Talking Tech Trends: Data Centers and Cloud Management
Welcome to the Upstack podcast, an ever evolving conversation on all things digital infrastructure, giving tech leaders food for thought as they push to stay ahead of the technology curve. I'm Alex Cole, and with my cohost and colleague, Greg Moss, we invite you to join us as we talk candidly about the latest technology infrastructure topics. Stay with us. Greg, this is another special edition of the Upstack podcast, because as you recall
Speaker 2:Special editions.
Speaker 1:We're doing a series of episodes digging into our 2024 technology trends report. Previous episodes have included security, customer experience, CX for short, and other rapidly rising sectors of digital infrastructure. But I think it's only fitting that we also cover data center and colocation. The physical layer of the technology stack, it seems like with the rise of AI and the ever shifting landscape of technology that we always talk about, some things you can just count on. Death, taxes, and data center.
Speaker 1:There we go. We have covered data center before, of course, and colocation, power from a power and efficiency standpoint. But the trends survey certainly highlighted some key areas that are just as important, in my humble opinion. But I leave it to you and our guests today to unpack that further.
Speaker 2:Before we start, Alex, I noticed that you have something on your desk. It's a helmet of some sort. I was so cool. What exactly is this?
Speaker 1:Oh, my University of Virginia football helmet? That was a gift from a colleague. It brings great comfort in times of stress. But this is not one of those times of stress. This is the Upstack podcast.
Speaker 1:And Greg, when it comes to data center colocation, you know we have to bring in that reputable third party. And we have the great luxury of working with some incredible people who have very deep experience. So let's welcome in one of our faves, Monica Sanchez, to the podcast. Monica, Upstack Managing Director with, I believe, a couple decades of experience in network infrastructure. And we know you spend a lot of your time partnering with and advising global enterprises in optimizing their colocation and, of course, other technology solutions as well as a member of the Upstack team.
Speaker 1:So welcome to your inaugural appearance on the Upstack podcast.
Speaker 3:Thank you, Alex. Thank you, Greg. Appreciate the invitation and happy to be here.
Speaker 2:When you choose a data center in this day and age, how important are these what you call ancillary features, right? The on ramps, the access, the latency. Are you seeing more and more of it move away from kind of just the space and power model into something that's a little bit more hybrid?
Speaker 3:Well, talking about even smaller scale clients and then up to these super consumers, Inside of these data centers is typically, it's typically the home to all digital access. And my clients are looking for not just cloud optimization, but I think this takes us down like an edge discussion. What are your thoughts?
Speaker 2:I think that's a great area to expand on. Mean, edge is really, really important these days because all the saturation within the primary markets is causing a lot of the revenue growth need from these data centers to be in these kind of secondary and tertiary markets. And then more importantly, is the big three have cloud hubs, right? They don't have cloud hubs in the secondary and tertiary markets. This edge data center play is causing the standup of private cloud and the need for public cloud in those markets.
Speaker 1:So edge, you kind of added to the list of things that's driving this rapid growth in data center and infrastructure in general. Of course, there's our friend AI, VR, all of the various as is the cloud services that's caused this explosion. And Monica, I think what you said about the pandemic causing this incubation period and these emerging companies and their infrastructure needs is kind of fed into that. When it comes to the edge, call me cautious. I'm going to pull us back from the edge.
Speaker 1:When I think data center, I go, Monarch, you talked about power, space, cooling. When it comes to power, that's a big story. We've covered it on the podcast before, but the demand for power is insane. We know there's constraints around available data center space, but power just keeps becoming more and more expensive and the demands, the power draw is incredible. The simple question, do we think the grid can handle this demand?
Speaker 3:Jumping in here, Greg, and certainly tell me if I'm wrong, but I think the answer is really no, which is why there's all this discussion on how do we achieve a green environment, wind, solar, hydropower. And you'll see some data centers and their purpose built models have been far more future thinking and future proofed for these types of environments, which allows this green environment and reduced consumption of traditional power and less emissions, which is something that I think everybody's talking about as well. So beyond the power, it's really how do we cool the power, right? So we've got two big issues are power consumption, but also water consumption and then emissions. So this is these environmentals that have become this big issue.
Speaker 3:And I think everybody is focused collectively in the data center world to achieve a greener footprint. There's no question. And for some clients, this is critical in their decision making process. Like, where is the data center today in that initiative and where will they be in the next two years, five years and ten years when they're choosing that lifelong partnership?
