Equinix Finds Balanced Ways To Move Up The Value Chain

by: Ben Kepes

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Global data center operator Equinix is in an interesting position. A large part of its business comes from providing the data center space for large public cloud vendors – while vendors such as Rackspace and Amazon Web Services (AWS) proudly boast of their facilities in far-flung spots such as Australia, the truth is that these facilities are generally sited within a third party data center – often times that third party is Equinix. The reality is that the large vendors’ business in remote locations isn’t yet sufficiently substantive to justify building their own facilities – Equinix can aggregate demand from multiple vendors (as well as enterprise customers) and justify a broader data center footprint.

But that introduces some issues for Equinix – clearly there is an attractive opportunity for the company in moving up the food chain and, rather than just offering dumb data center space, offering infrastructure services themselves. But were they to do that, they start to compete with their own customers – never a popular move move. It is for this reason that I postulated that Equinix had a behind the scenes role to play in hosting provider Digital ocean’s meteoric growth – I theorized that Equinix couldn’t publicly introduce its own hosting service for fear of customer backlash but could certainly give aid to a fast growing player in that space.

While my Digital ocean theory is just that, an unproven theory, what is clear is that Equinix wants to find ways to add value – previously it has done so by offering its enterprise customers interconnect services between their own data center space and the large public vendors – by leveraging its relationships with the big vendors, alongside the massive networking capacity it already has, Equinix can act as a kind of a broker.

The company is today launching another initiative that should see it move slightly up the food chain. The global channel program will help service providers to design and deploy the appropriate solution for their enterprise customers. The program allows partners to both resell and refer Equinix services, and is intended to help enterprise customers obtain the comprehensive cloud services and expertise they need – from the channel community they’re accustomed to working with. Essentially these partners can sell Equinix products (interconnect for example) that they can’t themselves offer – it’s a win for the service provider (who gets to sell a more holistic solution to customers) and a win for Equinix who gets to be more than simply a real estate leasing company.

It’s a good move for Equinix and should help them to squeeze some more margin out of existing customers, and attract new customers to their already impressive franchise.

About the Author

Ben Kepes

Ben covers how technology helps business compete.

Article source: http://www.forbes.com/sites/benkepes/2015/03/17/equinix-finds-balanced-ways-to-move-up-the-value-chain/

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