Cologix and Equinix Make Moves

The data center space is fluid right now. Cologix is up for sale according to Ramblings blog and WSJ. Chris Palermo, CEO of master agency Global Communication Networks said, “Cologix is a quality provider that has run an agent friendly channel, for years. Ten acquisitions later, they have grown into an interesting candidate for several data center providers [to buy].” The expected buyer yesterday was Equinix.

Hwver, today Equinix bought 29 data centers in North and South America from Verizon for $3.6B!

Equinix continues its expansion in major cities ignoring the Tier 2 and Tier 3 cities that other data center companies are moving toward. That expansion to the edge “is an industry wide shift in focus to edge computing and having these peripheral data centers in tier 2 markets might very well be a more comprehensive strategy to having a footprint where your clients need to be. In the Future, clients will look to the edge, meaning closer to their end users and subscribers as they expand out from their primary markets,” remarked Dany Bouchedid, CEO of the data center master agency COLOTRAQ.

Bouchedid continued, “As an industry we need to collectively adapt and do away with old ways of thinking even if we are still taking about traditional data centers. This reminds me of the wireless cell site deployment era. The initial deployments were always tier 1 markets yet once that reached a saturation point, the carriers had to move to where more subscribers resided. So they began to expand into tier 2 and 3 markets. What we are seeing in the data center industry so far is purely demand driven.”

It is also profit driven. Data center companies are real estate companies. It is why a few of them are structured as real estate investment trusts (REITs). It is why investment dollars flow into a third, fourth and even a sixth data center in an NFL city like Atlanta, Chicago or even Phoenix.

CenturyLink just sold their data center business for $2.1B to a coalition of PE firms headed by the former CEO of Terremark. C-Link was getting enough out of their data center business AND they needed cash for their Level3 bid.

Meanwhile agents are left wondering about commissions. Will the new company continue to pay the commissions? Or will that fall to CenturyLink? Who is billing the client now? Which company will the customer renew with?

Tierpoint rolled up Windstream and other data centers. They are held by a PE firm. This is a risk for channel partners because of the potential for sale. In other words, will your well written agent agreement be enough to continue to see commissions after a sale like CenturyLink’s or even Windstream’s?

One executive at a master agency noted, “The battle between Digital Realty Trust and Equinix continues! IO, Cologix, and Interxion are next.”

Tags: agents, centurylink, channel partners, collocation, commissions, data center, master agency, mergers
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