Speaker 1:Greg, before you jump in, just curious, this is becoming more critical for some clients, Monica, you mentioned, if you had to quantify that, is this one out of every five customers is looking for a sustainable solution when it comes to data center, or is it more than that?
Speaker 3:I think it's a part of almost every one of my conversations.
Speaker 2:Is it a mandate? Are you seeing that your clients are being mandated to do this? That's what's driving it? So
Speaker 3:mandates versus requirements or versus socializing and just being forward thinking. I've had, I would say for me, one out of every five data center projects is actually a mandate. Tops. Maybe that's even being too generous in that amount. But it absolutely part of our discussion every single time.
Speaker 1:Do you foresee that changing over time? Out of five are mandates, so eventually it's 100% become it's mandated. One would hope from an environmental impact standpoint.
Speaker 3:I think so. I do think that's where we're trending, definitely. It's really become such a focus beyond the clients. I mean, data centers are moving towards this model for a reason. Look, green data centers allow for maximum energy efficiency.
Speaker 3:So that's number one. In an environment where we just don't have the energy to power up the world's technology environment, this is a problem. So even if you didn't want to move towards a green data center, you really have no other choice in order to be scalable. You will not scale to the demands of the world. And data centers are truly the backbone of all technology.
Speaker 3:People don't talk about it as much because when you're surfing the internet, you don't understand that that's really powered by a data center at the end of the day. All of the applications, all e commerce, all search engines, all cloud, everything sits inside of these data centers. So it really needs to be a bigger discussion and a bigger focus, but we're running out of space. And more importantly, we just don't have the power. To go back to your original question, Alex, like, I think the grid can support it?
Speaker 3:No, the grid isn't supporting it.
Speaker 2:I love the comment on data centers are the foundation of everything, right? When you hear cloud, people can look up, right? They don't realize that, you know, whether it's an Amazon or somewhere else, it ends up in a data center, right? So anyways, really good points, Monica, and I love the path that you've taken on the green initiatives. I think it's relevant.
Speaker 2:Something I'm curious about to see if you're seeing across your customers is the densities, right? I'm seeing in my base, I'm seeing a lot of growth in a per cabinet draw in power, right? Which again means more power, more pressure on the grid. What are you seeing from a power consumption standpoint?
Speaker 3:Higher density capabilities and consumption in a single cab?
Speaker 2:Yeah. How do you see your clients addressing that kind of thing these days?
Speaker 3:My immediate response is yes, we're seeing higher densities. How are we addressing or supporting higher density in a single cab? Well, we're seeing a lot of movement from data centers that don't have the ability to scale with those clients and supporting their immediate requirements and the future proofing of their footprint. So we're looking in markets that can support that and transitioning away from data data centers that just don't have that scalable environment.
Speaker 2:Makes sense. Yeah.
Speaker 1:Can we go back to we've established there's power grid. There's power issues and vulnerabilities around the grid, Monica, as you said, the grid can't handle it. Enter the natural rise of sustainable solutions. And it sounds like while demand rises on the buy side, the sell side is able to meet that demand more and more over time. I know when it comes to power delivery and new cooling solutions, solutions be it submersion, something we've touched on previously, chip based cooling, my mind is now drifting towards redundancy and disaster recovery.
Speaker 1:When there are power vulnerabilities, that fail, that's highly problematic for your core infrastructure. So it's only right that disaster recovery certainly did pop in the survey that informed our trends report. How does that factor in? A question for both of you. How does that play a role when it comes to working with a client who's in search of more data center space, more capacity, the Doctor aspect?
Speaker 2:Yeah, I think the answer there, Alex, is that there's a lot of hybridization happening, right? You're finding people put either production in the cloud or Doctor in the cloud. And if you think about it, right, you're getting almost twice the redundancy of two types of environments. And resiliency and redundancy is always critical to companies that are running mission critical applications. And in today's day and age, everything's mission critical.
Speaker 3:I think I would echo exactly what Greg's saying. And I think, you know, one of the things to contemplate for smaller businesses or even mid market businesses is the cost of running multiple sites in parallel, a full Doctor environment can be prohibitive. So I think that's where things like this hybrid model come into play in those evaluations or alternate ways to minimize your risk of downtime or data loss. So we look at that or running data centers, maybe your secondary data center is in a less popular market. Sometimes latency is not as big of a driver or issue.
