INFN: Colocation Market blog post

Investment Analysis Clubs Saul’s Investing Discussions
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A new post hit Infinera’s blog spot today.

http://blog.infinera.com/2016/04/06/the-colocation-market-ar…

This one focuses on the data center and cloud providers, and shares Infinera’s insights about these players. It talks about how these companies are succeeding in providing colocation services where traditional telecom companies have failed.

It also talks about how the demands from this space served as the catalyst for products like Cloud Xpress and Infinera’s XT Series.

I think the author is not letting anyone forget that these products were specially built to satisfy very specific demands from some very key customers, and that these key customers are succeeding in this market because of it.

The author specifically calls out Equinix. No surprise.

Today, global colocation providers like Equinix have turned delivery of interconnection services into an art, providing an array of exchange and cross-connect services to meet virtually any operator’s needs. Specialized colocation providers like EdgeConnex have helped lower customer churn and raised network performance of their CDN by pushing content closer to end-users. The adoption of the virtual data center models enable colocation providers to create hybrid data centers by managing some content in a data center while pushing some content much closer to the customer. These examples confirm the varied requirements for this quickly evolving market and show how colocation providers are responding by providing new network services not imagined a few years ago.

Some other choice quotes from the article. These will of course appear out context. I recommend reading the article to find out more.

Whatever the scenario, telcos are not a major player in the colocation market.

Infinera is keenly focused on enabling cloud and data center networking.

No other platform comes close.

The barriers to entry are quite low, making differentiation essential to win.

In some markets, multiple colocation providers will struggle to differentiate their services, and those worlds will collide

One thing is apparent – this market will not be dominated by any telco, at least not anytime soon.

Sounds almost like fightin’ words don’t it?

Here’s the real takeaway:

Infinera delivered purpose-built solutions for cloud and data center interconnect, enabling colocation and granting cloud and data center operators as well as enterprise end-users the ability to interconnect to any data center without the complexity of traditional networking gear.

Sounds to me like their customer base is strong and growing - because of their flexibility and agility. These customers will begin to outmaneuver their competition. It’s a warning shot to those who are looking to succeed in this space with competitor solutions that are a lot less agile.

That’s all.

Best,
–Kevin

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Kevin, do you know if INFN has any products located in this building I’ve just posted about on Free For All Economics?

http://discussion.fool.com/the-nondescript-building-where-trilli…

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Hi RockOYates,

I just read the article from your posting (http://www.bloomberg.com/news/articles/2016-04-13/inside-equ…).

I have to say reading the post was very reminiscent - the article talks about the IX (internet exchange) in NY and how it deals with the New York trading system. The equivalent one in Chicago (350 E Cermak) runs the CME. Both are massively occupied by Equinix.

I’ve included a few snippets from the article, but really there’s only one takeaway that you need, and that is on the last line. For the rest - you really need to see the list of customers that Equinix serves to truly appreciate that last line’s impact.

The 49 different exchanges that lease space at this data center sent a record 9.6 million messages per second through its fiber-optic cables in February. Every day, electronic trades representing trillions of dollars’ worth of equities, derivatives, currencies, and fixed-income assets pass under this roof. This is NY4. This is where Wall Street actually transacts.

It’s just one of the crown jewels of Equinix, the $22.2 billion company that’s quietly grown into the world’s largest owner of interconnected data centers. To give you an idea of Equinix’s lead in the space, you would have to add up the market value of its five closest U.S. competitors to roughly equal its market cap, according to data compiled by Bloomberg.

Equinix pitches its centers as more than just storage space for servers. Its clients pay in part because of who else is there. That includes the Chicago Board Options Exchange, Bats, ICAP, Nasdaq, the NYSE, and Bloomberg LP, the parent company of Bloomberg News. IEX Group, the firm that starred in Michael Lewis’s 2014 book Flash Boys, stashes a key piece of its hardware in one of Equinix’s New Jersey data centers: a coil of fiber-optic cable that slows orders down by a fraction of a second. And those firms are just from the handful of financial industry customers Equinix discloses. It connects more than 6,300 businesses to their customers, and most of those firms don’t want it known that they lease one of NY4’s metal cages, which are identified only by numbers, not names.

Equinix’s nonfinancial clients, meanwhile, include some of the Internet’s biggest names: Amazon.com, AT&T, China Mobile, Comcast, Facebook, Hulu, LinkedIn, Microsoft, Netflix, Pandora, and Verizon. Much of the Internet is literally run through the nondescript buildings Equinix has scattered around the world. “They’re a crucial component of how the cloud works,” says Colby Synesael, an analyst at Cowen & Co. who covers Equinix. “It’s where the Internet lives.”

John Knuff, Equinix’s general manager for financial services, looks at this dense cohabitation and sees the future. “I always say, keep your customers close,” he says. “But keep your vendors even closer.”

Equinix is a big time Infinera customer. A simple search will show you where they’ve deployed solutions together: https://www.google.com/webhp?&ion=1&espv=2&ie=UT…

Equinix is also first on the list when you look at the list of customers that occupy each of Infinera’s markets: https://www.infinera.com/company/customers/

Equinix definitely relies on its vendors as the last line suggests and Infinera has been a very strategic one for their rather quiet build out. They also rely on partners. For example, they used a company called Spread Networks for the dark fibre route between the two financial markets in NY and Chicago. Want to know who helped Spread Networks? https://www.infinera.com/infinera-and-spread-networks-enable…

So, to repeat the question:

Kevin, do you know if INFN has any products located in this building I’ve just posted about on Free For All Economics?

Yeah, they’re in there all right. You may not see them in any of the pictures, but they’re in there.

Best,
–Kevin

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