Monday, June 13, 2016

Not Another xUE Metric!

By David Gross

This industry loves efficiency metrics.  Power, space, cooling, disk, I/O, memory - whether for capacity or environmental reasons, you can spend all day running ratios to measure well a facility and the hardware inside its walls utilize their resources.  But how do you know if you're measuring the right things?

I've never found all the "xUE" metrics that get heavily covered in the press to be that useful from a business standpoint.   Moreover, while calculating basic utilization metrics isn't that difficult, they often need to be incorporated into larger equations to be useful as management targets.   To capture this, one metric I've come up with is Weighted Average Cost per Utilized kW.    To calculate this, I take Full Service Monthly Rent/Consumed kW.   It can be measured across a pod, a facility, or for an entire portfolio.

I use full service rent because it not only captures all monthly costs, but it makes modified gross leases, which include management charges, comparable to triple net leases, which charge those fees separately.   To be even more complete, you can add depreciation on internally built cabling and rack infrastructure to the numerator in order to make wholesale leases more comparable to retail leases.

You'll notice that this assumes power is the scarce resource, because the equation above makes no reference to space.   While there has always been, and will likely always be, debate about power vs. space as the scarce resource in data center builds, I tend to focus on power. The reason for this is 2/3rds of the capex for a typical REIT-built data center goes to power and cooling infrastructure.   Meanwhile, land is typically just 5%.  Therefore, the scarce resource is power and cooling equipment, not space itself, which is why wholesale providers usually price leases by the kW, and not the square foot.  Some exceptions to this, especially in downtown carrier hotels, but leasing a rack at 111 8th Ave is still far cheaper than leasing an entire room in Ashburn.

So what's a good Weighted Average Cost per Utilized kW?  (or to be cheesy, WACU)

Depends on country mix, your company size, and if you've just taken on a large addition, but generally anything over $300 suggests you're overpaying, you're not big enough for wholesale leases, you're underutilized, or you've got a large footprint outside the U.S.   This also assumes Tier 3/4 facilities.  If you're going for lower tiers, or less redundancy, the meaning starts to get lost.  

Lastly, why measure this?  

Primarily because power, space, and cabling/rack capex can consume 20-40% of an IT or cloud budget, they require long-term leases, and aren't subject to Moore's Law unit cost reductions like compute cores, RAM, I/O, network, or disk.  By measuring cost and utilization in one equation, you can get a quick view of how efficiently you're using your data center dollars.

Tuesday, June 7, 2016

Data Center Stocks Close at Record Highs

By David Gross

Continued strength in bonds and investor giddiness about data centers helped push DLR, DFT, COR, CONE, EQIX, and QTS to record highs today.   Except for EQIX, all were up over 2% today, ahead of the 0.53% gain posted for the NAREIT Composite Index, which covers REITs for all asset categories. Outside the REIT category, INXN also climbed nearly 2% to close at 38.79.

Outside of yesterday's post-close announcement that QTS was buying DFT's NJ1 property for a fairly low $7,000 per available kW, not much news behind today's surge. Still, the combination of possible rate hike delays and Wall Street analysts catching on to a trend long after it's started aren't hurting.  Wells Fargo, for example, initiated DLR last week with an "outperform" rating.   Of course, you can't call your broker and ask to outperform the stock, and even if you could, where was Wells in 2013 when Digital was at 45 yielding 8%?

Wednesday, September 30, 2015

Tier 2 Cities Get Much Needed Edge Data Centers®

By Lisa Huff

The Internet edge network is primarily located in Tier 1 cities. These municipalities are defined as Tier 1 because they contain Internet Exchanges (IXs). IXs or peering points are physical points in the network where carriers and some content providers interconnect their networks. Originally, there were only a handful of these Tier 1 exchanges in the US. Now, Discerning Analytics (DA) would consider the following metropolitan areas Tier 1 markets:  Atlanta, Boston, New York City, Washington DC/Ashburn, Miami, Chicago, Dallas, Denver, Los Angeles, Palo Alto/San Jose and Seattle. In addition, Phoenix, Houston and Las Vegas may soon be considered Tier 1. Just a review of the following table will show you why. It lists what DA currently considers Tier 2 markets. Some, like Phoenix, Houston and Las Vegas, already have sizeable IXs, while others do not. Those that have smaller or no IX would benefit from an interconnection service as well as an Edge Data Center®.

