August 21, 2018
Stiff competition from cloud-platform giants, rising costs and an increasing menu of choices for customers all are making it tough for colocation providers to carve out and sustain market share.
A number of new competitors have emerged, such as Cyxtera, which formed when CenturyLink sold its data centers and colocation business. In all, the top 12 colocation providers account for more than 30 percent of the global market, according to a report by Global Info Research. Smaller providers capture 1 percent or less market share.
Even though the market is going through consolidation, the colocation industry includes more than 1,000 additional companies.
CloudTech1’s Rick Beckers
Members of the Channel Partners Editorial Advisory Board and Business Advisory Board shared their views with us on what it takes to succeed in colocation.
Rick Beckers, president of CloudTech1 and editorial advisory board member, said as it relates to agents that participate in the channel, a cutting-edge colocation provider, and SaaS or hardware-as-a-service (HaaS) provider, must provide an easy-to-use management interface and automated billing system.
“The reason for this is because most agents are not as tech savvy as a full blown MSP,” he said. “They own and maintain the relationship, and want to sell licensed and subscription-based products and services. They want to maintain account control by keeping others out of their accounts, so they seek providers that have these easy-to-use, management portals that allow them to sign up, sell, or subscribe their clients to the products and services they need without having to engage a third party or divulging the key contact information that they protect dearly. The colocation and data-center providers that can – or will – provide such interfaces will benefit by obtaining larger market share than the traditional data centers.”
Fusion’s Gina Kennedy-Toney
Gina Kennedy-Toney, Fusion‘s vice president of channel marketing and alliances, and a business advisory board member, said today’s environment has become extremely competitive and customers have more choices then ever when looking to colocate their facilities.
“With so much competition, Fusion has found it increasingly important to educate both its current clients’ and new prospects on what Fusion does well versus the competition,” she said. “The major obstacle customers appear to face when making their decision is who is truly the best fit for them. Our consultative approach effectively educates consumers on exactly who we are and what we will do best for their business so they may make the most educated decision.”
The biggest challenge is coming from the large public cloud platforms such as AWS, Azure and Google Compute, said Paul Cronin,“facilitator of excellence” for Cronin Corp. and editorial advisory board member. These public platforms allow for “endless just-in-time” provisioning and scalability of compute, storage and multi-region availability that is “next to impossible achieve with your own metal in a single collocation facility,” he said.
“It is getting harder to be different and add value and services that other providers do not also offer,” he said. “The colocation market is commoditized with many providers’ options in the larger geographic areas that offer the same network peering and uptime/availability. Older colocation facilities were built and designed before the explosion (of) public cloud in the last few years, leaving them empty and expensive to maintain without clients they expected when they were brought online.”
Based on feedback from editorial and business advisory board members, and recent news reports, we’ve compiled a list, in no particular order, of 20 colocation providers that are making the most of the current competitive landscape and charting success.
(list begins on next page)
Equinix is cited by Vince Bradley, president and CEO of master agent WTG, and Cronin as a successful, cutting-edge colocation provider.
Successful providers include international facilities and carrier-neutral policies, integrated managed services and additional infrastructure services beyond space and power that can be easily implemented, and geographic redundancy, interconnectivity scale and Tier 3-plus facilities, Bradley said.
Cyxtera has a “nice network” after spinning off from CenturyLink, Bradley said. It combines a global footprint of 57 data centers with a portfolio of cloud, hybrid security and analytics — providing more than 3,500 enterprises, government agencies and service providers with an infrastructure platform for applications and systems.
Beckers said his company works with – and is a Gold partner of – Microsoft Azure. Microsoft Azure ExpressRoute provides a private connection between an organization’s on-premises infrastructure and Microsoft Azure data centers.
“Uptime is one of if not the most important selling points of a colo provider,” Cronin said. “Any cutting-edge provider should have a Tier IV facility rating, which provides for no less than 99.995 percent uptime on all facility systems including power, cooling and network.”
Beckers also works with Amazon Web Services (AWS). AWS and QTS formed a strategic partnership to bring hybrid cloud offerings to AWS customers needing dedicated colocation that communicates with their AWS cloud.
“QTS is an example of a provider that has facilities that were built to meet government and health-care compliance standards, (and) they also set up hybrid environments including virtualization incorporated into their managed-service capabilities,” Bradley said.
Beckers said some of his clients are with Rackspace, In June, Rackspace began offering colocation services through its channel partners as it expands to fill needs for customers that aren’t ready to give up complete control of their IT infrastructure as they move to the cloud.
“Expenses keep rising,” Beckers said. “Building and maintaining compliant colocation data centers is definitely not cheap. Mainstream vendors with cloud solutions are driving down the price point in the traditional industry race to zero. So margins are getting lower each quarter.”