Speaker 3:And if that's the case, then you can start to shop outside of your primary environments.
Speaker 2:Monica brought up a really good point. When you when you when you host, something in the cloud, you don't have to host the entire piece of infrastructure. And when the Doctor need is there, can you actually spin it up. So if you had a data center data center primary, right, or production Doctor, let's say they're 100 each to maintain. If you went primary in data center and Doctor in cloud, you now have the opportunity to maybe do 100 k and 50 k.
Speaker 2:And then if the Doctor is needed, they spin up those servers at that moment.
Speaker 1:Got it. So there's savings there. It's still you need that backup, you need to hedge your bets, but it doesn't have to be as costly as the initial space. You're both touching. We talked about hybridization.
Speaker 1:I'm getting the feeling that these data centers, these colocation conversations with clients, with these enterprise level clients shouldn't happen in a vacuum because it naturally touches so many different parts of the technology stack. Safe to say when it comes to data center, this should be part of the broader conversation about hybrid and multi cloud architecture? Seems it just naturally happens. Are there some customers who come in, not with blinders on per se, but I have a need for data center, I'm not really considering these other things. And maybe you can help open them up to how this plays a role in so many other things they should also be looking at?
Speaker 3:No, I think that data center can solve so many issues for a client. And I think that's why we're seeing the best data centers globally or in every market are really the ones that are not just scalable, but also building what we call this ecosystem of connectivity and access to and ramps to all of these other environments.
Speaker 1:Is that potentially It's not putting all your eggs in one basket per se. It's a gateway to other solutions, other suppliers, or they may offer all of these services in house, but should a client want to explore other solutions, it sounds like they're still able to do that.
Speaker 2:I wouldn't say all your eggs in one basket, right? Because if you have a data center in Milwaukee and a data center in Texas, regardless of who, there's no single point of failure there, right? The interesting thing that Monica alluded to is that you have companies like Equinix that have true hybridization, right? You got the bare metal, you got the direct on ramps to the public cloud, you have the data center, and then you have the fabric that ties it all together. So, you know, that's hybridization.
Speaker 2:You see a lot more of that. DRT is chasing Equinix. They're trying to get there. The big question is, do the big three see the attrition? They don't see the attrition currently, right, because they still have such strong top line growth from some of the, what we call late adopters.
Speaker 2:But once that top line growth starts to slow, they're gonna see the attrition of people leaving the public cloud going back into data center or hybrid because of the cost model and technical implications. And they may scoop up an Equinix, who knows? Right? I'd be very curious to see if there's a future purchase of a large data center, a global data center by one of the big three. Think that goes hybrid the opposite way.
Speaker 1:There's a whole cloud migration conversation, yet another cloud migration conversation to be had there.
Speaker 2:I led you into that, Alex. We always come back to it. All
Speaker 1:right. We've touched on a number of the trends emerging from the Upstack Trends report specific to data center. As the layman on the call, what is something we're not touching on for the audience to know about?
Speaker 2:I love that I love that Monica brings a fresh perspective. I mean, her and I have, probably some overlap in our customers, but it's nice to hear from another industry expert as to the trends report. Right? Because you were seeing similar things and agreeing on these topics, which I think is important to our overall client base to show the continuity in the organization and and kind of what's happening across the globe. You know, I think that there is a topic that is an interesting topic.
Speaker 2:We saw a big spike in cost in power. Right? And that was middle early to middle of twenty three. And then we saw it come back down in this year. Right?
Speaker 2:And the question becomes, does this supply and demand continue to shift? Because it has really big financial impacts on organizations, right? Especially ones that have that service based model that haven't that can't push that cost onto their customer, right? So if you're operating at a 30% margin, suddenly you have this massive power increase and you incur that cost, you can't pass it through. Maybe your margins drop to 5%, maybe go negative, right?
Speaker 2:So these are things that we need to think about. And I'm curious, Monica, do you have any thoughts on kind of where that's going?
Speaker 3:Well, I mean, I agree with you. The cost of power soared. And I think we've not necessarily It hasn't stabilized really in certain markets. I think it's come down or settled a little bit, but it's a net new cost. It's not ever going to be what it was.
