Silent Partner

Ideas, big and small.

[gosilent]

Datacenters… Not as Power Hungry as Predicted?

Boy where did the summer go? We just looked up and realized it’s the middle of August. Since August means lots of cool, rolling fog in San Francisco it’s sometimes easy to forget what summertime means to the rest of the country. Humidity and 100 degree temperatures mean that folks crank up the air-conditioner and use tons of electricity. In fact several states across the South and Northeast have recently warned of the potential for rolling brownouts should the current heat wave continue. 

Speaking of electricity use, datacenters have been the target of some startling predictions. According to a widely referenced EPA study released in 2007 the growth of the Internet and the continued digitization of society would cause datacenter power consumption to double between 2005 and 2010. The consumed capacity for US datacenters in 2011 was predicted to exceed 12 gigawatts. That’s enough power to serve over 14 million homes! 

That’s why we took special notice of a recent article from the New York Times that refutes the EPA study. Jonathan G Koomey, a consulting professor at Stanford University, was engaged by the Times to produce a report effectively auditing datacenter growth and comparing it to the EPA predictions. Surprisingly, despite the greatest period of datacenter construction on record, overall power consumption only grew by 56% globally between 2005 and 2010. In the US power consumption only grew about 36%. Mr. Koomey identifies two significant factors that limited power consumption during this period: the recession first and foremost but also the improved efficiencies of the facilities as well as the equipment inside of them. Still despite the good news analysts warn that the slowed rate of power use could be only temporary.

At Silent Partner we’re bolstered by the news in this study. It’s satisfying to note that efficiency and “green” efforts do pay tangible dividends rather than solely being used for marketing. Regardless if the recent activity in our financial markets is any indication we may see a continuation of these lower power consumption rates for some time.

[gosilent]

Watch the 2011 Structure Conference Live Feed

Hello all you cloud heads out there... Greetings from sunny San Francisco where the city is enjoying a brief taste of real, summer-like conditions. Better yet, this week we host the fourth annual GigaOm Structure conference at the Mission Bay Conference Center. Structure is considered to be the most influential conference for cloud computing and its roster of attendees and sponsors backs that up. Amazon, Softlayer, Cisco, Terremark, Facebook, RightScale, and many others will be in attendance along with entrepreneurs, venture capitalists and IT and media professionals.

The topics and themes covered at this year’s conference include:

Has infrastructure as a service come down to earth?

The potholes that await platform as a service.

What’s new in webscale infrastructure?

What rights do consumers, customers, and providers have in the cloud?

Making the case for cloud databases.

Does the need for speed mean saying goodbye to disk?

Although we’re not attending this year Silent Partner is excited to watch the live stream. Of particular interest is Amazon.com CTO Werner Vogel’s “State of the Cloud” address that is taking place Wednesday the 22nd at 9:20am PST.

Check it out!

[gosilent]

New York is Red Hot!

The New York / New Jersey area has seen a flurry of datacenter activity over the last few months as providers jockey to acquire more space and serve demand in one of the country’s hottest markets. Capacity has been largely a tale of two cities (well States actually) with New York seeing relatively scarce retail capacity while Northern New Jersey has an abundance of wholesale space from the likes of Digital Realty Trust, DuPont Fabros and Sentinel. Since their target customers are financial services firms the NJ wholesale offerings all reside within a 30 to 70 km ring outside the blast radius from New York City but still within the limits of real-time data replication.

Clearly demand was impacted in NJ over the last few years as a result of the economy and the health of the financial services sector. In December of 2010 DRT identified 28 megawatts of available supply in NJ after one of the lowest years of absorption at 13 megawatts. (For comparison, 2008 saw 58 megawatts of capacity absorbed in NJ). Still the outlook for 2011 is strong and analysts predict as much as 40 megawatts to be acquired during the course of the year.

The one outlier here is Sabey Corporation who just announced their $120 million acquisition of 375 Pearl Street in lower Manhattan. This news is interesting in that it’s Sabey’s first development on the East Coast but more importantly because it’s unique to see a wholesale facility in New York proper.

One significant factor that is shaking up the market and potentially driving demand in both the wholesale and retail segments is Google’s acquisition of 111 8th Avenue. Last December Google acquired the massive carrier hotel in downtown Manhattan ostensibly for use as office space. Based on the significant strategic value of this property many in the datacenter industry question Google’s true intentions and have speculated that perhaps they would build their own interconnection and peering hub.

