Open data centers afcom - f13 dcw speaker ppt final - erik levitt

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Open data centers afcom - f13 dcw speaker ppt final - erik levitt

  1. 1. TRD$5.1:$The$Build$vs.$Buy$Decision$ Erik$Levi:,$CEO,$Open$Data$Centers$ $ $
  2. 2. TRD$5.1:$The$Build$vs.$Buy$Decision$2013$ In$an$industry$dominated$by$REITs$and$capital$sources$ interested$in$large$scale$new$construcIon,$there$are$profitK making$opportuniIes$available$for$less$tradiIonal$growth$ strategies.$ $ $ $ $ $ $ $ $ $ $
  3. 3. The$State$of$the$IT$Industry$ IT$is$Moving$Toward$the$Data$Center$ !  Cloud$CompuIng$vs.$Local$CompuIng$ !  New$regulatory$requirements$ !  New$IT$business$opportuniIes$(e.g.$Swaps$market,$analyIcs)$ !  Rack$density$increasing$–$but$not$at$the$rate$we$believe$(1)$ !  ConInued$decrease$in$telecommunicaIons$costs$ !  ConInued$increase$in$power$costs$$ (1)$Source:$Data$Center$Dynamics,$2013$
  4. 4. The$State$of$the$Data$Center$Market$ Bigger$is$be:er?$ •  ConInued$increase$in$data$center$demand$$ •  9m$new$square$feet$of$space$available$in$2013K2014$(1)$ •  ConInued$consolidaIon$in$the$industry$ •  Total$DC$investment$increase$beyond$$120$billion$in$2013$(1)$ •  REITs$realize$a$relaIvely$low$cap$rate$(7.25K7.75%)$(2)$ •  New$builds$cost$in$excess$of$$1500/sq$foot$ •  “BIG$Build$Syndrome”$–$Is$bigger$really$be:er?$ (2)$Source:$DRT$Release$1/31/2013$
  5. 5. The$View$From$The$Street$ SAS$Models$and$Customer$Ownership$Are$Key$ •  Managed$Service$Providers:$1K2x$$ •  Small$Data$Centers$(1K3$locaIons):$3K5x$ •  Data$Centers$with$Managed$Services:$5K7x$ •  Data$Centers$with$integrated$SAS$Models:$7K15x$ •  FaciliIes$based$providers$(e.g.$cable$operators):$5K8x$ •  Long$term$expectaIons$for$data$centers:$5K7$year$ROI$
  6. 6. Market$Entrance$Strategies$ What$does$it$all$mean?$ •  Build$new$faciliIes?$ •  Upgrade$exisIng$faciliIes?$ •  Buy$exisIng$faciliIes$(conversion)?$ •  Acquire$(purchase$exisIng$revenue$generaIng$faciliIes)?$
  7. 7. Merits$and$Disadvantages$of$a$New$Build$ Pros:& !  Build$to$spec$ !  Longer$lifespan$ !  Predictable$model$ !  Choice$of$geography$ and$locaIon$ Cons:& "  Expect$to$spend$more$than$ $1,000/sq.$h.$ "  Lack$of$carriers$in$iniIal$ build$ "  High$inerIa$in$customer$ a:racIon$ "  Startup$issues$ $
  8. 8. Merits$and$Disadvantages$of$Upgrading$ Pros:& !  PreexisIng$customer$ base/no$inerIa$ !  No$concerns$about$ carrier$density$ !  Low$markeIng$spend$ Cons:& "  PotenIally$high$build$cost$ "  No$improvement$in$overall$ market$diversity$ "  ExisIng$issues$may$persist$ "  Resource$constraints$ (power)$ $
  9. 9. Merits$and$Disadvantages$of$a$Buying$ExisIng$Facility$ Pros:& !  Very$low$upfront$capx$ !  ExisIng$carrier$density$ !  Rapid$market$entry$ !  ExisIng$spec*$ $ Cons:& "  RemediaIon$of$exisIng$ faults$ "  Cannot$choose$specific$ geography$or$locaIon$ "  May$be$moderate$inerIa$ "  ExisIng$spec*$ $
  10. 10. Merits$and$Disadvantages$of$Acquiring$ Pros:& !  No$inerIa$ !  High$carrier$density$ !  Probably$high$power$ density$ !  Instantaneous$ market$entry$ Cons:$ "  Buying$revenue$is$ expensive$ "  ExisIng$faults$ "  ExisIng$culture$ $
  11. 11. Thank$you$ Erik%Levi),%CEO,%Open%Data%Centers$ $ elevi:@opendatacenters.net$ (212)$796K5502$ $ $

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