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Are Data Center Providers Squandering The Biggest Technology Opportunity In Decades?

According to Cisco, over two-thirds of all data center traffic will be based in the cloud by 2017 – which leaves the question:


…are data center and colo providers poised to take advantage?

The Boon of Cloud Services

Cloud usage will continue to surge as Big Data becomes more and more usable, Big Ideas from little start-ups explode daily, and Big Enterprise hits the inflection point where OPEX over CAPEX makes sense and innovative incubators within the enterprise make cloud into an operational reality. At the back-end of this growth are the data center and colocation providers, the real estate barons.

According to an October ’13 report from Cisco Systems the cloud-generated proportion of data center traffic last year was 1.2 zettabytes and comprised 46 percent of all traffic. By 2017 Cisco estimates that the cloud will be generating 5.3 zettabytes and make up 69 percent of all traffic. That amounts to a 35 percent projected compound annual growth rate, as compared to a 12 percent projected CAGR for traditional data center traffic.

The Challenge to Come

Enterprise data center operations, legacy systems, and traditional IT isn’t going anywhere; nor is it in a hurry to move to public cloud but the explosion of “born in the cloud” companies that have put AWS and the on-demand model to the forefront of scalable innovation is only going to accelerate. Just look at how Softlayer muscled its way into IBM’s acquisition iron-sights. Traditional IT vendors will still sell their hardware, and traditional data center providers will still sell real estate – but how will their own business scale if they aren’t truly poised to share in the business of on-demand?

Cisco’s report runs through several scenarios of data center traffic, predicting that 17 percent of traffic will be generated as a result of direct end-user interaction with cloud services; 7 percent of traffic will be between data centers; but, the majority (76 percent) of traffic will be generated within data centers. If this traffic is being increasingly generated through cloud models, then shouldn’t data center and connectivity providers themselves be facilitating on-demand transactions?

Building and Enabling Technology Ecosystems

Call it what you want: the “Open Cloud”, Intercloud workload interoperability, the IEEE Standard P2302 or pipe dream – but it is being realized today by companies like Rackspace, Servicemesh, ComputeNext, and Telx and it will push us past the era of vendor lock-in for cloud platforms and towards a period where organizations can be more confident in their ability to use cloud services efficiently when and where they want without being governed by the boundaries of one provider or platform over another. Data will be free to flow between providers and we will have a free market in the best possible sense. The runway for marketplaces is long as it is wide. The ability to launch new marketplaces and ecosystems is at the very core of what we are doing at ComputeNext, and we believe that efficient usage of cloud can only be realized through interconnected ecosystems.

Who better to build and foster such ecosystems than those at the very backbone of interconnectivity – the data center provider themselves. If you look towards the horizon what do you see? AWS without any competition? More conglomeration and consolidation? Or maybe some some of these data center barons turn their walled gardens inside out into a technological playground where end-users and providers are free to transact efficiently.

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