Four Trends Seen At Data Center Boom!

Here are four trends in the data center industry we learned about during last week's Data Center Boom! event in San Francisco. Sabey Data Centers will focus on a bifurcated strategy of location data centers, both rural and urban markets, says company prez John Sabey. For instance, Sabey has one in Manhattan —probably one of the most expensive places in the US, other than Hawaii, to have a data center--to serve its high population density of users. (A lot of people in Manhattan need data storage so they can go on social media and complain about living in Manhattan.) That center is tied to his Quincy, Wash., facility, where it's very low cost and efficient for storage and compute cycles. He's seeing that urban-rural mix of centers becoming a trend across the US. It's a matter of finding what niche to be in and looking for customers that can make the right decisions.

Moss Adams Capital director Gregory Fink says the data center biz mixes tech with real estate unlike any other sector. Based on the growth of data needs over the past 20 years—and the next 100—many are looking at ways to figure out how to play in the sector. (Though considering how fast technology moves, we may just be storing data in our elbows within five years.) When real estate folks look at investing in data centers, it's not your typical VC or growth equity strategy; individual assets get capitalized separately and that's much more efficient, he says. Investors are looking for lower-risk assets and ways to get an assurance of cash flow and return of capital.

If your center doesn't have interoperability across IT and infrastructure, you're in the past. Ubiquity Critical Environments founder Sean Farney says the next evolution of development will be in underserved markets, like Jacksonville or Birmingham. There's a place for smaller data centers there to serve smaller customers. There is also a need to have a closer choice as technology like streaming TV, video, and audio evolves. Netflix and YouTube, he says, need to have the ability to have content closer to users. (If there is any delay to House of Cards there will be a riot.) Those technologies required a distributed--as opposed to centralized--network of data centers.

Fortune Data Centers CEO John Sheputis says data centers supply what people are using more of every day; there's a "ghastly" amount of storage and consumed bandwidth and computing processing power out there. (There's also some "ghastly" pictures from our office holiday parties taking up bandwidth right now.) The notion of a “one-size-fits-all” data center—if it ever was alive—is an endangered species now. The key is knowing who your customer is and what they're going to do inside the data center. It's important to put the right equipment in place in the right market--and market to the right set of customers. No one deletes things anymore, he notes (who's got the time?), so data centers are the ultimate storage business.