Two weeks ago Google formally announced that all remaining datacenter space at 111 8th was off the market. This news sent shock waves through the carrier neutral sector and most certainly will drive up the price of retail colocation not only within the building but also in similar carrier hotels like 60 Hudson and possibly 165 Halsey in New Jersey. The obvious short to mid-term beneficiaries of this news are Telx, Telehouse, CoreSite and newcomer zColo who operates space at 165 Halsey and 60 Hudson.

Just recently Telx leased an additional 53,000 square feet at 111 8th from Digital Realty Trust. Also in February Telehouse opened their newest facility at 85 10th Avenue. Thanks to its location two blocks away from 111 8th the Telehouse site should see an uptick in demand from displaced customers.

Speaking of displaced customers other carrier neutral operators inside 111 8th must be wondering what will transpire when their leases come due. This list includes Equinix (legacy Switch and Data), Internap and Qwest.

Silent Partner has learned that the same day Google made their announcement about removing available space in the building Qwest was also notified that their lease would not be renewed on a 2000 square foot suite. Adding insult to injury we’re told Google’s intent is to build a cafeteria in this space?!

Perhaps Qwest and others will look across the Hudson to the readily available wholesale space in New Jersey. After all it was similar conditions in the past that led Equinix, Switch and Data and others to deploy in the Garden State.

[gosilent]

Can Telcos Buy their Way Into the Cloud or is this Deja Vu?

2011 has thus far produced a bevy of acquisitions in the cloud computing sector. The epic buzz around cloud has driven many Telcos to revisit build vs. buy calculations with a renewed appreciation for the economics of buying their way to cloud relevance. Apparently the carriers have realized that the time to market and customer acquisition benefits of purchasing colocation companies (who operate a cloud) outweigh the economic impacts. As a result we saw three significant acquisitions in the first quarter including Terremark purchased by Verizon, NaviSite by Time Warner Cable and most recently Savvis gobbled up by CenturyLink/Qwest. 

Okay, what gives? Didn’t we just suffer through two setbacks in the adoption of cloud computing? Yes. Last month AWS had a prolonged outage as result of problems with their Elastic Block Storage systems. Sony Online also took a big hit as two separate phishing attacks compromised over 100 million users’ confidential data. So clearly uptime and security will continue to plague the adoption of cloud-based services by the enterprise, yes?

Well no, not according to the analysts. Recent studies point towards the continued adoption of cloud by business users. In fact Gartner projected global revenues for cloud computing to reach almost $150 billion by 2014. (The 2011 market is already estimated at ~ $68 billion globally).

Despite some perception hiccups thanks to AWS and Sony, enterprise IT is drawn to the efficiency and economic benefits of cloud. Flexibility and pay-for-use models are particularly appreciable given the uncertainty of the global financial system the last few years. The carriers are looking to capitalize on this shift in enterprise IT while leveraging their existing assets and personnel. At Silent Partner we find this wave of acquisitions reminiscent of the late 1990s / early 2000s when AT&T, Qwest, Sprint and others scrambled to build an application service provider (ASP) strategy.

At a high level, there are some obvious commonalities between the ASP boom of the previous decade and the current cloud computing frenzy. In a client-server world, the appeal of outsourcing your IT requirements is the same for software functionality (ASP) as it is for computational and storage needs (cloud). Thus we find cloud computing companies built in a similar fashion as their ASP predecessors:

ASP/Cloud providers own and operate the software application(s) 

ASP/Cloud providers own, operate and maintain the underlying equipment (servers, routers, switches, firewalls, load balancers, etc)

ASP/Cloud providers make services available to customers via the Internet

ASP/Cloud providers bill on a "per-use" basis 

In addition, many of those looking to jump on the cloud bandwagon are the same folks who tried their hand in the ASP market during the dot-com boom. These include telecom companies like Verizon, Qwest and AT&T; software companies like Microsoft and Google; and of course hardware manufacturers such as HP, Dell and IBM.

So, what happened to the ASP market during the previous decade? Didn't things end badly? Yes, they did and carriers would be wise to revisit their history to make sure they don’t make the same mistakes. There are numerous examples:

Qwest spent heavily to build datacenters and launch its CyberSolutions brand in 1999/2000. The idea was to host ASPs in their facilities as well as offer their own ASP service. After seeing their stock fall by more than 50% in 2002, Qwest sold this division to Corio for a mere $15 million. By 2005, struggling Corio was swallowed up by IBM.

