. So if anything that you've heard about here sounds exciting, you can really go out, try it, this is a service from Equinix, officially launched last year, right?

JS: That's right. We kind of re-branded the Packet service; so one aspect was re-branding, the other was really to move it into Equinix data centers because what's special about Equinix Metal is the Equinix part, you know, otherwise, it's just bare metal servers. We can talk about that more in a minute. And then adding interconnection capability, integrating with other products like network edge and fabric, and tapping into that Equinix value. Have we launched it back in, I guess it was October 2021.

ZS: No, no, October 2020, Jacob.

JS: Gosh, years fly. So we've been in market 18 months, and it's been a wild ride, super, super fun ride from a from a go to market perspective.

ZS: And a little bit of a dream come true for me because I've been an Equinix customer since 2001, throughout my career. And now customers can access that global reach of Equinix, which you can get almost everywhere. And you can do so with the interconnection, that ecosystem access that people come to Equinix to enjoy. But you can do it by logging on to Equinix Metal, putting in your username, swiping a credit card, and 15 minutes later be active in 20 markets around the world with neutral infrastructure. That has not actually been possible, for at least my part of the career. So it's really exciting to see that happen. And for customers to be able to experience that global reach and neutral access of Equinix, but with a whole new methodology.

MS: It sounds like a very easy, convenient way to interact with this technology. But there was obviously a time when all servers were bare metal servers, before hypervisors, and all of the things that we kind of layered on top of it. But today, we live in an age of cloud computing and everything as a service. So who are the customers signing up for bare metal today? And why are they doing it?

JS: Max, let me start with this one. So first of all, I like to joke that no one really cares about servers or bare metal. And I mean that in a humble way. People care about what they can do with that.

ZS: You know, most people don't care about data centers either.

JS: I mean, there's a there's a select few of us that they really love data centers. But that's not the value per se, it's the transaction method, is the way that we monetize where we give access. But I think that the kind of thing that's special about bare metal is choice, it represents the ability to define, hey, do I want multi-tenancy? Where do I want it? How do I want it to work? 100% choice.

That comes with responsibility as well: you have to manage more than you would. And so, really finding that balance of what I would call cloud experience, which you can loosely call programmability, repeatability. Some people have a definition of cloud that includes a lot of stuff, like voice recognition as a service. We don't see it that way; we see cloud experience, at least for the part that we're working on with digital infrastructure, is about automation, programmability and scalability. And then there are things on top that the cloud is complementary to, right? Cloud is a major partner to us as a business, but where most of our customers want to interact is between cloud and edge. So, bare metal, interesting, great trend that's coming back again, it's going to be cool, you know, but in the end, it's a way to have opinion about your stack.

MS: Absolutely. But do you have a preferred customer type? What kind of organizations typically go for bare metal services? Is it more enthusiast market? Software developers? Maybe open source guys? Are large corporations also interested in this, and do they have applications for this?

ZS: Well, I mean, we think about customers in two ways. And Packet started with the GitHub data model where the user is first, right? Who is the actual practitioner, touching and accessing the infrastructure? And so in that regard, Equinix Metal really attracts a software-empowered, automation preferring customer, customer who wants to automate infrastructure. They're also interested in more fundamental opinions. So generally, you've got developers, DevOps leaders, etc, who have a strong amount of opinion, as Jacob was mentioning, around their stack. But they still want to have that gating option of automation, because they're doing a CI pipeline, they're using TerraForm, they want to automate the entire viewpoint, including automating the data center, and that's really what metal gives them. It gives them a way to instantiate, from the very time of a boot process of a machine, the physical data center. And so you can really have full control over your software stack. So I would say that's first and foremost is users who are developer-oriented, or DevOps-empowered, and appreciate and are attracted to Equinix.

Those customers work everywhere, of course, at all types of companies. But in terms of the actual core target user, these are digital leaders. These are customers who have a strong investment in infrastructure. They're looking for global reach. So that's service provider platforms, content platforms, media, other types of what I'm going to call it verticalized enterprises, that are already in technology. Atomotive or broadcasting, anybody who's got high amount of investment in technology around their business. But comma, they have to value automation. If they don't, they're already doing something else. They're okay, there are other models and ways to access infrastructure. But that seems to be the limiter, users who value automation, enterprises that are investing heavily in technology and need that global reach with that programmability.

