I picked a bone with Lydia Leong at Gartner over a post she had in her blog essentially saying there wasn't a space issue in the data center markets. Today I see that Ramesh Kumar at Gartner says the EXACT OPPOSITE that power, space, and cooling are scarce.
I should also point out that yours truly made the very point that Ramesh did on Lydia's blog over a week ago. What changed?
So it got me wondering - is there just a ton of confusion over at Gartner about the data center market? How they cover it? It translates to me as a customer - you lost some credibility on this guys, please get it straight, you're supposed to the best...
Did Gartner do their homework after the first blog post on the state of inventory in data center markets and came to realize they really were tight?
Do they really understand what is out there, the differences, the nuances, the real deal in data centers from the systems perspective?
From density perspective? From the virtualization perspective?
I do. I will keep on sharing what I know to those who to understand what is and isn't out there for choices and arm you with knowledge to help make the best decisions.
Friday, May 14, 2010
Tuesday, May 11, 2010
Did EMC Management smoke breakfast this week?
That is a reasonable conclusion after reading what Joe Tucci said at the EMC World event in Boston - 'Journey into the Private Cloud' as in cloud of smoke?
I understand that every Fortune 2000 IT company feels compelled to have a 'cloud strategy'. It's the new Black. However when a strategy is presented in a way that it communicates alienation of some big technology partners (HP/Cisco) whose gear EMC's relies on in some form or fashion to move the data on and off EMC arrays, then I sit back and wonder WTF were they thinking?
Here is the quote I am using from ZDNet:
Tucci also criticized the data center verticalization strategy that companies such as Hewlett-Packard and Cisco are taking, saying it will lead to a new kind of lock-in that will ultimately lend itself to inefficiency. He said EMC’s private cloud strategy swaps out verticalization with virtualization and allows all of your data center solution providers — even EMC competitors — to plug in.
So here are the things that make me glad I am not a shareholder and glad I am a customer:
1. Leading to a new kind of lock in is what you want Joe. That means people like your stuff, they buy your stuff and become dependent on your stuff to function. It's a nice virtually guaranteed revenue stream.
2. As a customer, its great that I can now try other storage offerings from my competitors in a cloud, so when you decide to change the strategy to something more realistic and come back to get me to 'lock in', I now have options. Options that you gave to me, and your competitors. Thanks.
Look, EMC has said time and time again it wants to be an arms dealer. They could care less who wins on the battlefield so long as bullets keep flying and they don't get bloody. The issue with this approach is it's non-committal. What are you for? What are you doing vs. what are you not doing? What do you believe vs. how many buzzwords need to be thrown around before people see that you have no clue about what you're doing.
So Joe, if you are listening or should have one of your colleagues stumble across my blog - you don't need a cloud strategy. Cloud is an exercise in accounting. It's mainframe all over again. Take a box, itemize its components and lease it back to the user on a per unit basis. If you want a solid private cloud strategy, call me, and I will pull together leasing partners who will chop up a VPlex faster than a Benihana hibachi cook and lease them out, protecting your market cap, serving your customers, and still being an arms dealer.
In other words EMC needs a cloud strategy that isn't about cloud. It's about EMC's products being the best damn storage products they can make and enabling different ways for customers to figure that out.
I understand that every Fortune 2000 IT company feels compelled to have a 'cloud strategy'. It's the new Black. However when a strategy is presented in a way that it communicates alienation of some big technology partners (HP/Cisco) whose gear EMC's relies on in some form or fashion to move the data on and off EMC arrays, then I sit back and wonder WTF were they thinking?
Here is the quote I am using from ZDNet:
Tucci also criticized the data center verticalization strategy that companies such as Hewlett-Packard and Cisco are taking, saying it will lead to a new kind of lock-in that will ultimately lend itself to inefficiency. He said EMC’s private cloud strategy swaps out verticalization with virtualization and allows all of your data center solution providers — even EMC competitors — to plug in.
So here are the things that make me glad I am not a shareholder and glad I am a customer:
1. Leading to a new kind of lock in is what you want Joe. That means people like your stuff, they buy your stuff and become dependent on your stuff to function. It's a nice virtually guaranteed revenue stream.
2. As a customer, its great that I can now try other storage offerings from my competitors in a cloud, so when you decide to change the strategy to something more realistic and come back to get me to 'lock in', I now have options. Options that you gave to me, and your competitors. Thanks.
