The write-up below comes as a result of Ken Carter’s tour in VBDC with analyst Michael Levy of TR1 (451 Research) last month.
Full disclosure: I’ve edited out the portion of the article referencing another Phoenix data center provider originally covered in the article; it wasn’t germane to this blog post.
Emphasis in red added by me.
Brian Wood, VP of Marketing
Phoenix Providers You Should Know: AIS
Analyst: Michael Levy
Here, we take a close look at a provides that originated outside the region. American Internet Services (AIS) opened a facility in Phoenix because the geography is an ideal complementary disaster-recovery location. They see less local business than the premium providers (IO and Phoenix NAP) and primarily serve clients that already commission services in their other locations.
It is important to note that all providers, whether they are native or not, have acknowledged that Phoenix is an extremely price-competitive market. Although demand is strong, warranting the market’s healthy pipeline of expansions, prices fluctuate wildly. The monthly price for a single cabinet with a 20-amp circuit and bandwidth ranges from $900 to $1,800. Providers in Phoenix often include ancillary managed services to bump up the price. The most expensive single-cabinet deal we came across totaled $2,174; however, providers indicate that most recent deals are hovering around the $900-$1,000 range.
American Internet Services
In addition to its four multi-tenant datacenters in San Diego and point of presence in Los Angeles, AIS operates a datacenter within Digital Realty Trust’s 120 East Van Buren facility in downtown Phoenix. AIS is actively consolidating its Phoenix customers from a 25,000-square-foot suite into two newer, higher-density suites in the same carrier hotel that collectively provide 6,845 square feet of usable capacity. Pod 1 offers nearly 5,000 operational square feet and 510kW of power. Pod 2, which opened in May, offers 1,845 operational square feet of capacity and 281kW of power. All critical power systems in this location are configured to a 2N redundancy. In terms of space, the AIS Phoenix footprint is 63% utilized; however, in terms of power, it is only 14% utilized.
A significant portion of AIS’s customer base in Phoenix consists of existing clients that leverage this facility for disaster recovery purposes and use the company’s diversely routed private optical network between datacenters for secure Layer 2 connectivity. In fact, roughly 75% of the provider’s Phoenix customers are based in San Diego; the remaining 25% are headquartered in Phoenix and other locations. Traditionally, AIS sees serious uptake among the life sciences and technology verticals; however, in Phoenix, it also has traction with online education and service providers that leverage the diversity of carrier providers available in the facility. AIS most frequently lands deployments of four racks and customers range from SMBs to Fortune 100 enterprises. The three largest Phoenix deployments range from 10 to 12 racks.
AIS feels competitive pressure from IO and Phoenix NAP. Additionally, AIS believes it competes with Switch NAP in Las Vegas, which offers datacenter services in a similarly safe desert environment. AIS considers Phoenix to be an extremely price-competitive market in accordance with the industry’s general viewpoint on the market. Although pricing fluctuates wildly, AIS has a very positive outlook on demand and expects to achieve at least 30% Y/Y revenue growth in Phoenix in 2013.
Currently, colocation accounts for approximately 95% of AIS’s revenue generated in Phoenix, which the company projects will have increased by 27% Y/Y in 2012. The remaining 5% can be attributed to hosting and managed services. In late September 2012, AIS deployed its VMware-based Virtual Private Datacenter offering, called AIS BusinessCloud1, which consumes 704 square feet of space in Pod 1. By year-end 2013, AIS anticipates cloud services will account for 10% of revenue generated in Phoenix, colocation will be 75% and hosting and managed services will be boosted by cloud to 15%. AIS’s BusinessCloud1 Virtual Private Datacenter was launched in San Diego in late June; so far, fewer than 10% of its colocation clients have commissioned a hybrid product, but AIS expects that to change very soon in both markets.