Equinix

• This company was founded in 1998.
• Some top leaders include Charles J. Meyers, the President & Chief Executive Officer and Raouf Abdel Executive Vice President, Global Operations.

Digital Realty

• This company was founded in 2004 

• Some top leaders include A. William Stein who is the Chief Executive Officer, and Andrew Power, the Chief Financial Officer.

Research Strategy

Equinix Marketing

• Equinix was founded in 1998. Its goal is to be the world's largest digital interconnection platform and its marketing materials assert that it has achieved that goal.
• "The company leads in global colocation data center market share, with 205 data centers in 25 countries on five continents." The list of 55 markets where Equinix operates can be found on its website.
• Equinix provides digital interconnection services to businesses. The Equinix website offers a PowerPoint presentation to potential investors explaining Equinix's competitive advantages for businesses, including its copyrighted Platform Equinix, its interconnected ecosystems, its unmatched global reach, its high quality and consistency, its position as the "trusted center of a Cloud-First world", and its sustainability goals and achievements.
• Equinix operates its marketing efforts through a part of the company called the Creative Services group.
• At one point, Equinix used the services of Elevation Marketing (Gilbert, Arizona), to revise its email B2B content. As Elevation Marketing described the process, "The email content initiative is managed by and funded through the Equinix creative services group, and email requests themselves come from a wide range of functional areas, such as product marketing, field marketing and event promotion, and geographical offices (e.g., Ireland, Hong Kong, United Kingdom). ... Editorial consistency and brand compliance for email content are steadily improving across the company worldwide."
• Equinix also used the services of Karbo Communications for 10 years. A case study about Equinix on the Karbo website reports how Karbo got attention for Equinix in "the press, analyst, and technology influencer audiences". Using messages placed in those channels, Karbo was able to reach service providers, enterprises and content providers with messages articulating the benefits of outsourcing data center operations at Equinix. Equinix wanted to be known as the leader in the network-neutral data center and collocation space." Equinix positioned itself as unique, offering "network-neutral exchange services where companies would come to Equinix centers to connect to a wide aggregation of strategic network service providers. This varied from Equinix’s competitors that generally sold access only to their own, single network."
• The Harvard Business Review described a unique marketing training program that Equinix offered to employees. "Treat everyone as an extension of your marketing team: employees, partners, and even customers. For Equinix, surveys revealed that a third of employees were not confident explaining its company story. The company introduced an internal ambassador program for its ... employees" giving them "tools across all disciplines and levels to educate them on the company, its culture, products and services, and how they solve its customer’s needs. More than 20 percent of employees took the training online or in workshops in the first few months of the program, and employee submissions to its sales lead and job candidate referral programs were up 43 percent and 19 percent respectively."
• Equinix's largest clients include IBM, Sony, Wal-Mart, Merrill Lynch, Google, Yahoo!, eBay, AT&T, Sprint and Verizon, and 4,000 others.

Equinix Branding

• Equinix works with partners and exercises strong control over its brand through regulating the way the partners make use of the Equinix name, logo, photography, video, office signage, company boilerplate, and so on.
• The website explains the branding guidelines this way: "Equinix is a global brand that reaches many different audiences in many different ways. ...[I]it is imperative that we maintain a consistent and impactful representation of the brand. As such, we have created a set of brand guidelines to assist anyone involved in visually representing the Equinix brand."
• The company boilerplate that partners are required to use is this paragraph: "Equinix,Inc. (Nasdaq: EQIX) connects the world’s leading businesses to their customers, employees and partners inside the most-interconnected data centers. On this global platform for digital business, companies come together across more than 50 markets on five continents to reach everywhere, interconnect everyone and integrate everything they need to create their digital futures."
• Equinix Inc. is listed on the NASDAQ stock exchange under the ticker symbol EQIX.