Look, EMC has said time and time again it wants to be an arms dealer. They could care less who wins on the battlefield so long as bullets keep flying and they don't get bloody. The issue with this approach is it's non-committal. What are you for? What are you doing vs. what are you not doing? What do you believe vs. how many buzzwords need to be thrown around before people see that you have no clue about what you're doing.
So Joe, if you are listening or should have one of your colleagues stumble across my blog - you don't need a cloud strategy. Cloud is an exercise in accounting. It's mainframe all over again. Take a box, itemize its components and lease it back to the user on a per unit basis. If you want a solid private cloud strategy, call me, and I will pull together leasing partners who will chop up a VPlex faster than a Benihana hibachi cook and lease them out, protecting your market cap, serving your customers, and still being an arms dealer.
In other words EMC needs a cloud strategy that isn't about cloud. It's about EMC's products being the best damn storage products they can make and enabling different ways for customers to figure that out.
Monday, May 3, 2010
Part Three of The Issue of Scale - So What?
The question 'So What' is probably my favorite question to ask when a great idea comes to mind, or I hear a pitch about something. If I haven't answered the 'so what' question in advance, then I have failed in specifying and conveying what matters. I have also failed my colleagues if I merely whine about an issue without coming up with at least one solution.
On the Issue of Scale, so what? Follow up question - what can be done?
The so what question comes down to supply and demand. The supply for large footprints is dwindling and will only get tighter. That drives price up in mature markets. Sure you can get a deal in Oklahoma City, but I would put money on paying more to be in Northern Virginia, even outside the Ashburn/Reston data center nucleus.
I had posted a response to a post by Lydia Leong at Gartner
She makes the argument:
If I’m going to believe in gigantic growth rates in colocation, I have to believe that one or more of the following things is true:
- IT stuff is growing very quickly, driving space and/or power needs
- Substantially more companies are choosing colo over building or leasing
- Prices are escalating rapidly
- Renewals will be at substantially higher prices than the original contracts
I don’t think, in the general case, that these things are true. (There are places where they can be true, such as with dot-com growth, specific markets where space is tight, and so on.) They’re sufficiently true to drive a colo growth rate that is substantially higher than the general “stuff that goes into data centers” growth rate, but not enough to drive the stratospheric growth rates that other analysts have been talking about.
My counterpoints were that Virtualization is driving power densities up, not down. Colocation pricing is based on power density, whether expressed in square feet or per Kw rent. Density goes up, so does cost whether the cost is new CRAH/CRAC units, a new building, or a 50MW transformer.
Second - more companies look to outsource anything that is not a core competency including data centers than look to build up in house capabilities and staff. The construction of data centers gets more buzz than leasing does, but leasing still outpaces building every quarter. The companies who build are single tenant facilities with cash to do it. However building one and running one are two different businesses.
Prices are increasing. 'Ready to go' supply (a.k.a finished space) is taken in most major metro markets. That said, there will always be a company that will buy some business, get a loss leader anchor tenant and those decisions have many variables like loan structures, financing vehicles, etc. that drive what a company will charge on a specific deal.
Renewals are being done at higher price points. The cost of capital to grow is very high, data centers are incredibly capital intensive up front and companies that are doing renewals are seeing bumps in rates going forward. The counter seems to be to shorten term as if to send a message to the company that 'if you're going to jack my rate then I am only doing a 12 month renewal'. You know what, the vendor likes that more because in 12 months there will be less space and higher rates.
So how does one deal with this?
Put ROFO's in your license agreements. It gives you the ability to preserve space if a facility is filling fast. It may cost you more if the new customer is willing to pay more, but it beats having to run two sets of infrastructure in two separate facilities.
Investors - open up your checkbooks. If you got burned in the last build up - here's your shot at redemption. The window will start to close in 18 months in that you want a project funded and rolling and cash flow positive in 18-24 months. If you're looking for a fast return - stay out of this arena.
Operators - there are many deals out there to roll up assets that are underperforming and make a reasonable play and expand with rent in place.
End users - take space now if its available - especially in hot markets. If you think that virtualization will save you, it wont - your power draws will go up, we have never created less data than the previous day/week/month/year. If you think I am wrong look at it this way - every increased megapixel of camera that comes out increases file size, things go viral, and what was one picture can become a dozen copies of a a 2 megabyte photo, in other words 2megs * 10 copies is 20 Mb, not 2.
Lastly, there is a reason that there are hot markets and data center clustering - it's network density. More carriers in a building means better performance, fewer hops and lower latency. Go to buildings with high carrier density.
On the Issue of Scale, so what? Follow up question - what can be done?
