Equinix looks to shake up Asia's enterprise market with ECX Fabric and IBX

R E P O RT R E P R I N T

Equinix looks to shake up Asia’s
enterprise market with ECX
Fabric and IBX
APRIL 18 2019
By Agatha Poon
Positioning ECX Fabric as a one-stop onramp to multiple cloud providers, Equinix is looking to capitalize on multi-
cloud/hybrid cloud deployments in the region. It plans to expand in the region’s existing 12 metros as well as to
extend the Equinix Cloud Exchange Fabric footprint, adding a new metro location in South Korea.

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R E P O RT R E P R I N T

Introduction
Equinix is not foreign to Asian enterprises. Having been in the region for nearly two decades now, the datacenter
operator continues to evolve and grow its portfolio of products and services to support changing business
requirements. Beyond global consistency, each product is optimized to address unique business situations, which
eventually will have a direct bearing on the company’s success. This is evidenced by the engagement model
the regional team has set out. Instead of taking a product-centric approach, Equinix says it works with local and
regional partners to provide what it describes as ‘digital edge strategy briefings,’ which are deep-dive workshops
that are designed to help customers map out their multi-year transformation projects. The company has
expansion plans for the region’s existing 12 metros as well as to extend the Equinix Cloud Exchange (ECX) Fabric
footprint in the Seoul metropolitan area of South Korea. Building out its partner ecosystem is an integral part of
the company’s strategy to accelerate its growth.

451 TAKE

Equinix has a mature colocation business and a solid base of datacenter services customers.
Positioned as a partner for deploying digital-ready infrastructure, the company will need to
do more than grow its partner ecosystem. Working collaboratively for integrated offerings is
instrumental in creating an engaging digital experience. Given that ECX Fabric hasn’t yet reached
mainstream adoption in Asia-Pacific, having secured some big-name, well-established enterprises
such as Easybook and Carsales that it can tout publicly may help. It is the company’s ability to
articulate its value proposition with proven use cases that will win over customers and build
trustworthy relationships in the long run. Granted, Equinix is not alone in navigating through
changes and managing diversity; the global player has its work cut out for it to create impactful
outcomes in the region.

Context
Equinix first entered the Asian market in 2002 under a strategic merger whereby it integrated the assets of
i-STT, a wholly owned Internet infrastructure services subsidiary of ST Telemedia (STT), and Pihana Pacific into
its core internet exchange services business. The company has more than 200 International Business Exchange
(IBX) datacenters on five continents, 40 of which are in Asia-Pacific spanning 12 markets. In Asia-Pacific alone,
for the past three years the company has invested more than $800m to build out its IBX footprint. Its recent
announcement about the establishment of a new IBX datacenter in Seoul, which is slated to open in Q3 2019 with
an initial capacity of 550 cabinets in the first phase, confirms its commitment.

On the product front, while the colocation business remained a cash cow for the company across all regions,
interconnection service was a fast-growing segment for 2018, particularly in EMEA, followed by Asia-Pacific
(totaling $130.9m in revenue, up 22.3% Y/Y). At the global level, Equinix reported that its interconnection platform
has more than 333,000 physical and virtual interconnections, including thousands of virtual connections through
ECX Fabric.

R E P O RT R E P R I N T

Technology and product
Equinix is making every effort to transition from being a pure-play colocation provider to a partner for deploying
digital-ready infrastructure with ongoing investment in ECX Fabric. With that said, the company is mindful about
market readiness and is laying the groundwork through market education and training. Its existing customer base
has one thing in common: many of them operate in a highly distributed environment with multiple locations –
86% of which have multiple metro installed, 72% of them have to manage network traffic in multi-region and 60%
in all three regions. Together with the customer feedback gathered through direct interactions and the Customer
Advisory Boards, Equinix realizes the need to create a globally distributed yet interconnected ECX Fabric to help
customers connect local and remote offices from within the region and between regions.

ECX Fabric provides key features such as on-demand, one to many and self-service, enabling customers to reach
new markets and create their own ecosystems. Following the commercial availability in Q3 2018 of intra-regional
connectivity of ECX Fabric, by which Perth customers can interconnect to AWS Singapore, for example, the
company has deepened its capability to enable inter-regional connectivity in Q1 2019. For example, customers in
Hong Kong are able to interconnect with public cloud providers; e.g., AWS or Azure, or to other service providers
located in America or Europe, respectively – through virtual connection that takes minutes to set up using the
Cloud Exchange Fabric Portal. Equinix doesn’t provide customer count by geography, but publicly confirms it
has more than 1,400 ECX Fabric customers worldwide. Accordingly, Cloud Exchange Fabric Portal is available in
English only for now, but multi-language support is on the company’s product roadmap.

Positioning ECX Fabric as a one-stop onramp to multiple cloud providers (Oracle cloud, AWS, Azure, IBM Cloud,
Alibaba Cloud, Salesforce, Google Cloud Platform), the company is looking to capitalize on multi-cloud/hybrid
cloud deployments in the region. While the setup of a physical port, which is the access point between an ECX
customer and the ECX, takes days depending on individual customers, virtual circuits can be established by
end users to both cloud and network providers as well as a customer’s own infrastructure within seconds via a
self-service portal once the ECX port is provisioned. Additionally, the parameters of those connections can be
modified on demand.