Equinix Sales Functions

• Michael Campbell is the Chief Sales Officer, according to the Equinix website.
• "As Chief Sales Officer, Michael Campbell is responsible for the strategy and execution of all Equinix sales efforts globally, including direct sales and the entire ecosystem of go-to-market channel partners." Mr. Campbell was the Senior Vice President of Sales for Equinix before becoming CSO.
• Mr. Campbell joined Equinix in 2015 with 30 years of experience in international sales leadership at high-tech organizations, including Symantec, Guardent, NCR, UUNET, CompuServe, MCI, and WorldCom.
• With offices and data centers all over the world, Equinix has hundreds of sales employees, but the exact number was not accessible.
• "Equinix relies heavily on email campaigns for lead generation, nurturing and conversion", according to its content agency, Elevation Marketing.
• At the end of 2016, Equinix's customer base was about 8,500, including about 2,250 enterprise customers. It has grown since then, and current figures on its website indicate 4,000 enterprise customers. "Industry observers said a challenge for Equinix would be appealing to customers who did not know they needed what Equinix offers: 'Courting enterprises … is more difficult than serving Equinix’s traditional customer base, consisting of financial, network, media, and cloud companies. These customers basically knew what they wanted from Equinix, and all Equinix had to do was deliver.'"

Equinix on Social Media

• Equinix maintains a Facebook page with promotional materials posted for people to watch on video and to read. Facebook says on the page: 37,920 people follow this. Equinix Singapore and Equinix Warsaw also have Facebook pages.
• Equinix has a Twitter account (@Equinix) with 23.7k followers. The account posts promotional videos, press release extracts, and other materials.
• Equinix has an Instagram account with 1,107 followers. No posts have been put up yet. Equinix, Inc.

Coresite

• This company was founded in 2001.
• Some top leaders include Paul Szurek: President & CEO, Jeff Finnin: CFO, and Steven Smith: CRO.

Cologix

• This company was founded in 2010.

• Some top leaders include Bill Fathers: Chairman and Chief Executive Officer and Laura Ortman: President and Chief Revenue Officer.

Research Strategy

Company Financial Data

Earnings Snapshot

• Data Economy reported on the Equinix's Q1-2020 earnings report in an article dated 7 May 2020, referring to the 2% increase over Q4-2019 despite a $15 million negative foreign currency impact.
• Revenues for Q1-2020 stood at $1.445 billion, while operating income was $253 million, a 19% decrease from Q4-2019, attributed to the sale of assets in Q4.
• EBITDA was reported at $684 million with an adjusted margin of 47%.

Earnings Review Q1-2020

• Seeking Alpha considered Equinix's financial performance during the pandemic in an article dated 1 June 2020, after the Q1-2020 earnings were posted.
• The article examined the risks to the company from decreased demand and operational adjustments because of COVID-19, looked at the finances of the company, and delved into the company valuation given its networks and recent acquisitions.
• Seeking Alpha also noted that despite strong bookings, delays may be experienced from protracted contract negotiations, churn from different operating regions, and concluded with a caution to Equinix to clearly communicate measures taken to protect staff and to temper enthusiasm for high growth rates given the impact of COVID-19.

Positive Quarters

• On 6 May 2020, Tech Crunch reported that Equinix recorded its 69th straight positive quarter.
• Covering 17 years, the streak began in 2003 and includes the period of recession between 2008 and 2010, with the article referring to Equinix as the anti-IBM, contrasting Equinix's performance with that of IBM which recorded 22 straight quarters of declining revenue between 2012 and 2018.
• Equinix is expected to continue the streak for the remainder of 2020 with an expected fiscal revenue of $5.877 to $5.985 billion, or a 6-8% increase over the previous year.

Fitch Rating

• Fitch's Ratings provided a commentary on 6 November 2019 regarding the outlook for Equinix's senior unsecured notes.
• The company rated the senior unsecured notes issued by Equinix as stable and assigned a rating of "BBB".
•  Drivers for the rating by Fitches were the commitment by Equinix to the leverage policy, strong UA/UD coverage, Equinix's operating scale, its success in diversifying capital access, capital intensity limits, limited secured mortgage access, industry tailwinds, and prevalent opportunities and risks in the cloud provider industry.

