CARRIER-NEUTRAL COLOCATION 2009 DATACENTER REPORT BY JASON SCHAFER APRIL TIER1 RESEARCH & THE 451 GROUP DATACENTER
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1 CARRIER-NEUTRAL COLOCATION 2009 DATACENTER REPORT BY JASON SCHAFER APRIL TIER1 RESEARCH & THE 451 GROUP DATACENTER
2 REPORT SNAPSHOT TITLE Carrier-Neutral Colocation 2009 ANALYST Jason Schafer, Senior Analyst, Tier1 Research RELEASE DATE April 21, 2009 LENGTH 42 pages ABOUT THIS REPORT The Carrier-Neutral Colocation report is designed to be a guide to the carrier-neutral colocation marketplace for The report discusses facilities and providers whose primary service offering is carrier-neutral colocation as opposed to managed services. Many of the observations from this report are applicable to managed services providers that sell colocation, as well as carrier colocation providers who are competing directly with the carrier-neutral providers. The report includes a market overview and discussion of industry terminology, basic datacenter anatomy, power trends, efficiency metrics, interconnection trends through 2012, colocation customer perceptions and priorities and colocation discount structures and pricing strategies. The intended audience for this report includes investors at hedge funds and venture capital firms who need to quickly come up to speed on the colocation market; marketing and executive staffs at carrier-neutral colocation providers responsible for operations and positioning decisions; enterprise, content provider and Web hosters that may become customers of carrier-neutral colocation providers and enterprises looking to outsource IT needs to colocation providers where interconnection redundancy and resiliency are of importance. 2 TIER1 RESEARCH: CARRIER-NEUTRAL COLOCATION 2009
3 Tier1Research Better perspective from the top in independent tech research COMPANIES INCLUDED IN THIS REPORT 365 Main ABC Akamai Amazon AOL AT&T BellSouth BitGravity Brasil Telecom BT Group (BT) Cablevision CBS Sportsline China Netcom CNN Comcast Cox Communications Deutsche Telekom (DTAG) ebay EDS Equinix Facebook France Telecom Google Hulu IBM IDT Corporation Level 3 Communications Limelight Networks MCI NBC Netflix NeuStar OnFiber Communications Pirate Bay Qwest Rackspace Rogers Communications SBC Shaw Communications SK Telecom Sprint Switch and Data Telehouse America Telmex Telstra Terremark ThePlanet Time Warner T-Mobile UPC Broadband VeriSign Verizon Virgin Media WilTel Communications Yahoo YouTube 2009 BY TIER1 RESEARCH & THE 451 GROUP. ALL RIGHTS RESERVED 3
4 TABLE OF CONTENTS INTRODUCTION 1 MARKET OVERVIEW AND TERMINOLOGY 2 CARRIER HOTELS FIGURE 1. Carrier Hotel with Meet-Me-Room INTERCONNECTION INTERCONNECTION TRAFFIC TYPES FIGURE 2. Voice Traffic FIGURE 3. Internet Traffic FIGURE 4. Data Traffic TYPES OF INTERCONNECTION FIGURE 5. Regional Bell Operating Companies (RBOCs) INTERCONNECTION FACILITIES INTERCONNECTION FACILITY EVOLUTION TRENDS IN INTERCONNECTION: STAGNANT CONVENTIONAL VOICE INTERCONNECTION INTERNET TRAFFIC CONTINUES TO GROW AN INCREASING NUMBER OF INTERCONNECTING NETWORKS INCREASES IN CROSS-CONNECTION WITHIN FACILITIES NETWORK NEUTRALITY UNDERSTANDING COLOCATION CUSTOMERS: KEY DRIVERS 18 NETWORK DENSITY TELECOMMUNICATIONS SERVICES AVAILABILITY COST OF CABINETS, CROSS-CONNECTS AND POWER POWER AND COOLING CAPACITY EXPANSION CAPABILITY MANAGED SERVICES AVAILABILITY AND QUALITY FACILITY QUALITY AND RELIABILITY FIGURE 6. Datacenter Tier Ratings CUSTOMER PRIORITIES BY CUSTOMER TYPE FIGURE 7. Selection Drivers vs. Customer Type TIER1 RESEARCH: CARRIER-NEUTRAL COLOCATION 2009
5 Tier1Research Better perspective from the top in independent tech research COLOCATION PRICING STRATEGIES 24 POWER BLADE SERVERS SPACE-BASED PRICING FIGURE 8. Space-Based Pricing CIRCUIT-BASED PRICING FIGURE 9. Circuit-Based Pricing POWER-BASED PRICING FIGURE 10. Power-Based Pricing FIGURE 13. Branch Circuit Monitoring FIGURE 12. Current Transformers FIGURE 14. Smart Power Strips/Rack PDUs CABINETS/RACKS FIGURE 15. Power Density and Rack Cost Relationship FIGURE 16. Rack-to-Power Conversion OVER-SUBSCRIPTION OF POWER DATACENTER ANATOMY FIGURE 17. Basic Datacenter Anatomy FIGURE 18. Hot Aisle/Cold Aisle DATACENTER EFFICIENCY AND EFFICIENCY METRICS FIGURE 19. Power Usage Effectiveness (PUE) CROSS-CONNECTS COLOCATION DISCOUNT AND PRICING STRUCTURE 38 TERM LENGTH DISCOUNTS VOLUME DISCOUNTS ESCALATION CLAUSES PRESS DISCOUNTS CUSTOMER PERCEPTIONS 41 CABINET PRICING AND AVAILABILITY POWER PRICING AND AVAILABILITY CROSS-CONNECT PRICING SERVICE LEVEL AGREEMENTS (SLAS) BY TIER1 RESEARCH & THE 451 GROUP. ALL RIGHTS RESERVED 5
6 ABOUT TIER1 RESEARCH Tier1 Research covers consumer, enterprise and carrier IT services, particularly hosting, colocation, content delivery, Internet services, software-as-a-service and enterprise services. Tier1 s focus is on the movement of services to the Internet what they are, how they are delivered and where they are going. ABOUT THE 451 GROUP The 451 Group is a technology analyst company. We publish market analysis focused on innovation in enterprise IT, and support our clients through a range of syndicated research and advisory services. Clients of the company at vendor, investor, service-provider and end-user organizations rely on 451 insights to do business better. For more information about Tier1 Research and The 451 Group, please go to the company s websites: and Tier1Research Better perspective from the top in independent tech research 6 TIER1 RESEARCH: CARRIER-NEUTRAL COLOCATION 2009
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