Then there’s the confusing tale of GTE. At one time the largest independent phone company outside of the Bell System, GTE agreed to join ‘em by merging with Bell Atlantic in 2000. Of course, this union produced Verizon and much later the dreaded “can you hear me now” guy. In 2000, GTE Internetworking was re-branded as Genuity. With much fanfare (and a $20 million marketing budget) Genuity launched their Black Rocket managed hosting or ASP platform. By 2002, Genuity struggled to service a massive $2 billion line of credit and as a result filed for bankruptcy protection in November. Level3 ended up acquiring their network and assets for $242 million later that same year.

We could go on with stories of Global Crossing, Cable and Wireless and others but you get the point. 

Luckily quite a bit has changed over the years in order to create a better environment for the carriers. As mentioned above enterprise demand for cloud is there and it’s getting stronger. The “build it and they will come” mentality of the last decade seems to have burst along with the dot-com bubble. Furthermore technological advances in networking, processor speeds and datacenter technologies make for a more viable proposition when it comes to outsourcing your IT requirements. The economics are better but so is the overall level of functionality (security and uptime not necessarily withstanding). Finally, those carriers making acquisitions are in pretty good financial standing. This means strong balance sheets with low debt ratios and cash reserves. That being said Telcos are also being realistic about the state of affairs in their legacy product suites. After all, competition is fierce for IP services and the price points have been significantly eroded over the last two years. Adding to this problem is the saturation of the residential markets and the continued disconnection of landlines as more people use only cell phones. In summary the major carriers have realized that they must build for the future even if this means through acquisition. To remain relevant and financially viable long-term means you must have a cloud strategy. Here’s a quote from Adam Lowell, Verizon’s COO: “Every time we see a paradigm shift in computing, we see the number of users go up by a factor of 10. The global presence positions us to be a big player in the next generation of computing, as well. And where everything we do—media, communications, personal data, network intelligence, security protocols and many more—will be stored in the cloud and then delivered around the globe.” There is still a long road ahead of the Telcos since integrating acquired assets is never an easy task. Recent history has also shown that providing outsourced IT services to the enterprise can be too far removed from the carrier sweet spot. Still the conditions are favorable for cloud and legacy telecom companies must change in order to remain viable in the face of shrinking core revenues.

[gosilent]

Consolidating the Net: Level3 to Acquire Global Crossing

Monday April 11th arrived with confirmation of one of the longest running rumors of the telecom mill. Level3 has agreed to acquire its competitor Global Crossing in a tax-free stock swap valued at $3 billion. Deal terms specify that Global Crossing shareholders receive 16 shares of Level3 for every common or preferred stock held at closing. Speculation of just such an event has been circling the telecom campfire for years now so this week’s news came as little surprise.

Should regulators give the deal a thumbs-up the combined entity will represent a dominant force amongst Tier 1 networks. As previously discussed in this blog, Renesys shows Level3 to be the largest global network as measured by the sheer amount of IP space transited on their network. Based on this same ranking schema Global Crossing is the third largest network behind Sprint. Put the two together and you’ve got a massive operation with significant reach in terms of geography, route miles and access.

Based on this information executives on either side of the deal were quick to point out the economic efficiencies to be gained by merging networks. Consolidated operations will definitely help to reduce costs in terms of sharing network access and settlement free peering arrangements as well as eliminating overlapping support personnel and systems. There is however another and less favorable side to consolidation in our opinion.

Level3 has already struggled to integrate the 31 companies it has acquired since 1992. This list includes some rather sizeable operations such as Genuity, Williams and Broadwing. Silent Partner has experienced firsthand the difficulties of managing such a huge, disparate asset base. Capacity requests show no availability only to change 24 hours later. At other times buildings with legacy Williams or Broadwing fiber demarked come back as “off-net” according to L3. This confusion leads long provisioning intervals, messy support during outages and a general sense of frustration from the customer perspective. Integrating a network as large and far-reaching as Global Crossing’s will clearly present problems for the new entity.

While most analysts were quick to discuss the network implications of Level3 gobbling up Global Crossing, Silent Partner is curious to see what effect if any there will be upon the datacenter industry. Last summer Level3 conducted a detailed strategic assessment of its colocation business that led many to believe they were considering selling this unit. Traditionally L3 datacenters suffered from low power density since most were built in the telco colo style of the late-90s. L3 often uses these sites to house their own equipment therefore selling off excess capacity was essentially gravy on top of their core business. Obviously getting customers to colocate within a L3 datacenter guarantees control over their network spend onsite. By November of 2010 however Level3 had committed to upgrading 10 facilities in the US in order to deliver better power density. Thereafter a renewed push was made to sell colocation through direct and indirect channels. 