JS: Let's talk about that, though. Because there's also the broader IT and enterprise market, which is a big part of Equinix customer base right now. And they benefit a lot from, like you said, closing out of legacy strategies and legacy infrastructure and moving to the next one, call it cloud or call it operated, whatever you want.

We did that Equinix with data centers a long time ago, people used to build their own data centers, now they've generally decided it's not worth doing that, most of them. And then there's this next transition around, well, “can you operate more at the infrastructure for me?” I mean, internally, we call our service hardware as a service or data center as a service. And that infrastructure as a service layer is really, [important] you know, the software partners and the cloud partners that we have. Say, people want to run VMware on top of metal, they want to run Kubernetes on top of metal, not directly consuming metal. And so I think that's a nuance that we're facing as an ecosystem, like Equinix always has. We see a lot of partners enabling those higher level use cases that are certainly finding their way to us. But usually, with a partner, it's kind of a one plus one equals three thing.

MS: Yeah. Okay, just bare metal alone is not gonna give you what you need, you also need a software partner. But one of the things you mentioned is that you you actually developed a lot of software at Packet and I guess, Equinix now. It's an unusual idea to think about, Equinix as a software developer. So what kind of tools are we talking about? Is management and optimization and uptime?

JS: All the software...

ZS: All the software, all the time. We have about 300 people working on Equinix Metal today, including a significant broader investment in our platform services and related, here at Equinix. Think programmable interconnection like fabrics, NFVs, network edge, etc. But in Metal, what we're focused on is…. My wife probably thinks “you're so boring.” But I'm boring about the same thing I do at work every day, which is: we're just focused on automating fundamental hardware. We've been doing that for seven years. And frankly, for me, it's still an exciting journey, there's so much to do.

When you think about making physical hardware, no matter what it is – we're talking Dell hardware, some new Nvidia thing, this card and that – there's so much to do to make the state and management of that repeatable, so that a software user on the other end can harness the power of that technology, but not have to understand all the systems integration part of it, right? Does this optic work with that cable, work with this switch, work with that NIC. work with that firmware?

What we're doing is we're writing constantly that fundamental automation framework, and we've open sourced as much of it as we can. So, putting it in the Linux Foundation through CNCF, our workflow management and state control related to bare metal hardware, it's called Tinker Bell. Putting out most of what we can related to firmware control, base management controllers, etc. And then the orchestration of the experience, so our customers can get a great portal, and a great API, that touch all of that.

Now, I would say that, beyond those base-level experiences, and constantly trying to move the ecosystem forward for making hardware just work, what we're also dealing with is just a scale problem. How do we get this into a few 100 data centers? How do we scale software, independent distributed systems, working across, you know, 40 markets, and 1000s of different customer deployments, both public and private? That is in and of itself a huge portion of what we do.

JS: Yeah, I would say that as a service operator, tooling is probably where we spend most of our time. I mean, people pay us for the value, but no one rewards you for like, “oh, my gosh, you provisioned a server for me.” So much of it is the expectation. I mean, it turned on, congratulations, right? The ability to be an operator at scale involves really boring but very important things like billing, metering, rating, price, booking invoice, at scale for a zillion things in a different ways. Things like asset management, knowing what all the things are and where they're at and what state they're in.

ZS: Which MAC address goes with which NIC and what hardware to what switch, everywhere.

JS: Certainly, you know, what most companies at scale have looked at [this], there's a lot of crusty old open source tooling around to prove that. But the hyperscalers, of course, have have invested in and really lead lead the pack there. I think where we differentiate, and what we're trying to do, first of all, what can we do in the open? This kind of question, because we want digital leaders to be excellent at digital infrastructure, make that market better, bigger, and we think Equinix is going to be the best place for them to do it.

But also just the idea that we're looking at a heterogeneous environment, people come to Equinix because they want an opinion about that. Like where it is: “oh, it's gotta be an NY4, next to NASDAQ.” That's not a generic ask, right? Or I really need it to scale in this way at this cost, or reach these users. Those are all very kind of specific differentiators. That makes the infrastructure that we're helping our customers operate very different. And so, it kind of pushes us to build automation that's much more foundational, and also much more flexible.