The so what question comes down to supply and demand. The supply for large footprints is dwindling and will only get tighter. That drives price up in mature markets. Sure you can get a deal in Oklahoma City, but I would put money on paying more to be in Northern Virginia, even outside the Ashburn/Reston data center nucleus.
I had posted a response to a post by Lydia Leong at Gartner
She makes the argument:
If I’m going to believe in gigantic growth rates in colocation, I have to believe that one or more of the following things is true:
- IT stuff is growing very quickly, driving space and/or power needs
- Substantially more companies are choosing colo over building or leasing
- Prices are escalating rapidly
- Renewals will be at substantially higher prices than the original contracts
I don’t think, in the general case, that these things are true. (There are places where they can be true, such as with dot-com growth, specific markets where space is tight, and so on.) They’re sufficiently true to drive a colo growth rate that is substantially higher than the general “stuff that goes into data centers” growth rate, but not enough to drive the stratospheric growth rates that other analysts have been talking about.
My counterpoints were that Virtualization is driving power densities up, not down. Colocation pricing is based on power density, whether expressed in square feet or per Kw rent. Density goes up, so does cost whether the cost is new CRAH/CRAC units, a new building, or a 50MW transformer.
Second - more companies look to outsource anything that is not a core competency including data centers than look to build up in house capabilities and staff. The construction of data centers gets more buzz than leasing does, but leasing still outpaces building every quarter. The companies who build are single tenant facilities with cash to do it. However building one and running one are two different businesses.
Prices are increasing. 'Ready to go' supply (a.k.a finished space) is taken in most major metro markets. That said, there will always be a company that will buy some business, get a loss leader anchor tenant and those decisions have many variables like loan structures, financing vehicles, etc. that drive what a company will charge on a specific deal.
Renewals are being done at higher price points. The cost of capital to grow is very high, data centers are incredibly capital intensive up front and companies that are doing renewals are seeing bumps in rates going forward. The counter seems to be to shorten term as if to send a message to the company that 'if you're going to jack my rate then I am only doing a 12 month renewal'. You know what, the vendor likes that more because in 12 months there will be less space and higher rates.
So how does one deal with this?
Put ROFO's in your license agreements. It gives you the ability to preserve space if a facility is filling fast. It may cost you more if the new customer is willing to pay more, but it beats having to run two sets of infrastructure in two separate facilities.
Investors - open up your checkbooks. If you got burned in the last build up - here's your shot at redemption. The window will start to close in 18 months in that you want a project funded and rolling and cash flow positive in 18-24 months. If you're looking for a fast return - stay out of this arena.
Operators - there are many deals out there to roll up assets that are underperforming and make a reasonable play and expand with rent in place.
End users - take space now if its available - especially in hot markets. If you think that virtualization will save you, it wont - your power draws will go up, we have never created less data than the previous day/week/month/year. If you think I am wrong look at it this way - every increased megapixel of camera that comes out increases file size, things go viral, and what was one picture can become a dozen copies of a a 2 megabyte photo, in other words 2megs * 10 copies is 20 Mb, not 2.
Lastly, there is a reason that there are hot markets and data center clustering - it's network density. More carriers in a building means better performance, fewer hops and lower latency. Go to buildings with high carrier density.
Monday, April 12, 2010
The Issue of Scale - Part 2 - The Basketball through the Python
What a difference a week makes...
QTS announced they will bring up to 1M square feet into the market after they purchased a former chip fab plant in Richmond VA.
Digital Realty Trust announced they they are full as is DuPont Fabros in Northern VA and they will both be expanding to the tune of ~100K feet each. In total that is roughly 120 MW, I am not sure on the time period over which the inventory will be rolled out.
So given that coming into the year, about 9Mw were taken per quarter in Northern VA, and the recent leasing of at least that much in March means that things are growing not abating. That does not include the ~1200 MW that the Government will need to start planning for consolidation starting in 2011.
So this example brings me to the next issue of scale which is reality of expectations.
Specifically expectations that the available space will be there when needed. If the Government or the Systems Integrators think that 1200MW will just appear, then lets look at reality.
Lets say 12 agencies need 100MW each. With 10 -20MW available in any given quarter as move in condition - i.e. we tour it, we like it, we want it, price is fair, where do I sign, space is finished condition - this means in ten years the space will be there. Ten years to do a consolidation that has been set to take two years. For each agency.
At a cost of $1200/ft, and 10k ft = 1.2 MW and 1200 MW are needed/100 per agency... For 100 MW the capital needed is $1B. Times 12 = $12B. For ~1M sq. ft.