Speaker 3:So when we're out shopping on behalf of our clients or working with our clients and their interests, there's only so much way to protect yourself against unstable variables like the cost of power, right? That's something that we continue to look at and looking at trends within markets and where we're at. When we're looking in representing our clients and their projects, depending on the market, the different factors we contemplate in addition to the cost of power and certainly the efficiency of a data center, our ability to negotiate, all of these things are definitely more challenged than they historically were. I think like you alluding to margins is a whole different topic. We used to have a lot more flexibility in those negotiations.
Speaker 3:Rider first refusal for additional space, contingent additional space is really kind of a thing of the past. Those are getting called in two weeks. Negotiating power, right? Am I right? Really are.
Speaker 3:They're so silly to even put in.
Speaker 2:How do grow? How do you predict your ability to grow in a data center if there's a space to grow
Speaker 3:That's part of it. I mean, that's really part of it. So now when we're working with our data centers and I know you and I do the same thing, it's like understanding what that footprint looks like, not just today, but what do they have slated for 'twenty five and 'twenty six In the event that whatever we procured today is no longer enough to support that client, what are they going to do if that is completely sold out, which it likely will be? What then do we have on the horizon in 'twenty five and 'twenty six within that same campus? And what does the infrastructure between those sites look like to make the client look and feel like they're in a contingent space when in fact they're across the campus, right?
Speaker 3:So these are all the different things. I mean, really, again, it's all about scalability. It's not just these super air giants like our cloud companies that are driving everything. It's everybody. As cloud adoption has grown, as AI adoption has grown, our client stacks become more dense, their needs become bigger, and they're likely to expand inside of a data center become bigger.
Speaker 3:So we've got to like future proof them the best we can without really being able to do what we used to do, which was big ROFRs or even luxurious ramps. I don't know about you, but I'm not really seeing a ramp that exceeds one year depending on the market, but there used to be really generous ramps and leeway for the clients. I don't see those.
Speaker 1:Monica, we established at the top of the episode that you're dealing primarily with global enterprises, large scale, multinational organizations. Are they prepared to have that look into the future two, three years down the road, what their needs may be from a data center standpoint? Or do you find yourself introducing this concept much to their surprise?
Speaker 3:No, I work with really incredibly versed and bright people, thankfully. I don't think anybody can ever be completely future proof because I think the situation we're in now nobody anticipated. It's really unbelievable. And when I'm representing the interests of smaller enterprise that need between five and twenty cabs and a smaller footprint with under somewhere around 10 kW per rack, they're sort of secondary on the list of priorities. They're not as significant.
Speaker 3:So we really have to shop consciously and make sure that we partner with somebody who, again, is going to be scalable and can work with them and isn't as focused on hyperscalers, but still really does play in that enterprise model. When I go on with Reg and I had a meeting with a client today who really does understand what their landscape looks like and feels comfortable that every quarter they know where they need to be two quarters out. That's a luxury. Not everybody operates that way, I do feel like we work with some well versed and prepared people. Project's change.
Speaker 2:So Alex, imagine being the service provider, right? And most of your growth is client driven, demand, sales, right? And as Monica stated, years ago, when the growth wasn't as extreme, they would set up in a data center knowing that they'd have plenty of room or at least rougher or some sort of ramp to protect that space. So you get a clean slate, you go into a data center, nowadays, there's no guarantee that within a couple weeks or a couple months that there's any space available. So as a service provider, you're now saying, wow, I need to have two data centers in a market?
Speaker 2:Three, four, five? Like how do I service that? How do I scale it? So it's really They're interesting topics and they're important topics.
Speaker 3:It's not just hard for Greg and I are in a really comfortable position because we have the luxury of working with service providers around the globe. And we have access to their infrastructure. We work with all these talented people who represent the interest of one singular data center provider who have no space to sell, right? And that's a frustrating position to be in. So you're seeing this race for additional real estate to be able to support the demand for the next several years to come.
Speaker 1:So real benefit to being supplier neutral. We like to end every episode, our value listeners, with giving them a tip, something tangible to take with them. We may have already given it in terms of making sure that your organization, as much as they can, are looking into the future. I'm curious if there's anything else you'd want to offer, anything else you want to leave our listeners with?