A Cross-section of Tier 2 Cities with Local Content Data Centers and Internet Exchanges
State City Size (sq-ft) Data Center/IX Providers Current Communications Service Providers Known Content Providers
AZ Phoenix

8,600 EdgeConneX AT&T, CenturyLink, Cogent, Cox, ICFN, Integra, Level 3, XRP, Windstream, XO, Zayo Akamai, Cox Communications, Google
538k IO Phoenix Hibernia Networks, IO Data Centers, Layer42 Networks, TSIC, Login Limelight Networks, Mozilla, TripAdvisor
60,000 Phoenix IX, Telx Phoenix, Carpathia, CyrusOne IX, Swiftway Over 20 network providers Akamai, CloudFlare, Limelight Networks, Microsoft, TripAdvisor, Highwinds, Symantec
CA Sacramento 6,700 EdgeConneX CenturyLink, Comcast, Integra, Point to Point Communications, Sprint, XO, Zayo Comcast
CA San Diego 3,000 EdgeConneX CenturyLink, Cogent, Cox, Level 3, Sprint, TelePacific, Verizon, XO, Zayo Cox Communications, Google, Level 3
CO Denver 6,000 EdgeConneX AT&T, CenturyLink, Cogent, Comcast, Integra, Level 3, Windstream, XO, Zayo Comcast, Level 3, Netflix
FL Jacksonville

7,250 EdgeConneX AT&T, CenturyLink, Comcast, DFS Fiber, FPL FiberNet, Level 3, Rail America, Verizon, XO, Zayo  Comcast, Level 3
10,000 Cologix Over 30 network providers Amazon, Level 3
? Jacksonville Internet Exchange (JXIX), GoRack Datacenter Avesta Networks, GoRACK, FPL Fibernet, Joytel Wireless, Nodes Direct, Packet Clearing House, twtelecom, Volume Drive Akamai, Google, Level 3, Comcast
FL Orlando 4,000 Level 3 Level 3, Cogent Level 3
FL Tallahassee 4,300 EdgeConneX CenturyLink, Comcast, Level 3, Windstream, Zayo

FL Tampa 9,116 365 Data Centers AT&T, Bright House, CenturyLink, Cogent, FiberLight, FPL FiberNet, Level 3, TSIC, Verizon, XO, Zayo Akamai, Netflix, Level 3, Earthlink, Time Warner Cable, Verizon
10,000 WOW!business, Tampa IX (TPAIX) WOW!, FPL FiberNet,  Akamai
4,795 Level 3 Level 3, Cogent Level 3
HI Honolulu 20,000 DR Fortress Exchange Over 10 network providers Akamai, Microsoft
MI Detroit 4,000 Detroit Internet Exchange (DET-IX), 123Net 123Net,, Active Solutions Group, Clear Rate Communications, LightSpeed Communications, ManagedWay Company,, Riverfront Communications, US Signal A2 Hosting, MohoHost,, Easy Online Solutions, LightSpeed Communications
10,000 EdgeConneX AT&T, CenturyLink, CenturyTel, Cogent, Comcast, ComLink, Level 3, TelNet, US Signal, Windstream, XO, Zayo Comcast, Level 3
MN Minneapolis 45,000 Midwest Internet Cooperative Exchange (MICE), Cologix Over 30 network providers Akamai, Google, Netflix
MO Kansas City 7,000 Kansas City Internet Exchange 1&1 Internet, Google Fiber, Hibernia Networks, Hop Off a Cloud Networks, Hurricane Electric, KanREN, MOREnet, Northern Lights GigaPOP, TSIC, Wholesale Internet Google Fiber
MO St. Louis 8,663 365 Data Centers Over 10 network providers Amazon
NE Omaha ? OmahaIX, Nebraska Colocation Centers (NCC) Over 40 network providers Akamai, University of Nebraska at Omaha
NV Reno ? TahoeIX High Desert Internet Services, Packet Clearing House, Roller Network, Tahoe Internet Exchange, Verisign Akamai (pending)
NV Las Vegas 4,100 EdgeConneX Cogent, Cox, Integra, Sprint TelePacific, XO, Zayo Akamai, Cox Communications, Google
1M SuperNAP (Nevada NAP) Over 50 network providers, Box, FusionStorm, Limelight Networks, Microsoft, Mozy
NY Buffalo ? Buffalo Niagara International Internet Exchange, Data Centers Canada, ixColo ClubMessage B.V., Fiber Networx, TeraGo Networks, WIN Google, Yahoo!
PA Philadelphia 230k Equinix, Sungard, zColo ATX Communications, Coretel America, DBSi, GTT, Hibernia Networks, Hotwire Communications, Inerail, Internap, Sting Communications, Xand Netflix, EdgeCast Networks (now Verizon)
OR Portland 6,000 EdgeConneX Cogent, Comcast, Integra, Zayo Comcast
20k+ The Pittock Internet Exchange, Northwest Access Exchange, ViaWest, EasyStreet, LightPoint More than 60 Akamai, Google, Netflix
PA Pittsburgh 5,000 EdgeConneX CenturyLink, Cogent, Comcast, DQE, Fibertech, Level 3, Sunesys, Windstream, XO Comcast, Level 3
TN Memphis 6,100 EdgeConneX Comcast, Windstream, XO, Zayo Comcast
TN Nashville 5,500 EdgeConneX Comcast, Cogent, Level 3, NESnet, Windstream, Zayo Comcast, Level 3
TX Austin 70,000 CyrusOne IX Austin CyrusOne, Google Fiber, Inerail, InfoWest, Internet FX, Syringa Networks, Tonaquint Data Center, Veracity Networks Google Fiber, Mozy, WebNX
TX Houston 11,100 EdgeConneX Alpheus, AT&T, Cogent, Level 3, Zayo Akamai, Comcast, Level 3
320k CyrusOne IX Houston Comcast, CyrusOne, Southeast Texas GigaPOP/Rice University Wolfe Comcast, Microsoft, Netflix
UT Salt Lake City 5,400 EdgeConneX AT&T, CenturyLink, Comcast, Integra, Level 3, Utopia, Verizon, Windstream, XO, Zayo Comcast, Level 3
33,386 ViaWest Google Fiber, Inerall, Level 3 Google Fiber
VA Norfolk 5,100 EdgeConneX Cogent, Cox, Level 3, Lumos Networks, Windstream, XO Cox Communications
VA Richmond 7,660 EdgeConneX Comcast, FiberLight, Level 3, Lumos Networks, Summit IG, Windstream, Zayo Comcast, Level 3
5,000 RVA-IX, Pixel Factory Data Center Cogent, Comcast, Level 3, Pixel Factory Data Center, VA SkyWire, Global Web Solutions, Windstream, Zayo Akamai, Comcast