On the other side of the fence Global Crossing’s strategy has been largely the same in that most of their facilities are telco grade with the exception of a few key strategic markets where they operate more modern sites and in some cases offer hosting. Global Crossing has been a dominant player in Latin America wherein they operate 15 datacenters including sites in Argentina, Brazil, Chile, Columbia, Ecuador, Peru and Venezuela. This meshes well with L3’s datacenter footprint that is stronger in Europe and North America. Should the combined entity be able to update facilities to more current power densities they could become a player in the space. Carrier neutrality is of course a concern but Silent Partner believes that for certain network-intensive customer verticals like content and gaming the strength and reach of their networks provides a compelling reason to colocate with the new Level3 (access to peering notwithstanding).

[gosilent]

SXSW Debrief

Whew, what an adventure! South by Southwest was an epic week of inspiration, networking, incredibly smart people and delicious meats. Back and finally rested, we figured we’d take a minute to recap a few highlights from our trip to Austin. And while we’re at it we’d like to give a few shout outs to the people who made it happen in 2011.

First off the inspiration: Austin itself is such an amazing town and the friendly vibe there has a way of permeating the conference. This atmosphere complements the fascinating intersection of tech, film and music to make SXSW a special event where creativity and collaboration are encouraged. The open environment in Austin stands in stark contrast to so many other tech conferences where one-way communication and heavy corporate marketing rule the day. It’s refreshing to attend a conference where things don’t feel sales-y and transactional.

From our experience, we believe that SXSW attendees arrive in Austin looking to fill needs for themselves and their businesses. Whether the need is simply to educate yourself on the latest trends and hear from industry icons or find an audience for your new, killer app everyone who attends SXSW comes prepared to get out there and mix it up with the community. Again this atmosphere is in contrast to other conferences where people tend to have their guard up and stand behind their corporate mask (or booth). We found ourselves meeting and interacting with so many talented and motivated people we couldn’t help but walk away feeling pumped.

Speaking of the people, SXSW Interactive has become such a huge part of the conference. Almost twenty thousand people attended this year’s Interactive and as a result huge talent from across the industry came out to participate. Amongst the speakers we saw Seth Preibatsch stood out for his keynote on the game layer. If you’re interested you can read a good summary of his talk. We also enjoyed Tim Wu’s talk on the long-term prospects of net neutrality and Barry Diller’s keynote as well. Thanks SXSW for bringing together so many smart, engaging people. We had a blast!

Also a huge thanks goes out to Jason Schnurr and Cedar Street Courtyard, our home away from home. Kyle and the Dyn Inc. crew were amazing too. Here’s to pulling off the most amazing recovery of the conference by moving your party to Symphony Square at the 11th hour. You guys deserve the Energizer bunny award for keeping it going all week! Last but not least congrats are in order for Fraser Campbell and Eventseekr. Here’s to your new launch. Keep up the good work!

[gosilent]

Sin City Partners Here We Come

Once again we’re off to Vegas for the annual Channel Partners show. This is the first year it’ll be hosted at the Aria Resort and Casino and we’re eager to see what new excitement this might bring!

This event is one of the many things that helps keep us ahead of the curve and stay connected to the ecosystem. As usual we’ll be taking the opportunity to meet new people in the agent community and of course catch up with many of our fabulous long-term partners.

It's already looking to be a jam-packed time but if you’re hoping to connect with us and haven’t reached out yet, give us a holler. 

Channel Partners Conference & Expo 2011 »

[gosilent]

SP @ SXSW!

Well howdy folks!  

We just wanted to let ya’ll know that we’re fixin’ to head down to Austin, Texas for South by Southwest. Silent Partner is tickled pink to attend this year’s conference and we look forward to checking out the newest, freshest crop of tech companies from across this great land. 2011 marks the 25th anniversary of SXSW and so we’re anticipating big things at the show.

It seems like just yesterday that Twitter was the toast of the conference even though that happened back in 2007. Of course 2009 witnessed the launch of Foursquare at SXSW and as a result the explosion of geolocation products and apps. What’s on tap for this year and who will be the next killer startup? If you’re like us—you’re dying to find out.

So if you plan on attending the show and you’d like to hook up, give us a shout. The schedule is absolutely jam-packed but we’d love to catch up (preferably over a big ‘ole mess of BBQ.)

Adios for now, partner.

[gosilent]

Our GDC Mixer with Triggerspot

Last week San Francisco was host to the annual Game Developers Conference over at the Moscone Center. Silent Partner took advantage of this opportunity to host a mixer with our friends Paul and Anya from Triggerspot.