Perhaps the core differentiation is its sales engagement model to boost the overall user experience. Although
professional services are made available only to enterprises in the US and Europe, the regional team says it is
leveraging best practices studied from over 1,800 customer deployments to guide customers on their digital
transformation journeys. The company has developed architectural guidelines called Interconnection Oriented
Architecture, which provides step-by-step blueprints for end users to plan their architecture journey as they go
from centralized to distributed IT infrastructure. Aside from keeping pace with the latest technology and market
trends, customers will be kept informed through digital edge strategy briefings, which are deep-dive workshops
leveraging industry-specific use cases, playbooks, and customer insights to enable customers to map out their
multi-year infrastructure transformation journey.

The last piece of the puzzle is to work with strategic partners to address diverse business requirements. With the
exception of Japan, where the company acquired assets and domain expertise from datacenter and IT outsourcer
Bit-isle a few years ago to meet local business expectations, Equinix is looking to invest further in building out its
growing ecosystem of partners.

Given that the presence of an IBX datacenter is a prerequisite to be in the ECX Fabric, any new IBX datacenter
locations are likely to serve as major hubs for ECX Fabric, in addition to a suite of connectivity options – Cross
Connect, Equinix Connect, Equinix Internet Exchange and Metro Connect. With that said, customers don’t need
to colocate with Equinix in order to connect to ECX Fabric. The integration with Telstra is a case in point; Telstra
customers do not necessarily have colocation at Equinix’s IBX datacenter, but they can access features available on
ECX Fabric.

R E P O RT R E P R I N T

Use cases
While supporting US and Europe-headquartered MNCs operating in Asia, the company also works with strategic
partners, network service providers in particular, for accelerated growth in key Asian markets. Not surprisingly,
the strategic partnership with Telstra to enable API-based integration of ECX Fabric into the Telstra Programmable
Network (TPN) has caught the attention of other network players in the region. Equinix says it is currently in
discussions with a handful of carriers and enterprise customers in Asia-Pacific for similar arrangements, although
it is still early yet to determine the significance of API-driven integration for hybrid/multi-cloud deployments.

Under the overarching theme of digital-ready architecture, Equinix identifies four major use cases: network
optimization, hybrid/multi-cloud deployment, distributed data and distributed security. One example is from the
automotive industry, where a car manufacturer was looking to create a mesh network between different hubs in
different regions/countries to drive its connected car initiative. Equinix believes that having a robust ecosystem
of partners is instrumental in shaping future digital enterprise infrastructures. To that end, ECX Fabric has a role to
play in enabling enterprises to privately interconnect these ecosystems locally across their 200+ IBX datacenters.

Although customers tend to use ECX Fabric to support multiple use cases, Equinix sees a broader use of ECX
Fabric for hybrid/multi-cloud deployments and regulatory requirements like data sovereignty compliance in Asia-
Pacific. ECX Fabric seems to be the answer for businesses looking to maintain data on-premises while managing
data exchanges globally.

Strategy
In Asia-Pacific, Equinix primarily works with SIs and IT providers for managed services opportunities. Aside from
taking advantage of partners’ domain expertise and deep local knowledge, the company can strike a realistic
balance regarding the range of services on offer and where they are available. Equinix says it has already put
aside dedicated resources for the development of strategic partnerships. Building a network of go-to-partners
appears to be a savvy move for the company to exploit cultural ties and economic cooperation in individual Asian
economies.

Competition
Equinix competes squarely with established datacenter providers such as Digital Realty, KDDI Telehouse, Global
Switch and STT GDC. Datacenter investment companies like Keppel DC REIT and Mapletree are active in the region
as well. Network-centric providers such as NTT Communications show no signs of slowing down when it comes to
adding datacenter capacity in high-growth markets. UK-based datacenter provider Colt Technology Services has
regional hubs in Singapore and Japan and is eyeing digital opportunities in India with plans to build a hyperscale
datacenter facility. Issues with data security and sovereignty open new doors for local and regional datacenter
providers that support data locality. NEXTDC, AirTrunk and Telstra in Australia; SUNeVision and HKT in Hong
Kong; Netmagic Solutions and Reliance IDC in India; China Telecom, China Mobile and China Unicom in China and
SingTel and Starhub in Singapore are in this group. Nevertheless, with the ECX Fabric offering, we would not be
surprised to see some of the aforementioned companies become potential partners for Equinix, just as with its
strategic partnership with Telstra.

R E P O RT R E P R I N T

SWOT Analysis

  ST R E N GT H S                                 WEAKNESSES
  Evolving its role from a pure-play colocation   Aiming at its existing colocation and cross-
  provider to a partner for deploying digital-    connect customers for ECX Fabric makes
  ready infrastructures seems to be a savvy       sense; nevertheless, Equinix will need
  move, as reflected in Equinix’s quarterly       to equip its sales channels with a clear
  earnings results. Positioning ECX Fabric as     value proposition as it continues to grow a
  an easy onramp to cloud providers resonates     portfolio of connectivity options.
  well with transforming enterprises and
  service providers looking to benefit from the
  hybrid/multi-cloud phenomenon.

  O P P O RT U N I T I E S                        T H R E ATS
  Based on 451 Research’s Market Monitor          There is immense diversity in the markets
  service preliminary analysis, we predict        of Asia-Pacific and the local culture and in-
  the hosting, cloud and managed services         country politics often play a role in affecting
  market in Asia-Pacific will reach $26.7bn       industry development initiatives and
  by 2019, with an expected CAGR of 18.2%         business priorities. Equinix is not alone in
  throughout the forecast period of 2017-         navigating through the changes; the global
  2022. Opportunities abound for established      player has its work cut out for it to create
  players like Equinix to capitalize on hybrid    impactful outcomes in the region.
  and multi-cloud phenomenon.