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  1. #1
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    Digital Realty buying Telx

    Im surprised no thread has been opened about this yet.

    Does anyone have an opinion on this?

    I remember that Digital Realty cruelly evicted hundreds of cloud and ISP companies back in 2008-2009 and treated them badly, killing some big businesses in the process. Now it seems they reversed their position and want to get back the same type of customers they once evicted.

    See this thread for details:
    http://www.webhostingtalk.com/showthread.php?t=716848

    So one can only wonder if the same will happen at Telx where small providers will receive a termination letter only to be replaced by very large SaaS and IaaS cash cows.

    I cant see this ending well. DRT is a real estate company not a tech company. The cultures and mentality are completely different. They have a small handful of very large customers. There is little to no experience running a real colo business such as multitenant retail colo data centers with thousands of customers and all the operational details. Contracting vendors out to construct turnkey data centers (which they might do very well) is not the same as running a full service colocation business. They do not have the back office technology or staff or billing to support this. There are many on this board who already are not very pleased with Telx already so this would seem to make matters worse. Buying a book of business usually dooms many companies to failure. I cant see this bode well for Telx customers. Does anyone have any thoughts on this?
    Johnathan Tran
    NationwideBandwidth.com
    The Web's First Telecom Broker since 1999
    Email: sales (at) nationwidebandwidth.com | Skype: NationwideBW

  2. #2
    I feel bad for the customers that got kicked.. I hope they gave them sufficient time to migrate their servers before shutting them down. Sounds like a similar horror story that occurred to me, albeit with different circumstances.
    Frank Barcenas
    Hospemex.com
    Specialty hosting and services for Mexico and the general LATAM market. And a general gun-for-hire.

  3. #3
    Some mergers have been good and others have been awful. I guess we will have to wait and see.....
    http://www.QuoteColo.com - Colocation, Miner Hosting, Dedicated and Cloud Hosting Quotes

  4. #4
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    Oct 2009
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    I wouldn't go as far as calling DRT a real estate firm as they deliver turn-key colo space but I think this acquisition is a logical step to compete with equinix. We are a customer and I don't fear the acquisition one bit, I think it opens up new possibilities for clients

  5. #5
    Quote Originally Posted by DedicatedXL View Post
    I wouldn't go as far as calling DRT a real estate firm as they deliver turn-key colo space but I think this acquisition is a logical step to compete with equinix. We are a customer and I don't fear the acquisition one bit, I think it opens up new possibilities for clients
    Equinix is also a large DRT tenant in some facilies (IE 350 E Cermak). I wonder how this acquisition will affect Equinix's view on remaining a DRT customer while at the same time DRT has just entered into their same marketspace.

  6. #6
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    Quote Originally Posted by colomondo View Post
    Equinix is also a large DRT tenant in some facilies (IE 350 E Cermak). I wonder how this acquisition will affect Equinix's view on remaining a DRT customer while at the same time DRT has just entered into their same marketspace.
    Well I am sure Equinix won't like it at all, but location is key in this business.
    Equinix can't just move a facility to another building and secondly; DRT has locations that are at strategic locations in terms of connectivity etc.

    Equinix won't be thrilled I am sure but can't do much about it and I am sure DRT wouldn't want to loose Equinix as a customer either. So I wouldn't expect any changes.

    Besides, Equinix recently acquired Telecity (40 datacenters) which opens up a huge market in Europe for them. That deal stopped a merger between Telecity and Interxion that was set in motion just months before so who knows, maybe Equinix pulls a similar stunt here ;-)

  7. #7
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    It's a necessary strategic move to stay in the game. In addition to Equinix, two DR rivals QTS and Cyrusone have both recently acquired companies.

  8. #8
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    Quote Originally Posted by DedicatedXL View Post
    I wouldn't go as far as calling DRT a real estate firm as they deliver turn-key colo space but I think this acquisition is a logical step to compete with equinix. We are a customer and I don't fear the acquisition one bit, I think it opens up new possibilities for clients
    I know what you mean, but I can tell you that DRT considers themselves a REIT. They think like a REIT. We have managed some of the largest REITs and real estate companies in New York City, and you must understand the real estate mentality. Many REITs really could care less about technology, its just not what they do, and they see tech as just another investment. Many of these trusts are not involved or knowledgeable about the tech industry at all. They are at least ten years behind. Take NYC for example, most developers here have been trying to figure out in recent times how they almost missed out on the tech market explosion in NYC and are desperately trying to play catch up. Where were they in 2010? There are exceptions of course... for example Jamestown is a great company, they understand tech and have vision. You are seeing a lot of investments into real estate apps and technology now... it is silly. That's why a lot of them come to us for advice.

