Credit Suisse’s Sami Badri: On-Ramps Key Enabler for Enterprises Moving to Cloud
by Josh Anderson
CAMBRIDGE, MA — Sami Badri is a senior analyst at Credit Suisse responsible for the firm’s coverage of the Communications Infrastructure sector, including data centers, towers, and Internet fiber/infrastructure. Mr. Badri joined Credit Suisse in 2013 and joined the equity research department in 2014 as a research associate in the technology, media, and telecommunications group. Sami provided the keynote address at CapRE’s New England Data Center Summit on December 12, 2017: The State of the Data Center Industry, Current Demand Levels and the Evolving Types of Supply (Cloud vs Enterprise). The story below covers part of Badri’s presentation, focusing on one of three major enablers that will drive the 2018 data center market – cloud on-ramps.
If Sami Badri were to summarize the entire 2018 market, he would break it down into three key enablers — the first “bucket” of enablers would be cloud on-ramps. “Cloud deployments from Amazon Web Service, Google Cloud and Microsoft Azure, are meaningfully different from what a cloud on-ramp actually is,” he began.
To be clear, a “cloud on-ramp” is when Google approaches Equinix, or when Google approaches Digital Realty, and says, that they need about 4 or 5 cabinets in your facility. “The reason they need that is because Google and Amazon realized that for them to justify their 40%+ growth rate in revenue per year, they need to figure out new ways to generate revenue,” Badri explained.
According to Badri, the easiest market for them to tap is the enterprise market, which is about 10 times larger from a revenue perspective than the actual Web 2.0 market. “So as of very recently, cloud on-ramps have now been in position and actually been deployed,” he explained. “Cloud on-ramps are the key for cloud providers to help enterprises move into private and cloud environments. Amazon Web Services is meaningfully ahead of everyone in terms of the number of cloud on-ramps and their market share, as far as the most ramped up, who’s in the most locations, and what their ability to win enterprise business actually is.”
If you look at the top four, said Badri, it’s no surprise that it is actually the four major public cloud providers. “The only missing company that should be up there is Oracle Cloud, which is probably playing catch up,” he offered. “But it’s really important to remember that the more cloud on-ramps that you see enter in the market, the more data centers they tend to go into, and that increases the likelihood of you winning more enterprise customers over time.”
This is because enterprise customers don’t want to deal with the engineering of connecting to a cloud, or connecting to a software-defined networking fabric. That is a preferred-outsourced skillset that they would rather turn to the market for, rather than develop internally, said Badri. “Even at places like CreditSuisse, we focus content publishing,” he explained. “We focus on low latency trading. We focus on bank accounts and security. We don’t want to deal with designing the most complex software-defined network. We’re not in the business of that. That’s Amazon Web Services’ business. We would rather just outsource the entire function to someone else. That’s essentially why on-ramps are such a core driver within the market.
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