Equinix and other large data center providers will gain new revenue growth opportunities as more enterprises and SaaS providers migrate to the private and hybrid clouds.
During an Equinix analyst day, the provider said that a growing group of SaaS (software-as-a-service) providers are transitioning their public clouds to either private or hybrid clouds to achieve more scalability.
According to Equinix, the hybrid cloud market is a $60B market that it can take a part in as a data center player.
In particular, Equinix is capitalizing on the emerging big data trend with its Data Hub service being created with the emergence of new IoT applications. Data Hub is targeting enterprise customers' need to store data near the clouds they use while maintaining control on how that data is managed, for example.
Equinix says that IoT could be as big as the cloud ecosystem, which currently makes up 41 percent of its revenues from cloud and enterprise customers.
As more providers move their services into data center facilities from Equinix and others like Cyrus One and Digital Realty, there are benefits for both the SaaS provider and data center provider. SaaS providers will gain lower latency connections while data center providers can enhance their service portfolio.
"We believe this trend reads positively for the data center providers that can layer these services -- interconnection, hybrid cloud, managed security -- on top of their core infrastructure offering," Wells Fargo said in a research note. "We believe QTS, CONE, DLR (through Telx and the soon-to-be-acquired EQIX assets) and INXN should all benefit from this trend as they have emerging interconnection platforms, while QTS has the added advantage of a fully-integrated services platform."
Wells Fargo added that these trends illustrate that "cloud demand is not just for hyper-scale infrastructure, but also for other services further up the stack."
Taking it a step further, Evercore ISI says enterprises' ongoing move to push applications into the cloud will drive two other trends on the enterprises and SaaS providers.
Enterprises will move functionality into the edge to better integrate with cloud infrastructure, while "enterprise customers and secondary cloud players take more space and interconnection in order to better leverage the capabilities of those cloud platforms."
Such trends will continue as enterprises adopt more cloud services from companies such as Amazon (NASDAQ: AMZN) AWS and Microsoft (NASDAQ: MSFT) Azure.
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