Cronin said contract flexibility and being able to provide the client with alternative programs that allow them to move their hosted compute to and from the cloud and onsite at their own location are important. The client “seems to be still developing their strategies around hosted, cloud and on-prem and want to be able to have the flexibility with pay as you consume in (a) private cloud (hosted) environment just as you would in the public cloud consumption model,” he said.
Bradley cited Digital Reality among the most successful providers, adding its “strategy of interconnectivity, called Connected Campus, brings data center, cloud, connectivity and network elements together under a single, secure environment delivering a hybrid multicloud design.”
Flexential offers business continuity and disaster recovery (BCDR) services up front with colocation, Bradley said. It includes 41 data centers across 21 U.S. markets.
“Most clients who are in the market for colocation are in search of a better way to make their business more efficient, a better way to make their business more protected,” Kennedy-Toney said. “A solid colocation strategy can address both of these needs, but first you must have the knowledge to best identify the needs of your client and apply the correct consultation when advising on the solution.”
Bradley cited Sungard Availability Services (Sungard AS) as “good for BCDR and availability services.” The company is listed among “vital supreme players” in Prudour’s report on the global data center colocation industry.
“When delivering a service to different regions around the world from a colocation facility, you want to have the lowest possible latency between your servers and your customer’s device,” Cronin said. “A cutting-edge provider will have multiple peering paths to internet exchanges in different geographic regions on the country or world.”
Both Bradley and Cronin cite Switch as a successful provider. Based in Las Vegas, Switch is an “incredible highest-tier facility that is an ideal redundancy for Los Angeles, Phoenix and other areas in the Southwest,” Bradley said.
Geographic diversity of hosting centers is important to avoid impact from environmental conditions such as storms, Cronin said. However, understanding where your data is located remains on the top of clients’ minds, so accurate reporting is important for clients especially those with compliance requirements, he said.
Bradley said Internap (INAP)’s private network access point (PNAP) strategy gives them “great flexibility.” The company operates in 56, primarily Tier 3 design data centers in 21 metropolitan markets and has 99 points of presence globally.
Bradley also said Unitas Global has “unique high-level data center services.” This month, the provider of connected hybrid cloud for the enterprise has been ranked No. 904 on the Inc. 5000 list.
“Five years ago, a 1-5 megawatt opportunity was considered large,” he said. “Now the hyperscale requirements that AWS, Microsoft, Facebook, Oracle and Alibaba (as examples) have are in the 20-40MW plus (upwards for 100MW) range. So, if you have existing space, power and infrastructure to support these requirements, you have a great advantage. If not, then having the plans locked up to deliver these facilities in short order gets you in the hunt.”
AT&T has “good coverage for larger networks,” Bradley said. Earlier this summer, AT&T agreed to sell 31 data centers, comprising its data-center colocation business, to Brookfield Infrastructure Partners for $1.1 billion. Brookfield will use the assets to launch a new wholly owned global colocation business. AT&T will continue offering colocation – often packaged with other services – to its enterprise clients, but the colocation provider will be Brookfield.
“Direct peering to popular CDNs (content delivery networks) and cloud providers such as Amazon, Azure, and Google are a must these days so that your data travels on the lowest number of hops to the most popular internet services,” Cronin said.
Cronin cited CoreSite among successful, cutting-edge colocation providers. Earlier this month, the company was given the OK to add 100 megawatts of data-center capacity in Northern Virginia, providing expansion capacity in the world’s largest cloud computing hub.
Cronin also cited Colocation America as a top provider. The company has 22 data centers in eight major locations.
“Any top-tier facility should have an up-to-date SSAE 16 Type II certification,” he said. “This certification guarantees that the facility IT controls and operations are routinely and systematically inspected and audited so you can be assured that all the necessary controls are in place to secure your companies’ security, privacy and sensitive information.”
Cogeco Peer 1
Cogeco Peer 1 was cited by Cronin as a top provider. Through its subsidiary Cogeco Peer 1, Cogeco Communications provides its business customers with a suite of information technology services, including colocation, network connectivity, hosting, cloud and managed services, through its 16 data centers, FastFiber Network and more than 50 points of presence in North America and Europe.
Telelehouse has some “excellent facilities” in Asia Pacific, Bradley said. A subsidiary of KDDI, a global Fortune 300 Japanese telecommunications and system integration provider, Telehouse has 47 data centers in 23 cities throughout Asia, Africa, North America and EMEA, and delivers continuous operation of network-dependent, IT infrastructure to businesses globally.
Liberty Center One and Online Technologies
“Both have a presence in our home state of Michigan with geographically diverse redundant data centers for failover, etc.,” he said. “The geography and logistics for working with them is less costly. Working with them is most often much easier than the Tier 1 providers. They are hungry, loyal and committed to our joint success. That is a very good equation.”
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