Personal blog of Yzmir Ramirez

Equinix, the data center company, has the distinction of recently recording its 69th straight positive quarter. One way that it has achieved that kind of revenue consistency is through strategic acquisitions. Today, the company announced that it’s purchasing 13 data centers from Bell Canada for $750 million, greatly expanding its footing in the country.

The deal is financially detailed by Equinix across two axes, including how much the data centers cost in terms of revenue, and adjusted profit. Regarding revenue, Equinix notes that it is paying $750 million for what it estimates to be $105 million in “annualized revenue,” calculated using the most recent quarter’s results multiplied by four. This gives the purchase a revenue multiple of a little over 7x.

Equinix also provided an adjusted profit multiple, saying that the 13 data center locations “[represent] a purchase multiple of approximately 15x EV / adjusted EBITDA.” Unpacking that, the company is saying that the asset’s enterprise value (similar to market capitalization, a popular valuation metric for public companies) is worth about 15 times its earnings before interest, taxes, deprecation and amortization (EBITDA). This seems a healthy price, but not one that is outrageous.

Global reach of Equinix including expanded Canadian operations shown in left panel (Image: Equinix)

The acquisition not only gives the company that additional revenue and a stronger foothold in the tenth largest economy in the world, it also gains 600 customers using the Bell data centers, of which 500 are net new.

As much of the world is attempting to digitally transform in the midst of the pandemic and current economic crisis, Equinix sees this as an opportunity to help more Canadian customers go digital more quickly.

“Equinix has been serving the Canadian market in Toronto for more than a decade. This expansion and scale gives the Canadian market a clear and rapid migration path to digital transformation. We’re looking forward to deepening our relationships with our existing Canada-based customers and helping new companies throughout the country position themselves for digital success,” Jon Lin, Equinix president, Americas told TechCrunch.

This is not the first time that Equinix has taken a bunch of data centers off the hands of a telco. In fact, three years ago, the company bought 29 centers from Verizon (which is the owner of TechCrunch) for $3.6 billion.

As telcos move away from the data center business, companies like Equinix are able to come in and expand into new markets and increase revenue. It’s one of the ways it continues to generate positive revenue year after year.

Today’s deal is just part of that strategy to keep expanding into new markets and finding new ways to generate additional revenue as more companies use their services. Equinix rents space in its data centers and provides all the services that companies need without having to run their own. That would include things like heating, cooling, racks and wiring.

Even though public cloud companies like Amazon, Microsoft and Google are generating headlines with growing revenues, plenty of companies still want to run their own equipment without going to the expense of actually owning the building where the equipment resides.

Today’s deal is expected to close in the second half of the year, assuming it clears all of the regulatory scrutiny required in a purchase like this.

When Dell voted to buy back the VMware tracking stock and go public again this morning, you had to be wondering what exactly the strategy was behind these moves. While it’s clearly about gaining financial flexibility, the $67 billion EMC deal has always been about setting up the company for a hybrid and private cloud future.

The hybrid cloud involves managing workloads on premises and in the cloud, while private clouds are ones that companies run themselves, either in their own data centers or on dedicated hardware in the public cloud.

Patrick Moorhead, founder and principal analyst at Moor Insight & Strategy, says this approach takes a longer investment timeline, and that required the changes we saw this morning. “I believe Dell Technologies can better invest in its hybrid world with longer-term investors as the investment will be longer term, at least five years,” he said. Part of that, he said, is due to the fact that many more on-prem to public connectors services need to be built.

Dell could be the company that helps build some of those missing pieces. It has always been at its heart a hardware company, and as such either of these approaches could play to its strengths. When the company paid $67 billion for EMC in 2016, it had to have a long-term plan in mind. Michael Dell’s parents didn’t raise no fool, and he saw an opportunity with that move to push his company in a new direction.

It was probably never about EMC’s core storage offerings, although a storage component was an essential ingredient in this vision. Dell and his investor’s eyes probably were more focused on other pieces inside the federation — the loosely coupled set of companies inside the broader EMC Corporation.

The VMware bridge

The crown jewel in that group was of course VMware, the company that introduced the enterprise to server virtualization. Today, it has taken residency in the hybrid world between the on-premises data center and the cloud. Armed with broad agreements with AWS, VMware finagled its way to be a key bridge between on prem and the monstrously popular Amazon cloud. IT pros used to working with VMware would certainly be comfortable using it as a cloud control panel as they shifted their workloads to AWS cloud virtual machines.

In fact, speaking at a press conference at AWS re:Invent earlier this month, AWS CEO Andy Jassy said the partnership with VMware has been really transformational for his company on a lot of different levels. “Most of the world is virtualized on top of VMware and VMware is at the core of most enterprises. When you start trying to solve people’s problems between being on premises and in the cloud, having the partnership we have with VMware allows us to find ways for customers to use the tools they’ve been using and be able to use them on top of our platform the way they want,” Jassy told the press conference.

The two companies also announced an extension of the partnership with the new AWS Outposts servers, which bring the AWS cloud on prem where customers can choose between using VMware or AWS to manage the workloads, whether they live in the cloud or on premises. It’s unclear whether AWS will extend this to other companies’ hardware, but if they do you can be sure Dell would want to be a part of that.

Pivotal’s key role

But it’s not just VMware that Dell had its sights on when it bought EMC, it was Pivotal too. This is another company, much like VMware, that is publicly traded and operates independently of Dell, even while living inside the Dell family of products. While VMware handles managing the server side of the house, Pivotal is about building software products.

