爱达荷州立大学中国学生学者联谊会

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Why Switch Is not Chasing Super-Wholesale Cloud Data Center Deals

Why Switch Is not Chasing Super-Wholesale Cloud Data Center Deals

DCK Investor Edge: At an investor conference,Wireless Network the newly public company's execs indicated they were not after large, low-margin leases with hyper-scale companies, preferring higher-margin retail colocation business, where the company can leverage its unique value proposition.

DCK Investor Edge is a weekly column about investment in the data center market, covering both publicly traded data center REITs and privately held players in the space. More about the column and its author here.

It is not a secret that there are a many things Switch does differently than other data center operators. Its approach runs the gamut, from a modular data center design and hundreds of related patents to offering 100 percent green power to customers. It also stands out because it's organized as a closely controlled C-Corporation rather than a real estate investment trust (REIT) like Equinix, Digital Realty, CoreSite Realty, CyrusOne, and QTS Realty.Last week, Switch CFO Gabe Nacht and president Tom Morton presented at the Citi Internet, Media and Telecom conference in Las Vegas, where Switch is headquartered. In a Q&A with Citi analyst Michael Rollins, the two execs shared more detail about business strategy the newly public data center services heavyweight had shared in its private-company days.

Switch's October IPO prospectus and mission statement emphasize that the company is "a technology infrastructure company powering the sustainable growth of a connected world."Right off the bat, Morton and Nacht declared that management's number-one priority is to continue to expand its four Prime data center campuses. Other priorities for 2018 are to expand technology leadership and Switch's CORE telecom network purchasing cooperative, as well as to "meet or exceed" the results Wall Street expects.

It takes a lot of confidence to pioneer new data center markets. One of Switch's most daring and innovative strategic approaches is creating a unique and highly concentrated data center footprint.The existing three Prime campuses are competing with Tier 1 markets hundreds of miles away. It is essentially the opposite of an "edge" strategy and depends on the ability to aggregate large numbers of customers at each point on the map. The Strategy has proven successful in Las Vegas.

The outlier is the fourth Prime being developed in Atlanta, which is a thriving, fast-growing data center market. But that also means that the site (unlike the three existing Primes) is competing with sophisticated incumbents and their deep pockets. QTS Realty two massive data centers in Atlanta, serving hundreds of customers. Digital Realty has a major carrier hotel in town. CyrusOne has recently announced a large campus project to be built in Atlanta. There are plenty of privately held players in Atlanta as well, including T5 Data Centers, Ascent Data Centers, and Cyxtera Technologies.

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