I have seen the future

Posted by: Steve Hamm on March 10, 2005

It’s located in a godforsaken armpit of northern New Jersey, and it looks so nondescript that you’d never expect anything important to be happening there—least of all the future. But that’s the point.

The thing I saw, an ultra-modern data center, is so valuable that it’s designed to look like just any massive concrete warehouse-style building on the outside. It’s located in that out-of-the-way place so bad guys can’t find it. I don’t even know where I was, so it’s no use for evildoers to bother kidnapping and torturing me to try and find out.

The place I toured is one of 15 such facilities scattered across the world that are owned and operated by Equinix, a six-year-old dot-com era survivor. The tour was especially cool because it's not often that you'll be someplace and a guy will point to something just above your head and say something like: "Lookie. That’s the Internet running through here." Unlike in previous-generation data centers, with had raised floors under which the wiring ran, the newer ones run wiring in conduits suspended from the ceiling. (Easier to get to) The place was really big and dark and cold (58 degrees), with huge servers contained within wire cages—each set the property of a different mammoth commercial enterprise.

Besides its newness, Equinix data centers are set off from run-of-the-mill data centers in one very important way. In addition to housing computer farms for corporations, and Web farms for the likes of Yahoo!, Google, and Amazon.com, they are also Internet Business Exchanges, or IBXs. In the old days, Internet network providers such as Qwest, AT&T, MCI, Level3 and Sprint used to connect separately in each metropolitan area to each other network provider. It was expensive and inconvenient. Equinix has created network exchanges that function like airport hubs, where all of the service providers plug in to one another. More than 200 large networks connect in its facilities. "Huge network costs are being removed from the picture," Equinix founder and CTO Jay Adelson told me. He, by the way, was also one of the founders of Silicon Valley ISP pioneer Netcom.

Putting all of those network connections in one place has one heck of a network effect. After starting with the networks in the late 1990s, Equinix has attracted, in subsequent waves, content providers, large corporate and government clients, and, most recently, travel, energy, and digital media clients. The next growth areas are expected to movie downloads and Voice Over IP telecom traffic. The company has more than 950 customers, and revenues hit $163.7 million last year, up 38%. It’s still in heavy investment mode, and had a net loss of $68 million.

The notion of locating massive amounts of network connectivity and computing horsepower in large facilities like this has always made sense to me. But now that I’ve seen the Equinix center in action, it seems even smarter than ever. What’s holding things up? Caution, I guess. But sooner or later this massive change in the way computing is done seems inevitable.

If you’re interested in reading more about data centers and utility computing, check out a BusinessWeek Online special report.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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