Investors are you listening? That is $12,000,000,000 that is needed to fund building data centers that are green, efficient, and presumably modular in design and deployment. For one project from one customer. In a two year time frame. I mentioned that the power had to be green right? Oh and did I mention that gear needs to be ordered to replace the old stuff, moved if it's still good and in working condition, and all brought together within specific windows to minimize downtime? People can't NOT get their Social Security checks.
Using an industry estimate of 4 months to complete a 10k ft computer room - 1,000,000 square feet/10,000*4 months/12 = 33 years if we start now. No, that does not factor in economies of scale/parallel building projects, etc.
If we deploy 1M square feet at once then maybe to get a shell up takes 2 years, but figuring out how to chunk it up is a different story, and also where the time gets eaten up.
How much of the space needs to be in a SCIF and/or adhere to DCID 6-9? Where is the failover site going to be to make things redundant? Is all the data and equipment at the same level of security? Should it be? How do we connect it all?
I can hear the Cloud pundits say - put it in 'the cloud!'
How many of them have 12MW of cloud deployed let alone 1200? Does the data stay in the US? Can they prove it? Are all the facilities secure? How secure? Why do I have to pay to move data from site to site? How many vendors, license agreements, leases, and operations people, technologies, and methodologies do we need to be aware of?
Some of the apps can move to the cloud, along with the associated data and some of it already has been, however I am willing to bet that it is less than 1%. So this is a big opportunity and I sincerely hope that we as an industry can help keep it simple, eat this virtual elephant in bites, and save money for the taxpayers.
QTS announced they will bring up to 1M square feet into the market after they purchased a former chip fab plant in Richmond VA.
Digital Realty Trust announced they they are full as is DuPont Fabros in Northern VA and they will both be expanding to the tune of ~100K feet each. In total that is roughly 120 MW, I am not sure on the time period over which the inventory will be rolled out.
So given that coming into the year, about 9Mw were taken per quarter in Northern VA, and the recent leasing of at least that much in March means that things are growing not abating. That does not include the ~1200 MW that the Government will need to start planning for consolidation starting in 2011.
So this example brings me to the next issue of scale which is reality of expectations.
Specifically expectations that the available space will be there when needed. If the Government or the Systems Integrators think that 1200MW will just appear, then lets look at reality.
Lets say 12 agencies need 100MW each. With 10 -20MW available in any given quarter as move in condition - i.e. we tour it, we like it, we want it, price is fair, where do I sign, space is finished condition - this means in ten years the space will be there. Ten years to do a consolidation that has been set to take two years. For each agency.
At a cost of $1200/ft, and 10k ft = 1.2 MW and 1200 MW are needed/100 per agency... For 100 MW the capital needed is $1B. Times 12 = $12B. For ~1M sq. ft.
Investors are you listening? That is $12,000,000,000 that is needed to fund building data centers that are green, efficient, and presumably modular in design and deployment. For one project from one customer. In a two year time frame. I mentioned that the power had to be green right? Oh and did I mention that gear needs to be ordered to replace the old stuff, moved if it's still good and in working condition, and all brought together within specific windows to minimize downtime? People can't NOT get their Social Security checks.
Using an industry estimate of 4 months to complete a 10k ft computer room - 1,000,000 square feet/10,000*4 months/12 = 33 years if we start now. No, that does not factor in economies of scale/parallel building projects, etc.
If we deploy 1M square feet at once then maybe to get a shell up takes 2 years, but figuring out how to chunk it up is a different story, and also where the time gets eaten up.
How much of the space needs to be in a SCIF and/or adhere to DCID 6-9? Where is the failover site going to be to make things redundant? Is all the data and equipment at the same level of security? Should it be? How do we connect it all?
I can hear the Cloud pundits say - put it in 'the cloud!'
How many of them have 12MW of cloud deployed let alone 1200? Does the data stay in the US? Can they prove it? Are all the facilities secure? How secure? Why do I have to pay to move data from site to site? How many vendors, license agreements, leases, and operations people, technologies, and methodologies do we need to be aware of?
Some of the apps can move to the cloud, along with the associated data and some of it already has been, however I am willing to bet that it is less than 1%. So this is a big opportunity and I sincerely hope that we as an industry can help keep it simple, eat this virtual elephant in bites, and save money for the taxpayers.
Monday, April 5, 2010
The Issue of Scale...
I have been quietly spending the last few months contemplating scale. Specifically scale of data centers and the impacts of virtualization to the delivery of scale. This is the first installment of a multipart series discussing what is and what is not out there in the data center realm.