Triggerspot is a digital entertainment consultancy firm specializing in online games distribution and marketing. They offer developers and publishers guidance on go-to-market strategies and best practices around the launch, operation and monetization of games. On top of all that they are amazing people who know just about everyone in the gaming world.

We’d like to give a big shout out to Triggerspot as well as the folks at our party venue, 83 Proof. You guys rock! The event was a total blast and gave us an opportunity to drink and network with some of the best and brightest in the gaming industry. If you have a minute check out some of the hilarious pictures below. Silent Partner brought our trademark 80s brick phone and posed the question…

“If you were an alcoholic beverage, what would you be?”

Paul Thind, Triggerspot

Anya Shapina, Triggerspot

Mario Baumann, Business Development, Just A Game

Nathan Haydn-Myer, Marketing Manager, DreamsLair Entertainment

Mike Nguyen, Silent Partner

Kierra Box, Director of Stylists, Tobi.com

Chris Marlatt, CTO CaroNet Datacenters

Dave Ohara, Green (Low Carbon) Data Center Blog

Mike Turner, VP of Business Development, Big Collision Games

John Peterson, Director of Gaming, Digital River

[gosilent]

CoreSite Tops Out 2972 Stender Way

Last Wednesday members of the Silent Partner team met with CoreSite at their Santa Clara datacenter campus located at Coronado Drive and Stender Way.

Unbeknownst to us, CoreSite was preparing to top out their 101,000 square foot datacenter at 2972 Stender Way and we got a chance to sign the beam. Shown below is a photo of Silent Partner’s own Jennie Karnes armed with a Sharpie and sporting a hard hat.

The facility itself is slated to offer a 2N UPS configuration, supported by N+1 emergency generator and cooling systems. CoreSite’s focus on energy-efficiency is demonstrated by their use of air-side economization, 97%-efficient UPS units and variable frequency driven (VFD) cooling units. Speculation is that the datacenter’s projected average annual PUE will be 1.3 or lower.

Finally, CoreSite’s Any2 California Internet exchange, regarded as the second largest in the U.S., will be accessible from the 2972 Stender Way datacenter.

Congrats to CoreSite on their new facility! We look forward to working closely with them throughout the evolution of the 496,000 square-foot Santa Clara datacenter campus.

Jennie Karnes, Sharpie in hand ready to sign

[gosilent]

Earnings Calls this Week

This week many of the publicly traded colocation firms will announce their 2010 4th quarter earnings. This includes carrier neutral providers like Equinix as well as the REITs like DuPont Fabros (Wednesday the 9th) and CoreSite (Thursday the 10th). The outlook is generally rosy as revenues have continued to rise for most players thanks to new datacenter inventory coming online. Major markets are of course the biggest recipients of new datacenter space including New York/New Jersey and the Bay Area (yay!). In addition, the acquisitions of Terremark by Verizon and NaviSite by Time Warner have helped to push the stock of cloud providers higher in the last few weeks. Case in point: Savvis whose stock rose 16% after the Terremark announcement last month. Savvis announced earnings Tuesday the 8th. While the earnings discussed this week will mostly be driven by traditional colocation services look for cloud to drive valuations higher this year as more acquisitions are lined up and cloud adoption continues to grow in the enterprise space. Silent Partner believes those providers that can offer a full suite of products including colo, managed hosting and cloud are uniquely positioned to capture the dollars of emerging growth companies and next generation startups. Providers that offer customers the ability to port their spend between products will offer a distinct advantage over carrier neutral, interconnect driven companies. Flexibility will be the key to allowing clients to tweak their infrastructure plans during growth phases and changes to business strategy while keeping them sticky long-term.

[gosilent]

Verizon to Acquire Terremark... Is it All About the Cloud?

Last Thursday Verizon announced its plans to acquire Terremark in a deal valued at $1.4 billion. Assuming shareholders approve the acquisition Verizon will gain instant viability in the cloud space thanks to Terremark’s existing product capabilities and client base. Industry pundits lauded the move by VZ and surmised it to be a logical extension of their previous relationship with the datacenter operator. In 2007 Verizon began white labeling the Terremark cloud solution, leveraging the fact that both parties utilize VMware’s vCloud platform. Apparently Verizon liked what they saw under the hood.

