loud is growing, but not as fast as people predicted, says Equinix executive Eric Schwartz. "There are security worries, it’s more complic-ated than expected, some applications just can’t move to the cloud, and there aren’t enough skilled people." Those who say there are still two or three years to go before it really takes off are the early adopters, he jokes. The others? They accept there is still a long way to go.
But Equinix is confident enough of cloud to predict – at its analyst day in June – that revenue will be more than $7 billion in 2022. "It is 20 years since we started up," says Schwartz, who is president of operations in Europe, the Middle East and Africa (EMEA).
"Equinix held our analyst day in New York for investors and industry analysts," he says. "We hold it every two years. It’s a good opportunity to look at the state of the company and where the business is going. In 20 years the company has had its ups and downs, but we’ve gone from zero to $5 billion revenue in that time. And now we are celebrating our 20th anniversary." At that investor day he told analysts that Equinix’s EMEA revenue was $1.3 billion in 2017, 31% of the company’s total revenue. It made $583 million in EBITDA in EMEA, he added.
The company is planning to spend $2 billion a year over the next five years. "We’re very bullish about our expansion plans," says Schwartz. That planned $10 million will be spent worldwide, and Equinix plans considerable expansion in the UK and elsewhere in Europe.
Content providers have been important to Equinix and "over the last 10 years financial trading has been significant", but increasingly cloud services are seen as the key to future growth. "We see a very strong growth trajectory and a continuing adoption of cloud," he says. Does that mean enterprises are adopting cloud? "Clearly, yes. It’s fast, but not as fast as people projected," he says. Why? Most enterprise users are still early in their take-up – to the extent that those who believe there are still two to three years to go for full adoption are regarded as early adopters. The rest? A longer way to go.
"The hyperscalers are a meaningful portion of our business – around 10%," he notes. "We’re still seeing growth from them but also growth from enterprises using these platforms. And the number saying they’re operating with multiple clouds has risen substantially."
He adds: "Cloud brings many advantages but it’s not a universal solution. Multiple cloud is inevitable because of the complexity of what people do." So why is growth slower than optimists expected? "Security continues to be a big issue particularly for enterprise," he says. And that’s especially the case for users of multiple clouds. "You need to engineer security, including connections between clouds."
There’s more complexity in moving applications to the cloud, he adds. "Some have to be re-architected." But some can’t be redesigned, so have to be retired. Schwartz quotes the example of one of Equinix’s customers, a healthcare specialist in the US, that "had 1,500 applications, each with a different profile". The company "had to decide which ones to migrate and how. Some couldn’t be migrated and some wouldn’t be, for cost reasons or for performance reasons." It "all takes a lot of expertise and work to do this", he says.
The available pool of what he calls "cloud-savvy IT folks" is already well occupied and it's hard to find new people. "There’s a limited capacity."
Security is still seen as a major concern. That healthcare customer "has extensive security requirements", of course, and it has "data going back 20 years" that needs to be maintained. More, the company "has to build a portal so patients can access it". He warns: "It’s extraordinarily sensitive and extremely comprehensive."
It’s an advanced user, too. "For them the internet of things happened a long time ago – they connect diagnostic equipment and lab equipment." Never-theless, says Schwartz, the opportunity is exciting and Equinix is still working on the project with the customer.
Meanwhile Equinix is seeing a redesign of its own networks and data centres to cater for future requirements, especially as subsea cables expand across the world. "We’re moving our sites to where terrestrial networks meet subsea cables," he says. Equinix even considers Frankfurt to be a termination point for the cable across the Baltic.
"The growth of these cables is changing the dynamics of data flows." While at one time subsea cables terminated at what he calls "huts on the beach", now they tend to run straight into data centres.
"We want to be not only where the cable is landing but also where people want to house their data," he says.
All that makes him enthusiastic about ideas to build an Arctic cable (see pages 36-38) – one that would provide a short link from Europe via northern Finland to Asia and maybe North America. "At the moment the interconnection density in the north of Finland is low. I’m optimistic that this route will make sense," he says. "Our Helsinki sites would be an attractive location for one end of the Arctic cable."
