Siren Song

Greek mythology tells us that the sirens’ beauty and songs were so alluring that they were irresistible to men. Even Odysseus had to lash himself to the mast of his ship to overcome the temptation of their charms. Apparently the data center market has the same allure. Five years ago you could pretty much count the industry’s major players on the fingers of one hand. Now it seems like there is a new market entrant every month or two. Even the guys at 365Main have unleashed themselves from their retirement and jumped back into the fray.

You may be asking yourselves what the reason is behind this feeding frenzy. The answer is of course, and I paraphrase the late great bank robber Willie Sutton here, “this is where the money is”. It is undeniable that the current imbalance between supply and demand for data center space makes the market an enticing one over the next few years. Ultimately, however, long-term survival will characterize the participants who bring financial stability and a distinguishable value proposition with them. While the industry shows no signs of abating growth in the near future, one does have to wonder how long customers will be satisfied by a plethora of vendors whose only distinguishing characteristic is the logos on the “For Lease” signs in front of their buildings. It will be interesting to see which value propositions customers ultimately coalesce around as the industry continues to mature. Many of today’s current providers will no longer exist in the next 3-5 years. Some will leave us after their desire for quick returns have been satiated (much to the chagrin of their customers) but most will depart, either through absorption or even due to failure. Just some thoughts to ponder while the Siren’s sing.