There have been few announcements about large data center projects worldwide over the past two years. Mostly from Single Tenant Facilities (STF) like Apple, Google, Microsoft, and Facebook. I chalk this up to the capital markets being as dry as Melba Toast on a summer day in Vegas, so there hasn't been any capital to tap into to build new facilities so the big companies with credit are about the only ones who can do a build.
This leaves the rest of the market with Multi Tenant Facilities (MTF) strapped for space in the X megawatts up to the XXX Megawatts scale. The MTF markets are already experiencing stress in that the prime Tier III space is being gobbled up rapidly. I have had several discussions with folks outside the data center industry, or at best peripherally involved in it (like they shop for new space once every 8-10 years) and they say 'I don't see what everyone is talking about, there seems to be plenty of space out there'. For 10 cabinets or 20 cabinets I'm sure there is. For multiple megawatts from a single provider in a specific market? Ha ha ha ha... That's a good one.
In Northern Virginia, dozens of megawatts move every quarter, and have, for the past year. Companies are reluctant to publicize it. Why? They don't want the remaining inventory sucked up and for their ROFO/ROFR to get triggered because someone else needs a big chunk of space. There are two companies with buildings in Northern VA today that sat mostly vacant a year ago and one has sold out and the other will be full by fall. Another company on the West Coast that has pre-leased the entire first phase of their project before it was completed. Now that market has a few pockets for a few dozen cabinets when it seemed like there would be plenty of inventory for 2010-2011.
At the Data Center Dynamics conference in New York a month ago, Jim Kerrigan, one of the speakers said that "32% of the leased data center space is up for renewal by 2013" which means even MORE stress on the market is on the horizon with very little building going on and customers expanding out of necessity if nothing else.
Hopefully this helps establish a baseline for people trying wrap their heads around the two sides of the discussion about whether or not the Data Center market is tight on inventory. If you need a few cabinets in a few markets - you're fine. If you need 10 MW in 5 markets... Not so much...
There have been few announcements about large data center projects worldwide over the past two years. Mostly from Single Tenant Facilities (STF) like Apple, Google, Microsoft, and Facebook. I chalk this up to the capital markets being as dry as Melba Toast on a summer day in Vegas, so there hasn't been any capital to tap into to build new facilities so the big companies with credit are about the only ones who can do a build.
This leaves the rest of the market with Multi Tenant Facilities (MTF) strapped for space in the X megawatts up to the XXX Megawatts scale. The MTF markets are already experiencing stress in that the prime Tier III space is being gobbled up rapidly. I have had several discussions with folks outside the data center industry, or at best peripherally involved in it (like they shop for new space once every 8-10 years) and they say 'I don't see what everyone is talking about, there seems to be plenty of space out there'. For 10 cabinets or 20 cabinets I'm sure there is. For multiple megawatts from a single provider in a specific market? Ha ha ha ha... That's a good one.
In Northern Virginia, dozens of megawatts move every quarter, and have, for the past year. Companies are reluctant to publicize it. Why? They don't want the remaining inventory sucked up and for their ROFO/ROFR to get triggered because someone else needs a big chunk of space. There are two companies with buildings in Northern VA today that sat mostly vacant a year ago and one has sold out and the other will be full by fall. Another company on the West Coast that has pre-leased the entire first phase of their project before it was completed. Now that market has a few pockets for a few dozen cabinets when it seemed like there would be plenty of inventory for 2010-2011.
At the Data Center Dynamics conference in New York a month ago, Jim Kerrigan, one of the speakers said that "32% of the leased data center space is up for renewal by 2013" which means even MORE stress on the market is on the horizon with very little building going on and customers expanding out of necessity if nothing else.
Hopefully this helps establish a baseline for people trying wrap their heads around the two sides of the discussion about whether or not the Data Center market is tight on inventory. If you need a few cabinets in a few markets - you're fine. If you need 10 MW in 5 markets... Not so much...
Monday, March 22, 2010
I am Headed to FOSE
Are you going to the FOSE Conference in Washington DC March 23rd-25th?
I will see you there. I will be attending a few sessions, meeting with friends and colleagues, and if you want to catch up, talk about the State of the Union, let me know - mark.macauley AT gmail. com
I will see you there. I will be attending a few sessions, meeting with friends and colleagues, and if you want to catch up, talk about the State of the Union, let me know - mark.macauley AT gmail. com
Monday, March 1, 2010
I will be at Data Center Dynamics in NYC 3/2-3/3
It's at the Hilton in midtown. Is anyone else going?
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