Equinix's EMEA channel boss on why it will never follow in Rackspace's footsteps
Equinix claims it "cannot" follow in the footsteps of Rackspace in transforming itself into a fully-fledged managed service provider.
The US-based datacentre player is eyeing up opportunities to grow its services on offer to customers and channel partners but rejected the notion that it would move away from being a hosting provider.
Its EMEA channel boss Oren Yehudai told CRN's sister publication Channel Partner Insight that this is simply a move Equinix could not make.
"We just cannot. It's not about if we want to or not, we just can't go in that direction," he said.
This is mainly because Equinix, as a firm which owns a lot of "real estate" in the form of datacentres, is publicly listed as a real estate investment trust (REIT). As such, it is required to deliver at least 75 per cent of its gross income from property rentals or sales from real estate.
But Yehudai also said Equinix's channel business has become invaluable and is cautious that growing its services business in the wrong way could sever its partner relationships.
Equinix's total revenues were $5.07bn (£4.11bn) in 2018, of which just $280m came from managed infrastructure services.
"That's one of the internal discussions that we are having, and I think it's a sign that we're maturing as a channel organisation," he said.
"I always see vendor services as a two-edged sword; it can be a huge value to the partner ecosystem, and it can be a threat. So what I don't want to do is offer a service to our direct customers, where I'm taking money away from a partner."
In Equinix's recent Q2 results, the channel accounted for 25 per cent of net new bookings, claims Yehudai, and 60 per cent of total new customers acquired during the quarter.
The firm said last year that its channel business will account for 30 per cent of total revenues by 2021, up from around 20 per cent currently.
It has bulked up its channel sales teams across the UK, the Netherlands, France and Germany and put new channel-facing roles in Switzerland, Italy, Spain, Poland and Dubai.
The EMEA boss said there is no threat of Equinix following in the footsteps of hosting provider-turned-MSP Rackspace.
Rackspace was once an established hosting provider but has changed its business model to services as a consequence of public cloud providers such as AWS, Microsoft and Google pouring investment into space.
Now Rackspace partners with public cloud providers to deliver managed services, becoming a perceived threat to the partners it once served.
"When Rackspace did that, it could be that it was a deliberate choice, or it could be that it's one of those things where you start with something and then because you lose the confidence of the ecosystem, then you have to fill that gap," said Yehudai.
"I discussed this with the partners - you don't have the threat that we will try to vertically integrate and all of a sudden become a managed service provider because we will lose our status."
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