Speaker 3:Yeah, do your due diligence. Due diligence is everything. Unfortunately, we don't have the same luxury of time. That's a real thing. I think we find ourselves in this position where our messaging around the limitation on time, because if there is truly this race for whatever remains to be available inside of a data center from a space and power perspective, We almost feel like we're overly salesy in that pitch, but that is a real thing.
Speaker 3:Do your due diligence so that you know where you want to be and the drivers behind your decision, not just price, but do the best you can to future proof yourself. But understand that when you're being given limitations on time to make that decision, those are real, that people aren't just trying to hard close you. Everybody's dealing with the same limitations. But really do your due diligence, take the time to understand the different operators and what their future looks like and what their infrastructures look like and determine whether or not that supports your needs going forward.
Speaker 1:Well, that's the perfect ending point. This will not be the last time we discuss data center and co location, and it certainly will not be the last time Monica Sanchez joins us on the Upstack podcast. Greg, we got to keep going with the trends report. We're not done yet. Great conversation with our colleague Monica Sanchez on data center.
Speaker 2:Love Monica.
Speaker 1:As with I mean, we could go on about data center forever. It's it's again, the physical layer, the tech stack, it's not going anywhere. You know what else is not going anywhere?
Speaker 2:It's ugly brother.
Speaker 1:Oh, no. It's ugly? Ugly brother. No. Come on.
Speaker 1:I feel like not ugly brother, maybe more cousin.
Speaker 2:Okay.
Speaker 1:Cousin. We'll settle. Cousin you don't talk to a lot, but you're definitely related. Distance. Distance.
Speaker 1:About that? Talking data center with Monica, so many of the topics we covered foreshadowed this next trend that popped on the trend survey, and that that's cloud, my friend. That's cloud. And frankly, as right. You're looking up, Craig.
Speaker 1:He taught me. Don't look up. The cloud is physical infrastructure. So I've learned anything. And frankly, the number of trends within the cloud category within the report is robust.
Speaker 1:I feel like we're due for a rapid fire session. All we need though is the right subject matter expert. So allow me to introduce our next guest on the Upstack podcast. Greg Moss has decades of experience in in IT infrastructure and including cloud and data center among other solutions. Greg, how do you feel about jumping in the hot seat today?
Speaker 2:I would love to.
Speaker 1:No better expert. There's no better Truly are an expert within cloud. Cloud management, a hybrid. You are the originator of this hot topic around. Beware the pitfalls of the cloud only deployment and the hype cycle and other things that we're gonna make phrases on t shirts that you can wear on on the podcast.
Speaker 1:But I you're gonna help me here. Help me. Cousin, not ugly brother. It's the cousin.
Speaker 2:Let's talk about the cousin.
Speaker 1:I think when it comes to cloud and digging deeper into the trends report, we do a lot of digging on this podcast. Like I should be wearing Carhartt overalls, maybe next time. Hybridization. Hybrid. Hybrid cloud.
Speaker 1:Okay. Let's establish for maybe those newer listeners to digital infrastructure. What is hybrid cloud?
Speaker 2:I guess the easiest way to look at hybrid cloud is there's three buckets. There's the data center bucket, which will hold a company's physical infrastructure. There's the bare metal or custom managed hosting bucket, which is in between a public cloud and data center, and then there's the public cloud, which gives you the ability to kind of burst and create
Speaker 1:And that's your AWS and your Azure's. Got it. Got it. I know that much.
Speaker 2:Bringing the three of those together, whether it's data center and public cloud or data center and bare metal or all three is what you would consider a hybridized type of environment.
Speaker 1:And that's what we touched on it with Monica. There's working with the right partner, you can architect the optimal solution. So it's not necessarily what you can do one or the other, but there's actually real benefits for your business based on the needs of your business to do a mix. So it sounds like there could be some efficiencies there, having that mix of, be it on prem and cloud hosting. Doesn't this make things a little more complex?
Speaker 1:When you're working with clients, how are you advising them to best streamline what could be an incredibly complex process?
Speaker 2:So let's first realize the state of industry. Most companies are at about a 70% headcount in their technology groups. Right? So so they have to be extremely efficient in how they prioritize things. You know, as far as hybrid is concerned, you know, it's easy to make a decision to go in one direction.
Speaker 2:So we wanna go to the cloud or we wanna go to the data center. Right? That to me, that's cut and dry. You build the plan and you go with it. When you start to talk hybrid, it does get a lot more complex, Alex.