When the company went public earlier this year, CEO Rob Mee told TechCrunch that Dell recognizes that Pivotal works better as an independent entity. “From the time Dell acquired EMC, Michael was clear with me: You run the company. I’m just here to help. Dell is our largest shareholder, but we run independently. There have been opportunities to test that [since the acquisition] and it has held true,” Mee said at the time.

Virtustream could also be a key piece providing a link to run traditional enterprise applications on multi-tenant clouds. EMC bought this company in 2015 for $1.2 billion, then later spun it out as a jointly owned venture of EMC and VMware later that year. The company provides another link between applications like SAP that once only ran on prem.

Surely it had to take all the pieces to get the ones it wanted most. It might have been a big price to pay for transformation, especially since you could argue that some of the pieces were probably past their freshness dates (although even older products bring with them plenty of legacy licensing and maintenance revenue).

Even though the long-term trend is shifting toward moving to the cloud, there will be workloads that stay on premises for some time to come. It seems that Dell is trying to position itself as the hybrid/private cloud vendor and all that entails to serve those who won’t be all cloud, all the time. Whether this strategy will work long term remains to be seen, but Dell appears to be betting the house on this approach, and today’s moves only solidified that.

 Adobe likes to talk about its public cloud partnerships with Microsoft and others, but it doesn’t often talk about its private cloud strategy. It’s no secret that there are plenty of good reasons for using a private data center and Adobe manages a few of these around the globe. For most businesses, opting for a private cloud comes down to cost, but for Adobe’s Advertising… Read More

 As companies search for ways to modernize their technology stacks, they struggle with managing the legacy software (and hardware) inside their own data centers. IBM introduced a new private cloud product today that is supposed to ease the transition to cloud computing and containerization and place those legacy applications in a more modern IT management context. IBM Cloud Private wants to… Read More

 For a long time, traditional IT resisted the cloud, but that has changed in recent years as companies have come to realize that they can’t survive without the agility, scalability and economics that only a public cloud approach can provide. Yet in spite of the clear advantages the public cloud brings, there are still many companies out there that resist it for a variety of… Read More

Join Percona’s CEO and Founder Peter Zaitsev as he presents MySQL In the Cloud: Migration, Best Practices, High Availability, Scaling on Wednesday, June 7, 2017, at 10 am PDT / 1:00 pm EDT (UTC-7).

Businesses are moving many of the systems and processes they once owned to offsite “service” models: Platform as a Service (PaaS), Software as a Service (SaaS), Infrastructure as a Service (IaaS), etc. These services are usually referred to as being “in the cloud” – meaning that the infrastructure and management of the service in question are not maintained by the enterprise using the service.

When it comes to database environment and infrastructure, more and more enterprises are moving to MySQL in the cloud to manage this vital part of their business organization. We often refer to database services provided in the cloud as Database as a Service (DBaaS). The next question after deciding to move your database to the cloud is “How to I plan properly to as to avoid a disaster?”

Before moving to the cloud, it is important to carefully define your database needs, plan for the migration and understand what putting a solution into production entails. This webinar discusses the following subjects on moving to the cloud:

• Public and private cloud
• Migration to the cloud
• Best practices
• High availability
• Scaling

Register for the webinar here.

Peter Zaitsev, Percona CEO and Founder

Peter Zaitsev co-founded Percona and assumed the role of CEO in 2006. As one of the foremost experts on MySQL strategy and optimization, Peter leveraged both his technical vision and entrepreneurial skills to grow Percona from a two-person shop to one of the most respected open source companies in the business. With over 150 professionals in 20+ countries, Peter’s venture now serves over 3000 customers – including the “who’s who” of internet giants, large enterprises and many exciting startups. Percona was named to the Inc. 5000 in 2013, 2014 and 2015.

Peter was an early employee at MySQL AB, eventually leading the company’s High Performance Group. A serial entrepreneur, Peter co-founded his first startup while attending Moscow State University where he majored in Computer Science. Peter is a co-author of High Performance MySQL: Optimization, Backups, and Replication, one of the most popular books on MySQL performance. Peter frequently speaks as an expert lecturer at MySQL and related conferences, and regularly posts on the Percona Database Performance Blog. Fortune and DZone often tap Peter as a contributor, and his recent ebook Practical MySQL Performance Optimization is one of percona.com’s most popular downloads.

 Only a few days after announcing that it was selling 29 of its data centers to Equinix, Verizon today announced that it is selling its cloud and managed hosting business to IBM. The acquisition is expected to close later this year.
This move pretty much puts an end to Verizon’s loftier ambitions in the cloud — an area it started pursuing in earnest back in 2011 when it acquired… Read More

 Mirantis, one of the last pure play OpenStack startups left standing announced a major win today when VW chose them over Red Hat for an enormous OpenStack implementation. It was huge for Mirantis and for the open source OpenStack project. VW knew it wanted to run a private cloud on OpenStack. The only question was the vendor. After a call for requests for proposals it came down to two:… Read More

 Velostrata, an early stage hybrid cloud startup, emerged from stealth today announcing a $14 million Series A investment. The round was led by Norwest Venture Partners and Greylock IL Partners. The company has a sophisticated hybrid cloud solution that decouples storage from compute resources, leaving the storage in place on-premises while running a virtual machine in the cloud. The… Read More

 ZeroStack, a company that hopes to help mid-market companies set up a private cloud more easily, exited stealth today and announced $5.6 million in Series A funding. The round was led by Foundation Capital. ZeroStack also announced that Mark Leslie, founder and CEO and Veritas will be joining the board of directors. The promise of private clouds has been mostly confined to larger… Read More