Acquisitions

Data Center Purchase — Mexico

• In an article dated 9 January 2020 in FinanceFeeds, it was announced that Equinix has completed the purchase of three data centers in Mexico, adding a total of 215,000 gross square feet to the company's capacity.
• The data centers, previously owned by Axtel, were purchased for $175 million and expands Equinix's interconnection and data center services to two additional metropolitan areas in Monterrey and Mexico City.
• The acquisition is part of the company's large growth expansion strategy and serves to strengthen Equinix's global platform from the increase in interconnection among the America's.

Bell Canada Purchase

• TechCrunch reported on 1 June 2020 that Equinx intended to buy 13 data centers from Bell Canada.
• Equinix will pay $750 million for the data centers, and expects annualized revenue to register $105 million.
• The deal gives Equinix an additional 600 customers, 500 of which are net new, and strengthens the company's presence in a G7 economy.

Packet Purchase

• On 3 March 2020, Data Center Knowledge reported that Equinix had finalized the acquisition of Packet at a cost of $335 million.
• The acquisition adds on-demand server provisioning capability to the Equinix toolbox, allowing customers to deploy dedicated servers in Equinix data centers as is currently done with virtual machines in public clouds.
• Announced in January 2020, the deal is seen as a vehicle for launching Packet's services globally via the Equinix platform and as a "major" broadening of Equinix's technical abilities.

Industry News

Largest Industry M&A Deals

• Fierce Telecom mentioned Equinix in an article on the role private equity investors played in increasing data center mergers and acquisitions deals by 6% in 2018.
• In the article dated 27 January 2020, Equinix's acquisitions of Verizon's data centers in 2016 for $3.6 billion, and its purchase of European data center provider Telecity Group for $3.8 billion, also in early 2016, were listed in second and third place behind the purchase of DuPont Fabros for $7.6 billion by Digital Realty, as the largest industry deals since 2015.
• Together with Digital Realty, Equinix is mentioned as the industry's most "aggressive consolidators," contributing 31% of all M&A deals in the 2015 to 2019 period.

Hyperscale Deal in Japan

• On 21 April 2020, Yahoo Finance reported that Equinix and GIC, the sovereign wealth fund of Singapore, would be forming a joint venture to operate one hyperscale facility in Osaka, and two hyperscale facilities in Tokyo.
• The deal is worth over $1 billion, of which GIC will have an 80% equity interest and Equinix will have a 20% equity interest.
• The facilities are targeted at serving the needs of hyperscale companies and will provide an estimated 138 megawatts of power to the two metropolitan areas.

Equinix on Digital Realty's Interxion Deal

• Data Center Knowledge reported 31 October 2019, the comments of the Equinix CEO Charles Meyers on the potential of the proposed acquisition of Interxion by Digital Realty.
• The article noted that the Equinix CEO thought the deal had merit and an "industrial logic", yet did not see it substantially challenging the "scope, scale and value" of the Equinix platform, particularly the 22% market share that Equinix enjoys in the EMEA area.
• Mr. Meyers stated that Equinix will be comfortable competing against the entity that emerges from the deal in both Europe and globally.

Sify Purchase?

• On 16 October 2019, Enterprise IT World queried the status of the Equinix and Sify deal.
• The article speculated that discussions between the two companies in the previous few months centered around Equinix's interest in purchasing the data center business from Sify.
• Sify's data centers are deployed throughout India and this is thought to be the reason for Equinix's interest.

IBM Cloud Collaboration

• Datacenters.com reported on 24 June 2019, on the expansion of Equinix's collaboration with IBM Cloud to provide scalable and private connectivity to enterprises on the digital edge using Equinix Cloud Exchange Fabric (ECX Fabric).
• Royce Thomas, senior vice-president, Strategic Alliances and Global Account Management at Equinix, said the company can assist enterprises to deploy hybrid cloud solutions and enable digital transformation.
• Global Offering Executive at IBM Cloud, Gabriel Montanti, stated that Equinix's global presences offered IBM Cloud customers the opportunity to connect directly to critical applications from multiple points within the global Equinix data center network.