Speaker 2:And what that requires is more time and more understanding. And if a company has the time and the experience, it's really something that every company should look at because you're gonna optimize both the the technical and economic sides of your platform, in the best possible way.
Speaker 1:I keep thinking about the economics of all this, Greg. Great. There's a number of different options, on prem, public cloud, hybridization. There's costs associated with all of this, I would imagine. How are you balancing Do that delicate dance, client need versus the cost of the potential solutions available to them.
Speaker 2:Just like any industry, you have your your d grade players and your a grade players on the vendor side, and it really just gives you a kind of a range with, you know, services in a mostly a commodity driven world. Unless you have something really specialized about your environment, whether it's like extreme latency requirements or some sort of antiquated hardware, you know, it's you you could find the right vendors at the right price in this day and age.
Speaker 1:Alright, Greg. You got me. There's a lot of options out there. Sounds like I can find something that works within my budget. With you by my side, I can definitely make it happen.
Speaker 1:I want to migrate. Now, whether that's to the cloud or from the cloud or ending up somewhere in between, I would think that the quicker I can make this change, the better the return on investment. What are you currently seeing clients who are looking to make that move in one direction or the other? Is there frankly complacency to doing that? We've been on prem for so long, why make a change?
Speaker 1:We know it costs us X. Or are you seeing a lot of clients pushing for a change because they think there may be more efficiencies to be had from a cost or performance standpoint?
Speaker 2:It's a great question. There's a lot of different ways to look at it. You're seeing customers that wanna move to the cloud because it's something internally that they wanna do and they wanna upgrade their systems and get a chance to rewrite code and be better. There's customers that wanna be in the cloud because their customers need to be in the cloud. So a customer's customer is driving that demand.
Speaker 2:It goes back to capacity. Right? If you're operating at a reduced headcount and you need to prioritize, you know, I'm always gonna suggest bringing in a third party, someone who's been through that cloud migration process, you know, and then could step in and be the extra set of eyes and kind of mitigate risk and improve efficiencies, right? Because it's a process, whether it's a one month process or a one year process, you're going through a transformation that you haven't done in the past. And it's changing one platform to a new platform, and there's risk and cost.
Speaker 2:And again, claiming that you're the expert, with such a narrow focus, right, being that you're just in your lane, is a mistake. Bringing in a third party that sees what others are doing well and not so well across many different verticals and platforms is important, right? Even if it's for a partial consulting contract, you don't need to bring someone in to do the whole thing, but to have that extra set of eyes to me is critical.
Speaker 1:Alleviate some of the stress. The unknown. Avoid the unknown, the pitfalls. Pitfalls, You're breathing too early. I was going to say, are part of the hype cycle, but we want someone to help us avoid the pitfalls.
Speaker 1:Okay, I'm in the cloud now. Thank you. You have helped me understand the value of the cloud based on my business, what we're looking to do. The cloud makes a lot of sense. Maybe it's a hybrid environment.
Speaker 1:My workloads are in the cloud. Now I'm thinking about optimization. Another trend in the report, what are you advising clients on when it comes to workload optimization as far as the best tools? If I'm trying to get the most out of this investment, what am I using to do that?
Speaker 2:So just like building a house, if you don't have a really good foundation, the house could collapse or there could be a leak, right? Or a rodent somehow breaches the house. So same thing with the cloud. I think when you have the opportunity to start something new, you want to create a really strong foundation and that could be through cloud governance, that could be with third parties that help ensure that the workloads are being utilized to efficient, the most efficient they could be, right? You have a lot of situations, especially in the larger organizations where things kind of go astray and you have hundreds, if not thousands of cloud instances spun up from hundreds of different groups, all with little to no management.
Speaker 2:So a guy finishes his workday, goes home, that instance is still running even though it's not being used. And it can be forgotten about and run for weeks or months or years. Then suddenly you get these large bills and you're trying to figure out why you're overspending. And, you know, ultimately years later, you come back, hire a third party, and they say, wow, here's what you're doing wrong. Right?
Speaker 2:So the plan is to do all this upfront work to make sure that that foundation is already intact so you don't have those challenges down the road.
Speaker 1:This is where you need to have your cloud center of excellence. Have we not learned that? Seriously, Shuni we've learned. You need to have eyes and ears on this stuff.