This list is not meant to be exhaustive, but to demonstrate a few co-location data center companies that are addressing the content delivery issue in smaller municipalities. EdgeConneX leads the way. In fact, Edge Data Centers is EdgeConneX’s registered trademark. However, others like Cologix and 365 Data Centers are beginning to realize the business potential of providing content delivery nearer to the end users – or as some in the industry would say “closer to the eyeballs.” In addition to those that we mentioned above, some of these other cities, including Jacksonville, Austin, Buffalo/Niagara, Portland, Tampa, Detroit, Kansas City, Minneapolis, Richmond and even Omaha and Reno have actually formed new formal Internet Exchanges to help facilitate improved interconnection and content delivery. But, that really is not enough. While local peering points will facilitate local traffic, only edge data centers will alleviate overburdened content delivery network connections to Tier 1 points – where the content for many applications reside.

It is important to distinguish the difference between a Tier 2 edge data center and a co-location data center in a Tier 2 market. The main difference is that the Tier 2 edge data center truly moves the edge of the network closer to the end user – so the content is housed within this data center as opposed to being delivered from the “nearest” Tier 1 city. For example, EdgeConneX has an edge data center in Salt Lake City because its clients/tenants are delivering content directly from it to the consumers in the area. So far Comcast and Level 3 are the only content providers, but we expect to see many more based on relationships they have in other cities – like having Google in their Phoenix data center. In contrast, ViaWest has several co-location facilities in Salt Lake City, but no product for interconnection of content providers outside the greater Salt Lake City Area.  That content comes from Denver, Chicago or Minneapolis where ViaWest connects to an Internet Exchange or content delivery network (CDN). There is an obvious advantage to having the content closer to you – in this instance; any of your video-on-demand programs from Comcast would load faster with less distortion because there is a much shorter distance that the signal has to travel.

CyrusOne is tackling the content delivery issues a little differently. They have launched a product known as National IX. Its marketing material claims its National IX “can be more resilient and deliver a better connection to your clients when connected to CyrusOne’s top-tier, highly redundant facilities using National IX.” This service really just connects all of CyrusOne’s data centers, which means if Netflix is one of its tenants, other tenants could connect to them. It still does not deliver data from the immediate area – it is not an edge data center. While Cologix and 365 Data Centers have content providers in their data centers, they do not have a concerted effort (at least that we can tell) to do this in all of their data centers. 

It would be nice to be able to watch a Netflix movie without it freezing up or quitting all together because it has to travel on a shared network for more than 300 miles to get to the television. For many end users today, on-demand viewing can be very frustrating. All Tier 2 and Tier 3 markets would benefit from having true edge data centers. Hopefully, we will be seeing more co-location data center suppliers rising to the challenge of delivering them as well as more content providers taking space in them.

