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Sami Badri, Credit Suisse: Enterprises Can Now Make Intelligent Deployment Choices

CAPRE’s 7th Annual Greater New York Data Center Summit was held on April 5, 2018 at Westin New York at Times Square. Above: Sami Badri, Senior Analyst, Credit Suisse presents the keynote address: Cloud Enablers Boosting Enterprise Colocation Growth.
Jun 12, 2018
by Josh Anderson

NEW YORK, NY — According to Sam Badri, we are in the middle of a great IT architecture shift. And it bodes very well for data center developers and operators. Badri is a Senior Analyst for Credit Suisse, and a frequent contributor at CapRE Data Center Summits. At our 2018 New York Data Center Summit, Badri was the Keynote Speaker, and he had a lot to say about where the industry is headed, outlining a handful of forces that will accelerate cloud demand in the future. Below, we highlight some of Badri’s concluding remarks.

Market Absorption and Power Rates

“As it pertains to the New York market and New Jersey, you can basically see that compared to other markets in 2017, they had some of the lowest megawatt absorption,” he shared. “It’s no surprise. I think that the key reason for that is power costs. Power costs in the Tri-State area are very high. When you compare that to Northern Virginia or other states where it’s even lower, that’s essentially why all of the cloud providers are going to other markets. It just makes sense from a maintenance/expense perspective. And I believe that, there’s nothing indicating that this is going to change, but today I believe we’ll be determined to figure that out. And I think that a lot of panels will bring this out today.”

IT Architectural Shift

“We’re in the midst of an IT architectural shift,” he concluded, summarizing some deeper dives that he took into enablers earlier that day. “Cloud enablers include cloud on-ramps, network fabrics, strategic partnerships and colocation marketplaces, all of which will play a large role in 2018 and beyond.”

Fragmentation is Real

“The only key point that I really still want to make is that the industry remains fragmented, despite everything we know today,” Badri asserted. “Despite the partnerships. Despite the mergers and acquisitions. there are still a lot of players out there that probably do need to unify within the industry to align offerings for customers, and ultimately, cyber-security services could be a whole other market that could potentially be sold on top of existing colocation on-ramps.”

Wholesale vs. Colocation

data center summit“Which business model I prefer – an investment asset class wholesale, or retail colocation?” he asked the room, relaying an often-asked question. “It really comes down to, it depends. For wholesale, I like low power costs. And I like a very scalable, low-headcount, intensive business. I think this is important. But the one thing for wholesalers, you always have technological obsolescence risks. The risk that as servers get dramatically more efficient across power and compute, that is a huge risk to wholesale.”

“And on the flipside, on retail colocation, I generally prefer retail colocation,” he continued, “Because oftentimes these are mission-critical, low latency, and they generally require a lot of cross-connect investment into those markets and into those deployments. That makes the revenues very sticky and very sustainable long-term.”

“With the dynamics that we discussed earlier…now that enterprises are becoming more intelligent about the way that they deploy their cabinets and their networks, they can now make very educated decisions about what goes into retail colocation and what goes into wholesale colocation,” concluded Badri. “The dynamics have changed for the better. At the end of the day, the customers are the net beneficiaries. But the landscape does still reflect strong market growth into 2018 and beyond.”

For more from Badri, check out previous CapRE Insider Reports covering his earlier remarks:

 

CAPRE’s 7th Annual Greater New York Data Center Summit was held on April 5, 2018 at Westin New York at Times Square. Above: Sami Badri, Senior Analyst, Credit Suisse presents the keynote address: Cloud Enablers Boosting Enterprise Colocation Growth.
CAPRE’s 7th Annual Greater New York Data Center Summit was held on April 5, 2018 at Westin New York at Times Square. Above: Sami Badri, Senior Analyst, Credit Suisse presents the keynote address: Cloud Enablers Boosting Enterprise Colocation Growth.
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