Outages — Regulatory Action

• Data center outages, emanating from human error, cyber-attacks, equipment failure, software failure, or natural disasters, can incur high costs, impact on productivity, opportunities, and incur data loss. When the outage impacts on the ability of an essential service to function, the repercussions can be dangerous for human life. Within the past three years 50% of organizations in a survey by Uptime Institute encountered data center outages, a factor in the industry increasingly turning to regulatory action to ensure resiliency.
• Regulatory action on outages is becoming an issue for the data center industry because of "asymmetric criticality" or "creeping criticality." Both terms refer to instances when processes and infrastructure has not been upgraded to accommodate the relative criticality of the applications and/or businesses they support. This is particularly important for organizations where the infrastructure cycle is out of sync with industry development.
• Greater adoption of cloud and distributed IT infrastructure can help with managing criticality risk for organizations. This is achieved when data is copied across availability zones and workload management, disaster recovery as a service, distributed databases, software tools/approaches, and decentralized traffic. When this occurs with businesses in sectors such as the financial sector, reductions in the ability to view, account for, and control the data engages the attention of regulator.
• Facility Executive reports that regulators in both the United Kingdom and the United States have turned their attention to the issue. In the United Kingdom, the use of cloud computing in risk reduction for fin tech is being investigated by the Bank of England. In the United States, a data center run by Amazon Web Services has already been examined by the Federal Reserve.

Managing Energy Use

• Data centers are notorious for using large amounts of energy. Energy Innovation referenced statistics from Shehabi gathered in 2016 which stated that servers and cooling power provision systems both accounted for 43% of the total energy used at a data center. Other larges uses are storage drives with 11% and network services with 3%.
• With the move to hyperscale data centers, the issue becomes particularly pressing as some of the largest data centers can use up to 100 megawatts of power capacity, equivalent to powering approximately 80,000 US households. Further, streaming a two- and half-hour long movie uses 1 kilowatt-hour (kWh) of energy. Streaming in 4K Ultra HD is expected to increase this to 3 kWh.
• Aside from increases in streaming activity, other services that can lead to increases in energy consumption at data centers are continued deployments of 5G and blockchain. An International Energy Agency report from 2019 suggests that gains in energy efficiency at data centers may help to flatten energy demand, however the growth of data center dependent online services may mitigate against expected efficiency gains. The Uptime Institute agrees on this point stating bluntly that the drivers for use are too great to offset "efficiency gains."  
• Cooling a data center accounts for up to 40% of the total energy consumption of a facility. With increases in deployment of artificial intelligence (AI), an activity that requires high energy consumption processors, data centers are finding innovative ways to cool their facilities. Innovative solutions used so far include liquid cooling technology and artificial intelligence. At Google, the Deep Mind AI program was used to control the environmental systems at a hyperscale data center.

Regulating for Climate Change

• Increased demand for online services leads to an increased need for data centers to provide the underlying processing power for the online services. Data centers impact the environment through particulates from generators, and the consumption of resources and materials.
• The advent of eco-design regulation for servers and storage devices in the EU, coupled and the framework for strengthening how green data centers are constructed in China are two examples of governments strengthening regulations impacting on data centers.
• Additional examples of a strengthening of regulatory action to reduce the environmental impacts from data centers include power usage effectiveness (PUE) limits and a hold on the issuing of new licenses pending an environmental impact assessment in Amsterdam, land use restrictions in Singapore, use of non-fossil fuels for on-site power generation in Santa Clara, California, and PUE limits in Shanghai. Facebook committed to the use of renewable energy (89%) at a new data center in New Mexico, and Microsoft intends to become carbon negative by 2030.
• Datacenterfrontier.com discussed the impact of climate change on data centers in an article dated 6 January 2020. The article noted that Equinix, with an energy footprint of 43 megawatts powered by natural gas, has deployed Bloom Energy fuel cells in high cost energy markets, a move that is expected to save the company $150 million over the next decade and a half.

