Equinix – Network Neutral Data Centers

Implications: I originally viewed Equinix as a company with a solution in search of a problem.  In a day an age when the large carriers prefer doing direct connect to business customers, the Internet and in general enterprise technology has a created an environment where neutral data center are a necessity.

Analysis: The current recession actually helps Equinix. The company has taken a very simple model of network interconnectivity neutrality and targeted markets that were up to about 2 or 3 years ago largely ignored by the traditional connectivity customers.

Equinix’s customers are carriers and the IT (information technology) organizations of corporations.  Through the company’s Internet Business Exchanges, the company provides a variety of connectivity services.  From its beginning, the company focused on providing Internet connectivity support.  The company emerged at a time when the traditional back bones and outsourced network managers were focused on supporting TDM (time division multiplexed services) but beginning to look at IP (Internet Protocol) based technologies.  The carriers, up until a few years ago were still very much focused on maintaining and oeprating their substantial TDM based networks.  Market needs and demands of the times have forced the big carriers to be IP focused. 

Equinix’s corporate sales have zeroed in on not just corporations but financial institutions.  The company’s financial exchange services targets financial institutions.  They went where the money was.  They went where the decisions were made.  In a word, CLEVER.

The company has capital deployed in the right places.  I believe the company deployed sufficient capital ahead of the recession.  I would not say that this was necessarily foresight on their part but simple aggressive management and marketing.  In order for the company to build a critical mass of customers a widescale equipment deployment was necessary.

I believe their sales and marketing was brilliant – going after the sources of cash and financial decision making is smart; it was clearly a smart move to embed themselves with the holders of the keys to the gates.

The company’s global outlook also provides a broader customer base than one would normally see with the connectivity providers of old.  Equinix’s competitors like Neutral Tandem and Level 3 originally began as time division multiplexed based connectivity providers.  Neutral Tandem has since begun shifting into IP (Internet Protocol) based services; as has Level 3 but what both have dealt with is something we call legacy systems and legacy customers.  Don’t get me wrong I think a lot of Level 3 and Neutral Tandem.  However, Equinix has the advantage of beginning its life as an IP –based provider.  I am not going to opine on the technology because in my experience the state of a company’s technology literally has no bearing on their commercial success.  Equinix’s technology is not so proprietary that its competitors given time and money could not duplicate Equinix’s network.

Equinix is operating in an environment that needs a company to facilitate communications between corporate locations and between corporations and their customers.  Time is money and money is time.  Bottom line, Equinix is providing a valuable service at a time when companies are working feverishly to stay afloat and profitable.