Data center and Internet Business Exchange (IBX) giant Equinix has taken a bold step up the stack in a way that may show what enterprises are expecting as they look at private cloud…and also discomfit some of Equinix’s best customers. Equinix is integrating Carpathia Hosting’s (a long time Equinix partner) compliance management systems into its own operations to sell directly to its co-lo customers. The company calls the relationship “unique.”
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Equinix has been fairly strict in the past about remaining vendor-neutral as a data center floor space provider. It doesn’t push customers onto particular hardware or management systems (beyond racks and power); just pitches its expertise as interconnection and reliability. But with Carpathia’s compliance tools and advanced virtualized networking capabilities, it’s definitely moving beyond floor space. Equinix says the initial target is highly regulated, ‘complex compliancy’ verticals like Federal IT and health care providers, which is what Carpathia specializes in. The company added that customers are asking for this.
Greg Adgate, GM of the Global Enterprise Segment for Equinix, said that users with strict auditing needs wanted more integration at the first layer of infrastructure. They come to Equinix looking to co-locate and own their IT, but as federal guidelines on compliance get stricter, they have a need for advanced GRC tools like the ones Carpathia provides (through a variety of means including other vendors, like Vyatta).
Adgate said that Equinix and Carpathia had worked hard to integrate Carpathia’s compliance expertise, which is largely around documenting processes within the machine environment into its data center operations. Equinix had deliberately avoided that side up until now.
Cloud computing comes in because Carpathia has some interesting offerings designed around delivering compliant infrastructure as a cloud in its hosting business, and it sees a massive, policy-based push to cloud services and cloud platforms in the federal government and health care. U.S. CIO Vivek Kundra wants 20% of the federal IT infrastructure on or in a cloud pretty much now. Legislative mandates (and funds!) are driving adoption of electronic health records (EHRs) and healthcare information exchanges (HE’s).
Carpathia’s not giving up its hosting business. CTO Jon Greaves said the firm has spent the last year building out sophisticated ways to use Equinix’s IBX data centers, where network traffic and connections are traded and exchanged around the world, to make services that operated like clouds but looked like compliant operations. Now Equinix and Carpathia can either sell that technology directly to co-lo users or pitch Carpathia’s managed services as an alternative. Greaves said users can even buy Carpathia’s networking tools and connect to other public cloud providers in secure ways.
Courting cloud computing providers and enterprise investment is a natural evolution of Equinix’s strategy. At some point, said Tier1 analyst Doug Toombs, it had to start delivering more than power and floor space. He said the company’s position as an independent provider still held.
Toombs said the real strength of Equinix is its global network of internet exchanges, which service every major telecom and many others besides, so consumers have a choice on communications providers. That remains staunchly neutral.
Verizon, for instance pitched its cloud services as enterprise ready because you could completely avoid the public internet; Verizon could simply put you on a backhaul link if you didn’t want to use the internet for infrastructure. However, if you didn’t like Verizon, too bad. Equinix can now offer a similar enticement, with the advantage of not getting trapped at one telecom.
Competitors Rackspace and Savvis have seen the writing on the wall for a while now, and offer all kinds of tools and management products beyond floor space and uptime, and it shows. Both firms reported double-digit growth in customers and revenue last year; Equinix, with its co-lo pure play, got killed and had to lower its EBITDA.
But how will this sit with Equinix’s service provider customers, especially cloud? Integrating complex compliance tools at the bottom layer of infrastructure means they can offer the enterprise something Amazon Web Services and OpSource (both giant Equinix customers) can’t. They just cannot meet this. Those clouds can maintain certifications; with Carpathia in its operations, Equinix users can meet their own audits. Equinix says it’s not infringing.
“If you look at the complex compliance market, there really isn’t anyone else doing it so we don’t think we’re taking down any of our customers today. The complexity of it drives a price point that resonates with the price point we bring,” said Greg Adgate. That’s a high price point, Equinix is not cheap.
However, everybody knows that enterprise IT is coming to the cloud and bringing the big money stakes. After all, even if they own their infrastructure, lots of enterprises co-lo and still consider that “in-house infrastructure” and if they want cloud, they’ll look twice at a floor space operator that can do secure, private cloud-y stuff. “There’s some obvious segments like fed and health care but the market opportunity is much bigger than that,“ said Adgate.
Amazon did not respond to requests for comment about its data center provider. Salesforce.com doesn’t do sensitive infrastructure, so they’re rapidly sinking to the SaaS morass and don’t matter. OpSource also hosts in Savvis, so they’re probably fine.