Upon further consideration however, it may be rash to simply chalk the acquisition up to cloud computing. The price tag alone tells you that more factors must be at play since Equinix only shelled out $689 milliion for Switch and Data, a company with 5x the amount of facilities of Terremark. So what gives? Why is a Tier 1 carrier making such moves? And should we be concerned that an incumbent has more nefarious plans in acquiring a carrier neutral datacenter operator? Remember Terremark owns and operates one of the most strategic interconnect and peering sites in the United States in the NAP of the Americas, Miami. 

Well last Thursday I was enjoying a nice lunch with Dave Ohara from Greenm3.com. Dave received a text from one of his contacts tipping him off to the deal. After we wrapped up lunch and got back to our computers there was confirmation on the news wire. As a result, Dave and I spent several hours discussing the implications of such a combined entity and pinging our contacts to get the inside scoop. Dave graciously offered to summarize the conversation in a post to his blog. If you’ve got a few minutes bop over to greenm3 to check it out.

Meanwhile, we send a hearty congrats to our friends and associates at Terremark. Verizon: you couldn’t get a better group of professionals in Terremark. Good for you. Now, please keep NAP of the Americas carrier neutral. Thank you. That is all.

[gosilent]

Silent Partner Top Five Industry Topics of 2010

Hello and Happy Holidays! I hope everyone on the East Coast is staying warm and for those of you here on the West Coast, I hope you’re dry. 

I know it’s been some time since our last missive and you were probably starting to think we didn’t love you anymore. Rest assured dear readers, we still heart you. Not to make an excuse but it’s really been one heck of year here at Silent Partner. We had everything from highs to lows and a lot of stuff in the middle. Overall it was great and we can’t complain. What we can do however is take a few minutes to summarize our top news and events from the last 12 months. So without further delay here are Silent Partner top five industry topics of 2010 (in no particular order).

Switch and Data + Equinix

 Ok I know what you’re thinking… didn’t this happen in 2009?  Well yes, the announcement of Equinix’s $689 million acquisition of Switch and Data came in October 2009 but the deal wasn’t completed until May of this year. Moreover the effects didn’t really start kicking in until last summer. With the overlap of many support, engineering, management and sales positions, a lot of folks were let go. This was a bummer because we had a lot of friends at the company. Equinix policies and procedures were also rolled out into the legacy S&D sites along with higher rates for most services. Finally the cancellation of their channel program was of course a big deal to the agent community. We look forward to a time when Equinix will understand the value of the right agent partners and revisit the channel. Meanwhile we continue to enjoy success with those other providers who get the indirect model and work in collaboration with Silent Partner.

Cloud

While pundits far and wide heralded 2010 as the year of the cloud it was to us mostly an improved but similar tune from 2009. And by that we mean more talk and a lot of jumping on the bandwagon from a marketing perspective. Service providers, equipment manufacturers, and software companies all rolled out advertising campaigns that leverage the cloud hype. Microsoft even pushed their silly “to the cloud” series of commercials to the consumer market. Nonetheless there were some big pieces of news on the cloud front. NASA and Rackspace teamed up for an open source cloud software collaboration called “Openstack.” Larry Ellison did an about face and despite his very public reservations about the cloud, Oracle decided to throw its name in the ring as well. What a difference a year makes, eh? However to Silent Partner the most noticeable maturation of the cloud came via Amazon Web Services. AWS continued to grow by leaps and bounds in 2010 and they had the revenues to prove it. Analysts estimate that Amazon will rake in over $500 million from AWS this year. Finally as a nice cherry on top, Netflix announced they would roll their entire infrastructure to AWS instead of operating datacenters. In summary Silent Partner saw 2010 as the year where the service providers were legitimizing their service offerings in preparation for the coming demand. Since our attentions fall more with the client / buy side we didn’t see a ton of activity but we anticipate more client exploration and adoption in 2011.

Big content = big datacenters

In 2010 we saw the continued proliferation of content as Facebook broke 500 million users, Twitter exceeded 100 million and Apple surpassed Microsoft in market capitalization. That last point continues to dumbfound us. I mean we knew it was coming but when you put that into the context of the last 30 years it just seems amazing and unbelievable. As our British friends would say… good on ya’ Apple. With all these pictures, videos and music flying around the web a lot of compute and storage power is needed in some very large datacenters. Accordingly there were a lot of high profile projects turning up across the US in 2010. Facebook christened its very own datacenter in Prineville, Oregon while making plans for a new one in North Carolina. Twitter also got in the game with a new site in Utah and plans to occupy another in Sacramento. Not to be outdone, Yahoo opened its “chicken coop” datacenter in upstate New York. Like the Facebook project in Prineville, Yahoo’s facility employs evaporative cooling and modular design to reduce cost and the time to deploy. And continuing their streak of impressiveness, Apple went live with a 500,000 square foot site in North Carolina that cost an estimated $1 billion. Analysts speculate this site will be the launch pad for Apple’s continued foray into the cloud offering music, apps and soon software via iTunes.

