Equinix today announced the availability of Equinix Metal, a fully automated and interconnected bare metal service, integrating its Packet acquisition. Equinix Metal provides businesses with an automated, “as-a-service” deployment method to build their foundational infrastructure and take advantage of the global reach, interconnected ecosystems, and trusted partners available in Equinix data centers.
The Equinix Metal service is currently available in four Equinix data centers including Amsterdam, New York, Silicon Valley and Washington, D.C.. Furthermore, the service will be available in 14 global metros by early 2021. Specifically, Equinix Metal is targeting the edge data center opportunity, to reduce latency, expand global reach and accelerate time to market to drive better end-user experiences.
Equinix Metal helps enterprises deploy hybrid multi-cloud architectures and quickly access thousands of networks, enterprises, and clouds on the Equinix system. Notably, Equinix Metal can deliver high-performance dedicated servers in under 15 minutes.
Rationale for Equinix Metal Service
Equinix Metal allows Equinix to further access the growing hybrid colocation environments. Specifically, Equinix Metal helps businesses reduce time-to-market and reach users with high performance servers. Therefore, Equinix Metal deployments can occur through both on-demand and contracted models. Speed is of critical importance for Equinix’s customers because of how quickly workload needs can change in the COVID-19 environment.
During COVID-19, multi-tenant data center operators have had more urgent discussions with enterprises following government-mandated lockdowns. Importantly, the Equinix Metal offering can provide a complement to traditional colocation in situations where rapid deployment is necessary.
In a typical colocation lease deal between Equinix and a customer, the companies must order and ship their hardware, utilizing technicians to configure and activate it. This results in a process which can be difficult and lengthy, if infrastructure capacity constraints exist, which has been the case recently. For example, data center switches, provided by vendors including Broadcom, Hewlett Packard Enterprise, and Juniper, can take up to 90 days from purchase order to production deployment.
Differentiation from Equinix’s Bare Metal Offering and Packet Acquisition
Equinix Metal also has native interconnection through Equinix Fabric (a global, software-defined interconnection service). Interconnection differentiates Equinix Metal from other bare metal service offerings by competitors. Specifically, native interconnection will ultimately allow Equinix’s customers to build the private cloud components of their hybrid multi-cloud environments using as-a-service hardware.
By facilitating easier private cloud deployments, Equinix will reinforce its strong ecosystem. Thus, Equinix Metal will accelerate hybrid cloud deployments next to cloud on-ramps (which Equinix has dominant market share in), making it simpler for customers to deploy at these cloud on-ramps. In turn, this increases enterprise consumption of public cloud services (e.g., Amazon Web Services, Microsoft Azure and Google Cloud). Even though Amazon Web Services offers a full-service edge cloud solution, through AWS Outposts, this is not the only deployment option. Alternative services, including Microsoft Azure and Google Anthos offer cloud solutions that can be setup, in-part, on private infrastructure such as Equinix’s bare metal solution, Packet.
Equinix’s Packet Acquisition
Equinix acquired privately-held Packet Host (Packet) in March 2020 for total consideration of $336.6m. Equinix has since integrated Packet’s technology into what is now branded as the Equinix Metal service. Purchase consideration of $290.3m was paid in cash, Equinix paid $16.1m in cash to accelerate the vesting of unvested Packet employee equity awards, and Equinix issued restricted stock awards valued at $30.2m. Notably, Packet had run-rate revenue for 2020 of $38.5m to $48.0m, implying Equinix paid a revenue multiple of 7.0x to 8.7x for the business.
Prior to being acquired by Equinix, Packet, had deployed its own bare metal, i.e., dedicated infrastructure, across numerous different data center facilities. These facilities include data centers under Equinix’s ownership, in Tier-I and Tier-II data center markets. Packet addresses a pain point of many enterprise customers that cannot or do not want to set up physical infrastructure across many different data center locations. Instead these enterprises can rely on Packet’s physical, bare metal, infrastructure.
Equinix is the largest public data center REIT. The company has a global footprint of 214 data centers, representing ~1,200 megawatts / 305k cabinets of power capacity. Equinix operates across 26 countries around the world, supporting over 9.7k customers.