Demand for Services

• Increases in the use of streaming services and other digital content, the move to hybrid and multi-cloud solutions, edge computing, data generation, and increased deployments of IoT devices are among the computing uses that are driving demand for data centers. The sector expects an increase in growth by 12-14 % per year, and institutional investors are "swarming" the sector.
• Colocation services provided by data centers allows modern businesses to access the facilities of a data center without being saddled with the cost of a capital-intensive internal build out. Companies also leverage power and cooling facilities, and expert tools to reduce operational costs. Vxchnge.com notes that small and medium-sized companies can increase their ability to compete with large enterprises when colocation services are accessed.
• A driver of the increased usage of colocation services is the development of intelligent monitoring. Organizations still require control and visibility of their data, regardless of whether it is processed onsite or off-premise. Intelligent monitoring allows users of colocation services to remotely manage IT deployments without having to incur the expense of using a third party.
• Definitions of Hyperscale data centers vary, however the defining characteristics are the "scale of business criteria" the data center can service and the physical dimensions of the space. Hyperscale data centers are built to handle computing services that are power intensive, with heavy workloads and can handle heavy traffic. Equinix recently signed an agreement with GCI of Singapore to build three hyperscale data centers in Japan.
• Modern computing characterized by 5G networks, IoT, and the rise of social media, all combine to create a staggering amount of data. The traditional storage method has been the use of hard drive disks (HDD). Because they are cheap and accessible, HDDs remain the choice of many organizations seeking efficient storage options. However, to meet the increased demand innovations in storage technology has led to solid-state drives (SDDs) and 5D memory crystals that are providing an option for the storage of huge tranches of data, albeit at a higher cost than HDDs.
•  Micro data centers are an option for enterprises seeking to minimize their environmental and energy footprint while retaining processing power onsite. Technologies such as edge computing, 5G, IoT, and hybrid architectures are also drivers of demand for this type of data center. Use cases occur in industries where onsite resiliency is required, such as in banking and retail. Uptime Institute expects the rate of demand for this type of data center to increase from 2022.

Demand for Talent

• The workforce at data centers mainly comprise older men. In 2018, NetworkWorld reported that in a study on data center efficiency, Uptime Institute found that data center staff were getting older, were primarily male, and that females had little interest in data center jobs, comprising only 6% of the data center workforce.
• The study went on to note that expertise in managing Service Level Agreements (SLAs), operations and management, security, networking, electrical engineering, and cloud computing, were among the skills with the highest demand.
• Over half of data center staff were found to have more than 20 years industry experience (56%), while only 5% had less than five years. Addressing the dearth of talent for data centers will take time, as the underlying issues are "systemic and long term." Investments from industry and educators is one solution proposed to address the shortage.
• The required skill sets new talent to the industry should possess, according to colocationamerica.com are artificial intelligence integration, edge computing, 5G, Kubernetes and container security, Linux, Cloud hybridization, and network functions virtualization.

Edge Computing

• Gartner defined edge computing as a distributed topology for computing where the processing of information takes place closer to where data will be produced and consumed, at the edge of the network.
• In the traditional model for cloud computing, data collected at the edge of the network has to traverse to the core for processing before being returned to the source or another part of the network for consumption. When the data traverses the network in this manner, latency becomes a factor.
• Usage of edge computing is expected to increase because of greater adoption of Internet of Things (IoT) devices and the deployment of 5G networks. Networks with 5G infrastructure allow IOT devices to function more efficiently. Uptime Institute advises that a multiplicity of networking approaches and different types of data centers will be needed to accommodate the shift to edge computing.
• Datacenterfrontier.com notes that industry experts do not dispute the usefulness of edge computing, but rather its profitability, with a focus on near-term cost/benefit analyses over long term use.