Mo’ Money

After the dearth of readily available capital in the last few years, 2010 saw a bevy of activity amongst carrier neutral operators looking to expand through external financing. Telx announced plans to go public on the Nasdaq and hopes to raise $100 million to fund its growth. Telx was acquired by the private equity group GI partners in 2006 and GI has been behind other activity this year including Softlayer’s acquisition by the Planet. In September another private equity heavyweight, the Carlyle Group, took its datacenter subsidiary public on the NYSE. CoreSite raised over $270 million through the listing and joins the ranks of public traded datacenter REITs alongside DuPont Fabros and DRT. In our opinion Coresite along with Telx should figure to be strong contenders to fill the void left by Switch and Data. Both of these providers follow a go-to-market strategy similar to S&D whereby they offer good quality carrier neutral space in major markets along with peering. Finally the European operator Interxion also announced plans to file for an IPO in the United States. There have long been rumors that Interxion would enter the US and after they were thwarted in their attempt to acquire Switch and Data look for a go it alone strategy in 2011.

Year of the FCC?

Last but definitely not least on our list this year is the FCC. Led by Chairman Genachowski the FCC seems to have taken on a more active role in 2010. Unfortunately what started out as a great year for the agency has taken a turn to the left as a result of their recent efforts to legislate net neutrality. But first the good stuff: in early 2010 the FCC rolled out its National Broadband Policy. The FCC’s plan is a grandiose undertaking that hopes to light up broadband in 100 million homes across the country, rural areas in particular. To accomplish this goal the plan includes a much-needed revamp of the Universal Service Fund. Those buried charges in your long distance bill generate over $8 billion a year and the FCC wisely moved to prevent further shrinkage in this fund while simultaneously updating its charter. Where before the USF supported rural TDM based telephony it has now been appointed to bolster modern technologies like 3G wireless and FTTH. Moreover the Broadband Policy provided a hint of the other FCC activities we’d see later in the year with one example being the push to open up more wireless spectrum. Throughout the Fall Chairman Genachowski was busy stumping for more wireless spectrum and openly stating his belief that opening up more of the spectrum would spur innovation in the tech sector and possibly solve some of the coverage problems presented by the Broadband Policy. Silent Partner agrees with the FCC’s position and we were happy to see the resulting unanimous vote to free up white spaces in the TV spectrum for just such a purpose. 

Unfortunately these positive strides were largely tarnished by the FCC actions around net neutrality late in the year. Net neutrality began to heat up in late 2009 as result of Comcast’s lawsuit but things didn’t reach a full boil until recently, again thanks to Comcast and their recent dispute with Level3 over termination of Netflix traffic. Although we appreciate any efforts to keep the ‘net open, the FCC is really not the body to do so. In viewing the FCC proposal, released this month, you find that much of the verbiage is dedicated to separating and defining access to the Internet from the Internet itself. Remember the FCC only has jurisdiction over access services provided by landline or wireless. As a result much of the proposal language is a not so obvious attempt to validate the FCC’s position and authority to preside over the issue. Add to this the fact that the proposal attempts to please too wide a range of constituents from consumer to carrier and the result is a watered down proposal that lacks key components (such as including wireless in the ban on paid prioritization of traffic). Sadly the result will likely be prolonged legal wrangling in courtrooms across this country. At Silent Partner we look no further than the man who created the term “net neutrality” for a sound critique of the FCC approach. Harvard Professor Tim Wu says the FCC proposal gets about 50% of his criteria right and obviously that’s not a passing grade. If you’re interested in learning more about Wu’s take, check out his recent media appearances. We think you’ll find them as captivating as they are educational. Also for a deeper dive on this issue with lots of cool historical context a la Nicolas Carr, Silent Partner recommends Tim Wu’s latest book, The Master Switch.

With that we bid you adieu 2010. We at Silent Partner wish everyone a Happy New Year and best wishes for an exciting, productive and successful 2011!

