Credit: Shutterstock photoGlobal data center service provider Equinix Inc.EQIX recently announced that it has opened the fifth International Business Exchange (IBX) data center - SP3 - in Sao Paulo, Brazil. The new data center, popularly known as SP3, will enable the company to meet growing demand for data center services in the region. SP3 is scheduled to open in the first quarter of fiscal 2017.
Notably, Equinix has spent $76 million for the IBX data center which spans across an area of 215,000 square feet. The SP3 data center will provide approximately 2,800 cabinets, with the provision to add another four phases. This enables the company to proceed aggressively with its plan of developing data centers across different geographies.
Background
Equinix opened its first IBX data center - OS1 - in Osaka, Japan. OS1 had been developed in collaboration with K-Opticom and Kanden Energy Solutions (KENES), the technology access providers in the Osaka-Kansai region.
Following OS1, the company opened its second IBX data center in Rio de Janeiro, based on the platform provided by ALOG Data Centers of Brazil S.A.
Equinix opened its third IBX data center in Singapore and named it SG3. With the opening of SG3, the company's total number of data centers reached 104 across 33 markets.
More recently, the company has unveiled a new IBX data center in Japan's capital, Tokyo. This data center, which has been named TY5, spans on an area of 54,663 square feet.
Current Scenario
Equinix is a global provider of network-neutral data centers and Internet exchange services for enterprises, content companies, systems integrators and network service providers. Expansions in important markets and consolidation of facilities in the existing ones are part of the company's core growth strategy.
Following last year's initiatives, the company has announced an aggressive expansion plan for 2016. It is targeting an investment of over $4.5 billion for this year in data center openings, expansion of colocation space and acquisitions. The amount includes $3.8 billion for the Telecity acquisition completed this January.
Further, Equinix plans to open four data centers in Tokyo, Dallas, Sao Paulo and Sydney, bringing the total to 150, all by this year.
Management remains optimistic on growing demand for data centers, which is attributable to the Big Data exchanges. To meet this demand, the global interconnection and data center company has been expanding its IBX data centers globally and gaining popularity among tech companies that are looking for data management. Thus, the company expects its total addressable market for retail data centers to increase at a CAGR of 8% in the 2013-2017 period and reach $24.0 billion. Based on this projection, the company projects a revenue growth rate of 10% through 2017.
To Conclude
We are impressed by Equinix's recurring revenue model. The company's cloud and IT service businesses are its fastest growing segments, accounting for approximately one-fourth of its total revenue.
Equinix shares space with established communications carriers like AT&T T , Level 3 Communications LVLT and Verizon Communications VZ - other companies that operate data centers.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
