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Also posted on: IT Infrastructure
Last week I caught up with Ravi Ravishankar, Global VP for Product Management and Marketing at Equinix on a flying visit he made to London. Equinix has developed a range of offers over the past couple of years, like Performance Hub, Cloud Exchange and Data Hub that, along with its message, Equinix-where opportunity connects, appear to have positioned it very differently to its competitors. Ravi and team have had a key role in developing these offers and I wanted to understand the impact they have had on the business and the sort of journey that was necessary to get there.
The impact is pretty clear. Equinix stock price has more than doubled in the last couple of years. The company continues to grow, both organically and through acquisition and it appears to be able to maintain a healthy price premium on its offers to the market. As Ravi pointed out, when he joined the company from Cisco 3 years ago, the interconnection story was already prominent, with network operators, content delivery networks, cloud service providers and trading and advertising ecosystems gravitating to Equinix and allowing a price premium. However, if Equinix was to continue to grow profitably it needed to be successful in the Enterprise market.
The issue was that, put bluntly, the Enterprise didn’t care about peering. They have business problems that need solving. The team could see that in order to deliver solutions to those problems Equinix needed to fill a number of capability gaps in its own portfolio. Channel is absolutely key. Equinix doesn’t want to build and deliver all the capabilities itself. Indeed its status as a REIT (Real Estate Investment Trust) means that it are often unable to do so. Its existing network of agents, resellers and partners were simply selling space and power with little or no differentiation…and not very exciting returns for either party.
So the challenge was to carefully pick consultants, integrators and service providers who would become an integral part of a whole market offer. This allowed Equinix to define and market well packaged solutions that meet customer business issues and, at the same time, increase the revenue earning opportunities of their channel partners. Ravi pointed out that Enterprises are very used to buying from partners, so there was little cultural resistance to the approach Equinix took.
Returning to the impact of what Equinix has done the team has seen customers take these individual point solutions, often in a single geography. When they see it work successfully they might decide to try it in another region where they need to get closer to their end customers, but they also see the benefits of using Equinix capabilities to, for example, expand further into the cloud globally without having to use to use the public internet to access those services. This has resulted in a significant ‘Land and Expand’ trend with their new Enterprise customers.
What are the implications for other co-location providers? The days of selling power and space are over. Carrier neutrality, low latency networks, a low PUE, high levels of security are all table stakes. Obviously few have the scale and reach of Equinix, and trying to emulate the Performance Hub, Cloud Exchange and Data Hub offers will be a game of rapidly diminishing returns. However, the lessons from Equinix’s journey are clear. Understand what business problems you are trying to solve for what group of customer. Assess what capability gaps you have. Then either acquire the capabilities and services you need or work closely with channel partners to build whole offers that appeal to your target audience that will enable you to ‘Land and Expand’ in the way Equinix have. You may be 50% cheaper than Equinix today, but customers looking to buy on price alone will drive you and others like you to the bottom very quickly.
This post first appeared on the old Cassini Reviews website.