Speaker 2:That is right. So you
Speaker 1:don't go too far down a particular path. That's incredibly valuable. And I'm instituted, as I established in a previous episode, I have won when it comes to various things in my house. My children don't really abide by the rulings of the Cloud Center of Excellence, but we're still working on it. Greg, we got to go to the edge.
Speaker 1:We're always toeing the edge here. Touched on it a bit with Monica because obviously this is one of the many connections to data center. But what are you seeing maybe most recently when it comes to edge computing in the cloud? Certainly, continued migration for certain businesses, certain applications. But anything else to add?
Speaker 2:Yeah. I think the interesting thing about the edge is it's coming later in process and that's I think that's predominantly because everyone's tackled the, you know, the football cities. You know, once you've hit a football city and you've tapped it out from a revenue standpoint as a company, you need to look for more top line revenue. Then they move to the secondary markets and then the tertiary markets. So all these moves into these markets are requiring service providers to be at the edge to deliver a latency a low latency product.
Speaker 2:So what's happening is you have a situation where, you know, AWS has and GCP and Azure have these massive hubs around the country. But to get back to those hubs, certain applications won't work, right, because of the latency. So what's what's happening is these data centers are moving into these secondary and tertiary markets and standing up private cloud or some sort of bare metal cloud to to offset some of those needs. So you have a situation where you're in Paris, Texas, and you need to get back to a service provider. It's coming back to a data center as opposed to a public cloud.
Speaker 1:And I'd imagine availability of edge or that infrastructure, it's only going to grow over time. That's the growth. Yeah. Was gonna say that's where the growth is. It makes sense.
Speaker 2:It's it's it's a big part of the growth. Right? There's still a lot of growth inherently within the football cities, right, because it's just natural. But lot of the top line growth and new logo growth for some of these service providers are in the secondary and tertiary markets, which we're considering edge markets. I think we're contractually obligated to talk about AI in every single episode of
Speaker 1:the Upstack podcast. Where within cloud are you seeing AI drive the most growth? I mean, the hyperscalers are benefiting. Obviously, you've got some connections there between Microsoft and OpenAI, but I'm curious if other players are coming along to support that growth from an infrastructure standpoint.
Speaker 2:So I think every company in the world or most companies are looking at AI and what it means to their business, whether it's a direct development of AI or working with a third party and back to the hype cycle. Right? That's at some point gonna kinda stall out for for people and that, you know, all that infrastructure is gonna come back on the market and all those needs will kinda slow. And then what's gonna be left is the core of what the real need is. And I think that what's happening is AI is driving large power demand and denser power demand.
Speaker 2:And then you have this, interesting convergence of the hyperscalers and then smaller firms like DigitalOcean and Lambda, and, you know, everybody's kind of fighting for the customer. And which is great. Right? Because that drives cost down and it it creates markets. So it's an interesting thing.
Speaker 2:Right? Right now it's what is it? Is it exacerbated? Yes. I don't really I can't really formulate a thought around what it is today because everybody's doing it and everybody wants to know
Speaker 1:what it's about. Doing it or they think they need to do it. Well, everyone else is doing it.
Speaker 2:I got to figure it out. Haven't put a business model around it, which is a big issue. Right? Because they're buying power at 11¢ and not knowing if they're gonna be able to generate a profit, let alone margin on that. Right?
Speaker 2:So there's a lot of unknowns in this AI space right now.
Speaker 1:A lot of unknowns in AI. Are there any unknowns in the cloud space that we want the listeners to be aware of? Is there anything we haven't highlighted talking about trends within cloud and frankly managed hosting services in general?
Speaker 2:Yeah. Think cost in the public cloud has always been a concern. We've talked about this on previous episodes. And at some point that has to give because there's a lot of companies that aren't gonna move out of the cloud just because of costs. Right?
Speaker 2:Because then there's a cost to move out. So the question becomes, do the data centers in the cloud meet in the middle? Right? We talked about it briefly on our last episode. Does one of the big three acquire a large data center, a global data center company to create a hybrid coming from the cloud down as opposed to a data center company creating a bare metal environment and then direct on ramps to the public cloud from the bottom up?
Speaker 2:So the question is, is there a convergence? That's to me the big question mark that will take cloud to that next level.