Saturday, April 4, 2015

More Weather Excuses Coming?

By David Gross

Friday's disappointing jobs report has many analysts asserting that weather contributed to the low numbers.  However, if this were really the case, wouldn't that have been factored into more forecasts?
Either way, cloud and data center providers really have little reason to bring this up, though mother nature often finds a way of reaching the oddest corners of the economy during earning calls.

It will be interesting to see the breakouts when the state and metro data is released.   Through January, seven states - Arizona, Florida, Nevada, California, Texas, North Carolina, and Washington - had accounted for over half of the country's 3 million new jobs over the previous 12 months.   There were no weather reasons for hiring to slow down in these locations during March.   Moreover, the Northeast Corridor, from Virginia to Maine, had only contributed 13% to national job growth over the year through January 2015.   So how could bad weather have accounted for total job gains that missed expectations by more than 50%?

Friday, April 3, 2015

Sunday, November 30, 2014

Data Center Optics - TIA Data Center Workshop and 7x24 Exchange Delaware Valley Chapter Meeting

 By Lisa Huff

I just finished a quick trip to Arlington, VA and Philadelphia, PA to participate in two events:
TIA Data Center Workshop and 7x24 Exchange Delaware Valley Chapter Meeting. Both had excellent discussions about the role of optics in the data center.

The panel I moderated at the TIA Workshop had representatives from Microsoft, Google, Dell and Sumitomo. The discussion brought home to me the fact that there is a large gap between the needs of the small, medium and even large enterprise data center and the needs of Internet Data Centers. The chart below, that was provided by Dell, tries to summarize the point.

Here in 2014, we still have many enterprise data centers that run 1G servers with uplinks of 10G. At the same time, Microsoft is moving from a combination of 10G and 40G servers with uplinks of 40G and 100G, to pushing for 25G servers to connect to one 100G top-of-rack (ToR) switch-port (a breakout cable). And, Microsoft is also currently working on 400G and above for the rest of its data center network. Clearly a vast difference in Ethernet application.

The diversity of data center needs will continue to broaden over the next five to ten years so the IEEE is trying to address this in its Ethernet standards development. Data rates like 2.5G, 5G, 25G and 400G are now being considered in order to address both ends of the market "spectrum." Pun intended.

At the 7x24 Exchange Delaware Valley meeting, I discussed this trend and more from our recent study on data center optics. Here is a link to a copy of the presentation.

More to come later on trends in data center optics.

Sunday, June 2, 2013

Review of Data Centre World London 2013

By Lisa Huff

I haven’t attended an AFCOM Data Center World Conference in almost five years because when I did, my impression was that the exhibits were not well attended by would-be clients of the company I was working for at the time. In fact, that year, we saw only two potential customers in our booth. People that have attended it recently have told me much of the same. They received less than a handful of good prospects to target.

Fast forward to 2013 when I’m temporarily living in the UK and have an opportunity to attend Data Centre World in London. I was pleasantly surprised to find, in my opinion, a much better event – and it was free for qualified attendees! Perhaps that was the difference. I found the conference program to be comparable to AFCOM’s and the exhibit floor to  be much more crowded. The other refreshing thing was that while software defined networks (SDN) were mentioned, they were not the overwhelming theme. The program stuck to its intended subject matter, the data center market, its networks, facilities, clouds and hardware.

Some of my observations from attended presentations and visits to some of the booths:

  • Data center space demand throughout the world is expected to level off within the next five years due to server virtualization. SSE Telecoms showed this chart to illustrate this:

               It was reiterated by CBRE in its presentation – a snapshot is below.

    • More than 75% of network traffic stays within the data center. Thus the trend to higher data rates and flattening of the data center network.
    • The vertical market customer drives data center needs. In other words, if you’re a healthcare organization, your data center may look much different from a state/local government data center.
    •  “Shadow IT” is driving change in local area networks (LAN) and data centers. Bring your own device (BYOD) forces company networks to be more open to the employees using them, but poses possible security issues for the IT department.
    • Co-location is slowly becoming the norm for even smaller businesses due to the expenses associated with maintaining ownership of the data center.
    • Many connectivity vendors were there and they seemed to be getting healthy traffic in their booths. Some that I visited were 3MBrand-RexCommScope,CorningDraka/Prysmium GroupFujikuraHellermannTytonLynx Data Cabling,MethodeOrtronics and Telegรคrtner. All were showing either copper and fiber solutions (or both) for the data center.