MS: Makes sense. And certainly, there are attractions to Equinix that you just can't find anywhere else. And you've touched upon this, but where does bare metal fit into hybrid cloud strategies? Because in January, for example, network specialist Aryaka reported on a survey of 1,600 IT professionals that found that more than half were planning to close all of their on-prem data centers in the next two years. Does this align with what you're seeing, this extinction event caused by the pandemic, for on-premises data centers? And how will this change the data center industry? Or do you think that like with all surveys, they might have made the problem seem bigger than it is?

JS: Well, this was happening before the pandemic, certainly Equinix had a front row seat to people closing their data centers and looking for a new way to do that. That's been a trend that we've been a part of, and a lot of that has been about finding their hybrid home. Like, where are they home rooming their network assets? Where are they home rooming their data? And then, obviously, how do they reach the places they're trying to reach – clouds, and users, connected vehicles, whatever. We've been a part of that story and the pandemic, just kind of pushed the gas on, as we all saw.

To me, and I'm fairly new to the data center industry – I came in for the classical music seven years ago – I don't have the same vantage point that Zac does, but I don't think the death of the on-prem data center is really a problem for Equinix, and even for customers. It's about what are you best in the world at. And are you going to be best in the world of operating your data center? You know, for some people, that's a yes. And for a lot of people, it's a no. And as we move forward, our job is to figure out well, where can we really fit? And where do we not go?

We made a very specific decision early in the journey with Equinix: customers are like, “could you make it easier doing VMs and Kubernetes for me,” and a lot of people are saying we should consider that. And we have partners who are called VMware and AWS, who are really good at those things. And let's be really good at what we're really good at. And so I think that's part of our view of how this can can go forward is that it's going to be what we call an ecosystem of providers. You're going to assemble the components that you need, and that's going to include a very diverse and evolving group of things called software and hardware and networks and whatever. And our job is to help to enable that to happen and to connect it all.

So, I gave you a little bit of our view, like where does bare metal go? I think it gets sexier. I mean, silicon is pretty cool right now.

ZS: And there's kind of an overarching trend there, where we do hear it from customers who are looking for hybrid cloud, why they want to move out of siloed on-premise data centers, where they're having to bring all sorts of connectivity and technology and ecosystem to them. That's very expensive, especially considering how many ecosystem partners most enterprises interact with. I need to talk to Salesforce and I have to have a VPN that goes into this, and I need private connectivity to AWS, and so there's just a general movement out of - I'm going to call it siloed on-premise data centers – into neutral, interconnected ecosystem driven data centers like Equinix.

But what we see is a movement where people are asking to remove the friction: global supply chain challenges, flight restrictions, how do I get my onsite team to Melbourne to rack and stack this, so I can get my two racks of things going? And then there are longer-term trends around building and operating that in the most efficient and sustainable manner. Things like, “help me track my assets in a secure way, help me dispose of my technology in a manner that's responsible, help me run it with increasingly improving PUEs and less energy. Oh, and could you help me measure that? So I can report on it to my shareholders or to my governance boards.”

And so there's a lot of movement for enterprises to say, help make it easier for me, while still giving me that choice. Because you know what, I'm invested in Dell Technologies, or I'm a strong user of Pure, or I really love my NetApp software that's tied in with all these things. And so they want that choice. But remove the friction along the way.

MS: Yes. And there was this expression, I'm not sure people still use it, “one neck to choke,” right?

JS: One nose to punch! It's much more peaceful.

MS: There is an actual company called One Neck IT and that was, you know...

JS: I'm surprised they're still alive. That's the question: is one throat to choke, one nose to punch, a reality? For infrastructure, probably not. But can you have primary relationships. And can you have things operated for you that you don't want to operate. I think that's where people are making decisions. And that's why we see multi-cloud and other things. Because there's a lot more riding on these decisions than in the past. And to say, well, that's just our app, you know, that runs our thing is not true for most businesses anymore. It's much more central to their business. And so they have a lot more invested in how it works. When it moves, how it evolves, all that stuff. And it' is moving beyond software.

When I jokingly said bare metal gets a little bit more sexy, it is because software is working its way down, and people are bringing more of their software opinion with them. And inevitably, where physical and digital, or hardware and software, kind of intersect is where a lot of the magic happens.