Speaker 1:So potentially a dense question. You're I mean, that's an amazing prediction, by the way. But the hyperscalers, the big public cloud companies might do that because they see such a rapid move or potentially an increase in companies moving from the public cloud and they want to capture some of that revenue, some of that market opportunity. Is that why you're hazarding to guess that might happen, this idea of convergence?
Speaker 2:They've been attriting for a decade, or if not more. The question becomes, do you see the attrition or how does the attrition affect your top line revenue because you're publicly traded?
Speaker 1:Right.
Speaker 2:They still have such a strong demand not only within their current base, the growth within their current base, but they have a lot of delayed adopters still coming online. That attrition isn't as important. But once that slows over the next three to five years, they're gonna start to pay a lot of attention to that. And the only way to control that is to get into the game. Right?
Speaker 2:And that game is data center or bare metal. And I don't see under any other option for them. You know, the other thing would be, you know, controlling the cost of transfer because that's one of the big increases in price. They can't do that. There's not one if there was a single fiber provider across The United States that can solve for that, an acquisition of a fiber carrier would do it, but it's not.
Speaker 2:There's so much peering and handshakes within the fiber world that there's no acquisition there that would solve for that. There would be an acquisition to solve for hybridization, which would bring costs down and get them into a company into an environment that made sense endowlistically. Making this truly a one stop shop where all the options are at your fingertips.
Speaker 1:But with a single supplier, we've also talked about that where this idea of being able to operate supplier agnostic has huge benefits for your business, both from a solution ecosystem standpoint, but also the costs associated with it. All right. Rapid fire. How did it feel to be in the guest hot seat? Are you feeling more empathetic?
Speaker 2:I'm still trying to figure it out, Alex. I'm sitting here. I didn't even realize we hit start. Are we done?
Speaker 1:I think we don't have to be done, but I'm just waiting for the moment when you turn the tables on me. Like, what the hell are you going to ask me
Speaker 2:Well, I asked you about the helmet on your desk earlier. I mean, we should should we save it to one question per episode?
Speaker 1:Or We can do that. Yeah. Why don't we do that? There's only so much depth here. As opposed to IT infrastructure, the Alex Kohl stack doesn't doesn't run that that deep.
Speaker 1:But this was fun. Have you learned? Do you feel
Speaker 2:like being on these podcasts, you've actually because I'm assuming you you you're at events or parties and you've been able to have conversation based on some of these.
Speaker 1:Very much so. I love talking shop with you and our other colleagues. What I love most about our industry is the technologies that we have deep experience in touch every aspect of life today. It underpins the Internet. The internet is interwoven in everything, whether it's my kids on their iPad not listening to me as I operate from my cloud center of excellence, or something as rudimentary as typing in directions to Google Maps in my car.
Speaker 1:It's been amazing. And frankly, why are we doing this? We're evangelists of sorts, certainly for Upstack, but for technology at large. Can feel it from at least where we sit in Upstack. The spotlight is growing brighter on this industry, and people are understanding more and more the critical component that it plays, both data center and cloud and CX, and certainly security very much so, top of mind in the public sphere as well.
Speaker 1:But the technologies that comprise the tech stack as well. So we will have more episodes because there is one constant addition to data center and cloud, too. This industry is ever evolving, so we'll never lack for content or topics. So with that, Greg Moss, great to see you, and thank you for being a guest on this special episode of the Upstack podcast. Who are we sponsored by today?
Speaker 2:We're sponsored by Mountain Valley.
Speaker 1:That's fantastic, the iconic green bug. I like to thank Mountain Valley Natural Spring Water for Greg Moss's lustrous skin. Hydration. Hydration. Yes, I could use some of that.
Speaker 1:To our listeners, thank you for putting up with us, and hopefully you learned a thing or two today when it comes to cloud. Do check out the technology trends report. It is just it's the the very tip of the iceberg when it comes to to areas of expertise that Upstate can help you and others with, and we hope you enjoy the read.
Speaker 2:If you're looking for an agile gardener without the cost, we're here. There there you go. An agile gardener. Can we trademark that?
Speaker 1:We'll get on that. We'll get we'll get our team right on that. Listeners, we appreciate your time. We look forward to seeing you next time on the Upstack podcast. Thank you for listening to the Upstack podcast.
Speaker 1:Don't forget to like or subscribe to the show wherever you get your podcasts. We'll see you next time.
