By David Gross
One of the most keys to success in the wholesale/co-lo market has been the ability to dominate certain geographies. While Wall Street is still going on with its vague, misguided approaches to understanding demand, businesspeople who don't need to ask for "a little more color" get that they need to have high share within the metro areas in which they operate, regardless of how big their competitors are in other cities. So for this reason, it was good to see Equinix announce its newest data center, not in Singapore, Sydney, or Slough, but San Jose.
While some companies overdiversify by offering too many services, Equinix has done so by entering too many markets, especially those where it has limited share. To succeed in Los Angelese, it will have to invest a tremendous amount of cash in marketing, in order to reach media companies and content distributors already in CoreSite buildings. Dallas will always be a tough market, because Equinix has no chance of catching up to the 2 million square feet owned by Digital Realty. Northern Virginia, a former Equinix stronghold, should have another 1 million square feet of Equinix-owned space right now, but expansions elsewhere diverted capital to other markets, and created a nice opening for Digital Realty to come in and develop its Devin Shafron properties.
Equinix's newest facility in San Jose is its eighth. Its first phase includes 1,098 cabinets, with a full build out of 2,600 and total space of 165,000 square feet. In its press release announcing the opening of the facility, the company proudly pointed to its legacy serving Silicon Valley companies, and to the cross-connect opportunities across its regional footprint. But both would be even greater if it wasn't stretching its capital budget to cover large markets already dominated by someone else.