Was anybody more surprised than Caesar when the long knives came out? One minute you’re talking to a few “friends” in togas, and the next, you’re a particularly well-ventilated former emperor. Isn’t that the way things so often go? Slay a few Gauls and the world is your oyster, cross the Rubicon with your army and suddenly your future’s a clam. Someone once said that, “Fame is fleeting”, but as our noble Roman found, so is gratitude. The data center industry is currently going through its own Shakespearean phase, and some colocation and hosting providers are starting to feel a little “Cesarean” themselves as the same folks who lease them data center space have begun to compete with them.
Although our friends in the colo and hosting industry might be a little surprised by their new competitors—or as Caesar was heard to say, “Didn’t see that one coming”—this is really just indicative of an industry in transition. As history shows us, as markets grow and evolve, partnerships and relationships do as well. Old alliances dissolve, and new ones are formed, and you have to be prepared to adjust to these changes in the competitive landscape. The enemy of your enemy may be your friend, but are you ready for the day they both hate you?
It’s interesting to see how the dynamics of the data center market are evolving. As we continue to become an even more infocentric, transactional economy, the alternatives available to end users are beginning to wreak havoc on business models that seemed impregnable just a year or two ago. The growth of the Cloud has made it easier for organizations to parcel out elements of their operations to colo providers and to demand that their data centers come to them rather than the other way around. Does this spell doom for some existing providers? Maybe, maybe not, but it’s obvious that a number of them are re-evaluating their go to market strategies.
Customer cannibalism might not be the best reaction to this shift in market direction—it tends to breed trust issues—but it shouldn’t be unexpected either. In many instances, the movement of businesses from one side of industry into the domain of their customers is a logical result of the shift to a more customer-oriented marketplace. The days of simply spec building a gigantic facility in a specific location for customers to come to are probably slowly drawing to a close, and a wholesale provider deciding to offer colo services or colo providers rolling out their own cloud offerings can be seen through rose colored glasses as logical line extensions rather than completely different business endeavors.
At Compass we believe to be great at something you have to willfully ignore other things. We are certain that we don’t want to do what our customers do, and having been doing for years. We don’t have the pride or conviction to believe that we can do a better job than they do in their businesses. We are good at building dedicated data centers so we will stick to that.
It will be interesting to see just what the ramifications of this new phase of industry maturation will be. Obviously, some participants will find themselves competing with companies that they never expected and others will enter markets that they never would have anticipated. Still others may find former competitors or partners will become prospective suitors. All of us will need to view the competitive landscape from a broader perspective. How this will all end up is anybody’s guess, but until that time we all might want to think about wearing Kevlar under our togas.