MS: Absolutely. Probably my last question: so you've mentioned sustainability, and sustainability is obviously a massive area of interest for Equinix, that's what most of their interaction with the market these days is about. If you get a press release from Equinix, half of it is going to be about things like, “this is how we made this facility green.” They're doing things like tapping into groundwater, that's the latest facility in Munich, will be using groundwater for cooling. And all of their new builds have greenery on the roof, and other things like that. So obviously, you're not involved in architecture, you're not going to design the green roof over the building, but what can you do on the bare metal side to improve sustainability? And so it is demonstratable, and people can take it to their boards, to show that they're doing doing the right thing?

ZS: This is an area of particular passion for myself, and also for the leadership at Equinix. It's not an accident, that it's a big part of what we do. Because internally, we're spending a ton of time on it. The place where it becomes interesting, beyond our overall design and construction, our own internal goals of scope two, and scope, three emission reporting and reduction by 2030, etc, is that when we're in the business of helping to operate the hardware. We can take the building systems that before, in a multi-tenant data center, we could only take it down to the cage. We could help you with cooling and power, we give you power whips, here's an A side and a B side, we've got these generators out back, and we've got cooling, which is general purpose.

But once we can help operate the computer, we can bring those building systems all the way down to the machine. And so, we've been focused on an open source initiative within Linux Foundation called Open19, where we work with OEMs, such as Cisco and Supermicro. and ASRock and Inspur, as well as supply chain, like Schneider Electric, and Vertiv, and Molex, and Amphenol, and cooling providers like CoolIT and ZutaCore, and the industry as it were. And working with partners to have open standards around pluggable liquid cooling, and power management.

What we feel is the opportunity here is if Equinix can help our customers to operate hardware within our own facilities, no matter what it is, whether it's from an OEM partner or it's something that you brought in. Can we give you our scale of investment around things like pluggable liquid cooling, where suddenly we can have closed loop cooling instead of evaporative cooling? And offset or remove the evaporation of millions of gallons of water for a facility? Could we reduce energy consumption by 30 or 40% per machine because we're not putting in fans? Could we move to 48 volt power and give you software to find power that dynamically switches, so that if you needed high availability, you got it? And if you didn't, we wouldn’t have to build N+1 for every power circuit?

So there's a tonne of innovation that we can do, and I think we have to do it as an industry together. There's no way any one company can solve these sustainability problems, and no verticalized proprietary solution is going to work because you can't access it everywhere. We're really interested as Equinix to work together, using our ecosystem-driven approach in the open to create these very disruptive ways where we can have sustainable or even net-zero data center and IT footprints.

JS: Yeah, and I'll just close it out, Max, because the difference, like Zac mentioned, now we're operating the computer, flows through a lot of our learnings. You know, bet a lot of people probably looked at Equinix when they acquired Packet, and went like, “risky, going into the cloud space, eh?” Actually, just think about what our customers do right after they get a cage – they put in servers, interact with the network, and that's what we're doing. And just by moving that one step up, we have so much more empathy, and insight, and responsibility for what our customers do every day, across tens of thousands of racks, which is put in computers and networks, and operate them, and cool them. And so, we have a front row seat to some of the customer pains.

ZS: Even as simple as getting servers into the data center and having to get rid of the packaging. Can we work with the supply chain to have reusable packaging? Can we do that? That is something that we can actually help our customers with, and also help ourselves with. So there's this like, nice virtuous cycle now that we're there, sitting next to our customers, doing this aspect of “down to the server” that we can really bring to bear, our global real estate footprint and supply chain access, to improve.

JS: It does optically look like we're getting into a new business, but it’s the same business, same foundational thing, really – enabling customers to reduce friction. And then these opportunities are really for innovation. Right? And I think that kind of open like we talked at the beginning of the interview, that sort of open neutral ecosystem ethos that was the founding of Equinix and persists today, that's what drives how we're going to do it, and why we're going to do it. Versus just like, “hey, there's a market there and people want to buy computers.” Of course they do, it’s a digital world. That's kind of the short story long, if you if you might call it, so thanks for letting us speak about it.

MS: It's a very ethical view on a data center business, so I'm rooting for you guys. Best of luck in your business. I'm afraid this is everything we'll have time for today. But we will absolutely will continue watching what happens to Equinix Metal and bare metal computing in general. Good luck with rolling out those additional locations. And hopefully, see you on the show floor, or at an event somewhere, and let us know if you're building something interesting.