(WEB HOST INDUSTRY REVIEW) — Dan Ephraim of wholesale data center provider Digital Realty Trust (www.digitalrealty.com) followed Dan Golding at Tuesday’s hosting and colocation market presentation.
After introducing Digital Realty generally, Ephraim says the company is now in a position to work with hosting providers, as a supplier, that it was never able to address before – hosts in the $7 million to $10 million revenue range.
The volume of building the company has done (more than 15 million square feet in total), has made it possible for the company to drive costs down in a way that can really positively impact the bottom line of hosting providers.
Digital Realty, like DH Captial, is bullish, he says. A lot of that is based on some research Digital Realty did, and some of the fundamental functions of the company’s business.
The fear based on the memories of 2001 are unrealistic, he says. Digital Realty does not build speculatively. Modular build-outs are the standard now, not the exceptions.
He says there is a huge growth in storage requirements (62 percent per year, according to most sources). The market IDC calls “content depots” (a term based on not really knowing what to call this kind of content dumping ground) is 92 percent annually through 2012.
There’s a lot of ambiguity, he says, and amid that ambiguity is opportunity.
He says there is a lot of new demand for data center capacity. 82 percent of Fortune 2000 companies plan to add capacity in the next 12-24 months. 73 percent plan to exand to two ore more locations in 2010 with 20k square feet per location.
Many of the huge drivers for storage are companies that didn’t exist five years ago – YouTube, Facebook and Skype, for example.
The biggest drivers for data center expansion are power capacity, storage and regulatory requirements, he says.
He says the advantages that Digital Realty provides in delivering data center solutions to the hosting business address the three major pillars of data center development – risk, control, and financial structure.
Digital Realty’s proposition, he says, is that hosting providers shouldn’t have to build data centers. Building is full of risks, from the financial standpoint, from a real estate investment standpoint and from a design standpoint.
There is a big range of issues that affects time to market – including the lack of complete expertise with a single organization, the difficulty of keeping up with building trends when the frequency of facility building is 4-5 years for a colocation provider, the lack of a standard template for data center building, the cost and availability of data center components, and the difficulty of keeping specifications consistent form one facility to the next.
Unsurprisingly, Digital Realty addresses all of those issues.
One of its offerings is what it calls Powered Base Buildings, which it says providers customers the ability to build out and operate their own data centers. The facilities are built to a template, they can be built to the customer’s design.
Digital Realty’s facility design is built around its POD Architecture, a sort of standard template that enables the company to build on a rapid turnaround.
Its flagship product is the Turn-Key Datacenter, which provides a move-in ready facility, available in multiple KW increments, and with a completely transparent maintenance and other functions.
The company also offers a build-to-suit offering, through a partnership with KDC, a leader in the corporate build-to-suit market.
Each of those offerings (Build-to-Suit, Powered Base, and Turn-Key) has a different build timeline, but each of them is an improvement over the do-it-yourself timeline.
Among the Fortune 2000 companies surveyed, more than 71 percent were looking to expand by 15K square feet or more in 2010, and 20 percent wanted to expand by more than 20K square feet. Not a whole lot of hosting companies have capacity for that right now. Most of those who plan to expand in 2010 plan to add between 1 percent and 29 percent to their power consumption in 2010.
About 73 percent of those companies who plan to expand this year, he says, plan to do so through a data center partner, that is, a hosting provider.
He says hosting providers should be working to accommodate this demand from among their existing customers, in addition to just seeking out new customers.
Interestingly, those companies planning to use a partner to expand their space are looking at the data center providers themselves as the number one resource for information on data center providers.
The point there is that hosting providers should be working on building out their websites as information resources for existing and prospective customers.
Those companies planning to expand their facilities were mostly looking for space in major metropolitan areas in the US, but there also is major demand for markets outside the US. And in many of those markets, Digital Realty has data centers.
His conclusion is pretty straightforward. Don’t build any more data centers. Digital Realty can do it better, faster and cheaper. And they do it for you.
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
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