February 3, 2014
Geopolitics has always fascinated me. The shifting alliances, changes in the balance of power and just your average everyday run of the mill diplomatic machinations, you name it, I’m all over it. History is replete with the exploits of men like Richelieu, Metternich, Gromyko and Kissinger and how their actions literally had global repercussions. For most of us a good portion of our lives were spent as spectators to the Cold War with us on one side and the Russians on the other. Was there ever a better foil than those guys? Everything we did was measured against what they were doing and vice versa. Whether it was the race to the moon or Olympic medal counts, we all knew whom we had to beat. Even in the movies, any story about international intrigue revolved around somehow foiling some fiendish plot hatched by our friends in Moscow. Let’s face it, the Russians were the enemy we loved to hate. And then one day, they were gone and there was really nobody to fill the void. So how were we supposed to respond to the toppling of our most vicious global adversary? Make them a customer of course! This strategy has worked well as many a former Soviet has found they have an affinity for everything from Cadillacs to Big Macs. And now, according to an article I just read, data centers are on their list of “must haves”.
Despite what you read about the repressive actions of the Putin regime, it’s hard to keep your entire population off the internet after they’ve found that they can post in Cyrillic on Facebook. Likes for vodka, for example, are simply off the chart. So being the pragmatists they are, the Russians are now into things like virtualization and the cloud in a big way. Naturally, all this drives the need for additional raised floor when there is only 653,000 square meters of white space in the entire country.
Along with the low volume of available raised floor space, Russia offers substantial opportunities for wholesale providers since only 10% data center use is currently outsourced. I guess when you come from an environment where one misstep can make you the newest employee on the Trans Siberian Railway, you tend to play things a little close to the vest. But that apparently is all changing. After finding out about our own NSA activities, the average Russian now realizes that the grass may not necessarily be greener outside the domain of the Kremlin, so what the hell—somewhere some group with an acronym for a name is going to be listening in no matter what they do, so let’s outsource. Sometimes public/private partnerships can help catalyze a market.
Naturally, the majority of this new demand is occurring in Moscow, as the former home of the Czars represents over 75% of Russian demand for colocation. While this probably does not mean that we are going to see a new data center on every corner of Red Square or outside of St. Basil’s, it does mean there is plenty of room to grow in the city whose leadership first gave meaning to the term “remote hands”. Putin is said to be thrilled with the emergence of this new marketplace and allegedly has offered to wrestle a grizzly bear while shirtless at the grand opening of the first new facility built within the city limits. I dare you to find a display of this level of government support at the next ribbon cutting in northern Virginia.
If you’re like me, I think you’ll find the emergence of the home of Lenin and Stalin as a new data center frontier an excellent example of geopolitical evolution. In just a few decades, a country whose major export was the AK-47 is now just as gaga over the Cloud and Big Data as the rest of us are. Historical events have always resulted in strange bedfellows and this new economic marriage is no different. You just never know where opportunity is going to raise its head. We at Compass are in the process of evaluating the market potential. This will probably require a fact-finding trip on my part. I don’t know if we’ll ever build a data center on Russian soil, but I’m pretty sure I am getting one of those big furry hats…