INTRODUCTION

STRENGTHS

1. WIDE GLOBAL FOOTING AND NETWORK DISTRIBUTION

•  Equinix is one of the world's largest data center and co location provider and has a vast distribution network that can reach the majority of its potential market.

• Equinix has a presence in 50+ markets across five continents with a successful track record of developing products that connect the world's leading businesses to their customers.

• Equinix operates data centers in the United States in Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, Miami, New York, Philadelphia, Seattle, Silicon Valley, and Washington, D.C.

2. STRONG BRAND PORTFOLIO

• Equinix Inc. has a strong brand portfolio with highly successful Go To Market strategies for its products.

• It also has a strong base of reliable suppliers of raw material that enables the company to overcome any potential supply chain bottlenecks.

WEAKNESSES

1. LIMITED SUCCESS OUTSIDE CORE BUSINESS

• Despite Equinix, Inc. being one of the leading organizations in its industry, "it has faced challenges in moving to other product segments with its present culture."

2. LOW PROFITABILITY RATIO

• The company's "profitability ratio and Net Contribution % are below the industry average."

• Observing first quarter "2020 results within the Communications Services industry 28 other companies have achieved higher Gross Profit Margin."

OPPORTUNITIES

1. NEW TECHNOLOGY

• Development of new technologies can provide Equinix, Inc., with an opportunity to practice differentiated pricing strategies in new markets, enabling the firm to maintain its loyal customers with excellent service and win over new customers through other value-oriented propositions. 

2. NEW ENVIRONMENTAL POLICIES

• New environmental policies have helped create a level playing field for all the players in the industry, which represents an excellent opportunity for Equinix Inc. to emphasize its advantage and gain market share in new product categories.

THREATS

1. LIABILITY LAWS

•  Liability laws in different countries are not the same, which can lead to Equinix Inc.'s exposure to various liability claims given the change in policies in those markets.

• The company also runs the risk of facing lawsuits in multiple markets due to the different laws and continuous fluctuations regarding the standards of products in those markets.

2. INTENSE COMPETITION

• Increased profitability has led to a stable rise in the number of industry players resulting in downward pressure on profitability and overall sales.

•  Rising pay level especially coming from movements such as $15 an hour and the increase in prices in China, has the potential to bring about severe pressure on profitability for Equinix, Inc.

RESEARCH STRATEGY

Demand

•  Demand in this industry, for collocation data center space, has increased as the spread of the pandemic has limited movement. It was already evident that this industry would witness a surge in the event that people cannot freely move around.
• The verticals that have seen the highest increase in demands include cloud services such as education, gaming, and video streaming. The revenue streams are generally normal.
•  Jonathan Atkin is the Managing Director at RBC Capital Markets. In his remarks about the data center industry, he stated that the shift to digital delivery has caused this industry to experience a boost. He stated how this industry has not experienced any significant negative changes caused by this pandemic.

New Construction

• In the wake of the pandemic, the drop in labor and the limitations in the transportation of various parts has interfered with the construction projects at new and existing sites.
• According to Ed Cooke, the founder of Conexus Law, the construction of new data centers have experienced some struggles due to the pandemic. The main obstacles here is the halting of labor and the supply of various parts.
• He states how several sites across Europe have had to halt construction necessitated by the lock down. With the lack of labor, the sites cannot continue to function/run. Industry leaders and key players are still unsure when they would resume construction.

• Construction projects in Southeast Asia have responded differently. Singapore has paused activity in construction, while Thailand has simply adjusted workdays so that their workers can make it home before curfew. This is a sharp contrast with Europe that has completely closed construction sites to ensure the safety of the workers, their families, and their communities. Additionally, pre-construction activities have also experienced a halt.
• In a world that is increasingly dependent on being connected, this industry will simply adjust to meet this demand. Although construction may have been halted, the industry will survive this pandemic.

• It is also of importance to note that mergers and acquisitions still continued. From January 2020 until now, there have been 28 mergers in the US, worth $15 billion. This demonstrates how companies are still growing, even though physical construction may have been paused.

Research Strategy