[gosilent]

Channel Partners DC Wrap-up

In follow-up to our previous post about the Channel Partners show in DC we wanted to take a few minutes to recap our trip and give a few shout outs. Although it was a rather whirlwind affair the trip afforded us the chance to reconnect with many of vendor partners and fellow agents from around the country. Typically the East coast, fall installation of Channel Partners is a little less busy than its Vegas counterpart. Also considering it’s not in Sin City there is of course more time to focus on meetings and datacenter tours versus gambling and nightlife. 

One of the highlights of the DC show was the NTT & Telx sponsored boat cruise on the Potomac. According to Mike and Jennie the nighttime views of our nation’s capital were amazing and included a glimpse of the Nationals stadium in full swing. (Go Giants!). Before leaving, the crew also got a chance to do a limo tour of the new Latisys facility in Ashburn. With 250,000 sq ft of Tier III compliant space Latisys has picked up a great asset and we look forward to helping them fill it. Finally there was also time for a nice drive out to Culpeper in order to see firsthand the expansion Terremark has underway. By the way, we previously chronicled Terremark’s expansion in Culpeper right here on our blog. According to Jennie the facility has come a long way since last November and Terremark is enjoying a steady success with their cloud offerings in the Federal sector. The facility is located far enough away from the Beltway to pass “blast radius” limitations at more than 50 miles but not too far away to prevent the ever present server hugger phenomenon. :)

Finally for the shout outs...

Silent Partner would like to say thank you to Peak10 our newest vendor partner. We appreciate the mindshare and look forward to a long and prosperous relationship.

Also, to Donna Turner of AboveNet and Steve Warren of Integra goes a hearty congratulations for your nominations to the top 15 Channel Mangers list. You guys rock! 

[gosilent]

September Baseball with Silent Partner

It just doesn’t get any better than this.  

Last Tuesday night as San Francisco was basking in its warmest day of the year, Silent Partner hosted our annual baseball event at AT&T Park. The temperature was a perfect 73 degrees at first pitch and the atmosphere was electric thanks to the Giants being primed to win the division for the first time since 2003. This year’s outing was co-sponsored by NTT Communications, Telx and Dyn Inc. We’d like to give a hearty thanks to each of our vendor partners for their help in making the event a success.

Of course no Silent Partner shindig is complete without our wonderful friends and clients from around the Bay. This year we had an awesome turnout including folks from Justin.tv, Zoosk, Netflix, Trulia, On24, Weebly, Infoblox, Wikispaces and more. Finally in what’s becoming a trend at our annual event, the Giants came back to win the game 4-2 after falling behind in the 2nd inning. As a result the Giants took a two game lead in the division and their chances of playing post-season baseball look solid.  

Go Giants: we'll see you in October!

Jason and Ronnie from Facility Gateway checking out the Giants in action.

Mike Sullivan and Steve Gasser representing Silent Partner.

Rob from Trulia hanging out with Bob Faulkenberg and Arjan from Bunchball.

The Silent Partner team in full effect.

DNS is sexy.

Christian from Meebo making a point (or two).

Jennie hugs on Dave from Zoosk.

[gosilent]

Problem Solving with GreenM3

A few weeks ago I had the pleasure of meeting Dave Ohara at the datacenter happy hour event over at a local club, 111 Minna (thanks for the connection Chris!). I’ve been following Dave’s writing for some time now and so I was thrilled to speak with the man himself. For those of you unfamiliar with his blog, I highly recommend you pull down the feed. 

The Green (low carbon) Data Center Blog is a beacon for the cause of green datacenters and efficient computing. After twenty plus years of work at high profile companies like Apple, HP and Microsoft Dave has distilled his experiences into a captivating series of posts on events from across the industry landscape. Dave is a pretty prolific writer and yet he always manages to present unique insight into the latest tech news and trends. While there is a variety of information to enjoy from the technical to the hilarious what is constant is the call to embrace green practices. 

Just this week I had a chance to sit down with him for a cold beer and some conversation. The result was an interesting philosophical discussion on how process, corporate bureaucracy and even ego can adversely affect a company’s datacenter strategy. We both agree that strong organizations hang their hat on problem solving and forego process just for process sake. 

Dave was so kind as to write a little piece on his blog about our chat. If you’ve got a minute check it out. Silent Partner is honored by the post and we welcome him to our ecosystem.

Data Center Problem Solving or Process, where do you spend your time? »

Kevin

[gosilent]

Hello Out There!

Apologies for the short notice but we wanted to let you know that members of the Silent Partner team are currently attending the Channel Partners Conference in Washington, DC. If you plan on attending and will be around the Gaylord Convention Center, shoot us a line. It’s a quick trip but we’d love to catch up with you.

Cheers,

Silent Partner