Should Colocation Data Centers Fear Consolidation? (SlideShare)

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Should Colocation Data Centers Fear
Consolidation?

Yes! No!Wait a minute…To understand whether
consolidation is a threat to colocation data centers, we
need to know what kind of consolidation is concerned.
Sponsored by http://www.DataCenterLeadGen.com

IT consolidation, for instance, refers to the actions of an
enterprise to reduce its IT resources through more
efficient technologies.

Data center market consolidation, on the other hand,
refers to mergers or acquisitions of service providers,
producing smaller numbers of providers, but increasing
their average size.

Now that we know what we are talking about, we can
assess the negative risk, meaning the threat; and perhaps
also the positive risk, meaning the opportunity.

Consolidation from the Customer’s Point of View
There is no shortage of technology to help customers
do more with less when it comes to hardware and
operating systems. Blade server systems have replaced
or obviated the need for mainframes.

Server virtualization allows multiple virtual machines to
run on one physical box. IT automation makes processes
run faster, more efficiently, and with fewer errors.

How does this affect colocation providers
that offer data center space and facilities?

Overflow customers.Those whose own data centers
that were filled to the brim may now find consolidation
gives them space to bring colocated systems back in-
house. If so, they may no longer use colocation services.

Outsourcing customers.Technology is only one part of
the total IT solution. Data center facilities and
competent data center staff are also critical.These
customers may consolidate their installations within the
colocation data center, but will reduce rather than
eliminate their colocation budget.

Customers consolidating their own data center. In
this case, customers may end up needing only a
fraction of their original data center space. Compared
with trying to build or find a smaller data center of their
own, colocation can be an attractive solution.

Colocation can also appeal to larger organizations
consolidating multiple data centers: some individual
business units may prefer to retain their IT autonomy by
moving to colocation, instead of trying to sort out
internal cross-billing in one organizational data center
that houses the systems of all business units together.

Consolidation of the Colocation Market
Currently, larger colocation players are buying up smaller
ones. Other providers that remain independent must
compete with larger providers offering wider
geographical coverage, economies of scale, or both.This
situation is a classic one in business. Smaller colocation
providers then have several options.

They can specialize in different colocation market
segments (retail, for example), and distinguish
themselves by offering personalized service.

Some growth sectors, like the industrial internet services
requiring geographical proximity for low latency
networking, may be better suited to smaller, local
colocation providers, rather than bigger, but more
remote ones.

Much as neighborhood stores continue to compete with
large supermarket chains, there are business
opportunities for both small and large colocation
providers, whichever way the consolidation wind blows.

How is consolidation – in any sense of the word –
affecting you, as a colocation service provider?

Share your experience and opinion with a line or
two in the space underneath.

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Should Colocation Data Centers Fear Consolidation? (SlideShare)

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