    Another important thing to remember is that jumping on board to stay competitive, is not the same as execution. We all know that ideas and execution are two very different things, with the latter being 1000 times harder than the former. I dont think DRT will execute very well on this, and even if they do, the question still remains would you trust a company that has a history of putting their good paying hundreds of tenants out onto the street with no prior notice?
    Johnathan Tran
    NationwideBandwidth.com
    The Web's First Telecom Broker since 1999
    Email: sales (at) nationwidebandwidth.com | Skype: NationwideBW

  9. #9
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    Quote Originally Posted by mr fixit View Post
    I know what you mean, but I can tell you that DRT considers themselves a REIT. They think like a REIT. We have managed some of the largest REITs and real estate companies in New York City, and you must understand the real estate mentality. Many REITs really could care less about technology, its just not what they do, and they see tech as just another investment. Many of these trusts are not involved or knowledgeable about the tech industry at all. They are at least ten years behind. Take NYC for example, most developers here have been trying to figure out in recent times how they almost missed out on the tech market explosion in NYC and are desperately trying to play catch up. Where were they in 2010? There are exceptions of course... for example Jamestown is a great company, they understand tech and have vision. You are seeing a lot of investments into real estate apps and technology now... it is silly. That's why a lot of them come to us for advice.

    Another important thing to remember is that jumping on board to stay competitive, is not the same as execution. We all know that ideas and execution are two very different things, with the latter being 1000 times harder than the former. I dont think DRT will execute very well on this, and even if they do, the question still remains would you trust a company that has a history of putting their good paying hundreds of tenants out onto the street with no prior notice?

    While I agree with your assessment of the problem with no prior notice, note now that they have had a couple refreshes of executive leadership, and it would be hard to see how that could happen now a days. (hopefully)

  10. #10
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    May 2015
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    A REIT does not necessarily mean poor service. Many data center operators are becoming REITs due to the tax advantages. Equinix just converted to a REIT, also QTS, CyrusOne, CoreSite, etc are REITs.

    That said, since datacenters are a effectively landlords, they sometimes take on a "real estate" mentality. Equinix has been known to churn out customers to make way for other more interconnection dense deployments. An effective way to combat this is to have a good relationship with your provider.

    Lastly, as dougisontilt points out Digital Reality has new management. Digital Reality has signaled that they are going to focus on Retail (as well as their Wholesale operations.)

    cheers,

    -ebell

  11. #11
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    Very true, but my post was trying to drive home that there is a difference between a REIT who is "filed as a REIT for tax benefits" and a REIT that "is a REIT and thinks like a REIT". Tremendous culture difference. DRT is a REIT that thinks and behaves like a REIT, not a technology company. Some of the top management hasn't changed, they are the same people who have been there since 2004-2005, and the culture really hasn't changed at all. All very worrying factors. Focusing on Retail means what? Selling to large SaaS and IaaS and then booting everyone else? There is a lot of elasticity in that definition.

    Quote Originally Posted by ebell View Post
    A REIT does not necessarily mean poor service. Many data center operators are becoming REITs due to the tax advantages. Equinix just converted to a REIT, also QTS, CyrusOne, CoreSite, etc are REITs.

    That said, since datacenters are a effectively landlords, they sometimes take on a "real estate" mentality. Equinix has been known to churn out customers to make way for other more interconnection dense deployments. An effective way to combat this is to have a good relationship with your provider.

    Lastly, as dougisontilt points out Digital Reality has new management. Digital Reality has signaled that they are going to focus on Retail (as well as their Wholesale operations.)

    cheers,

    -ebell
    Johnathan Tran
    NationwideBandwidth.com
    The Web's First Telecom Broker since 1999
    Email: sales (at) nationwidebandwidth.com | Skype: NationwideBW

  12. #12
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    Quote Originally Posted by mr fixit View Post
    Some of the top management hasn't changed, they are the same people who have been there since 2004-2005, and the culture really hasn't changed at all. All very worrying factors. Focusing on Retail means what? Selling to large SaaS and IaaS and then booting everyone else? There is a lot of elasticity in that definition.
    New Management: Digital Realty has a new COO. His was previously an exec at Equinix and CoreSite. The COO has previously initiated Interconnection efforts including the Ethernet Exchanges at both companies. His fingerprints are all over the Telx acquisition. It's gotta count for something (whether good or bad.)

    Retail definition: Deployments less than 250 kW.

  13. #13
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    This sums it up perfectly

    http://www.glassdoor.com/Reviews/Dig...ews-E36929.htm

    "The management has no direction and expects that business will magically appear. The company has a very arrogant attitude towards its clients and employees."
    "As another person pointed out the culture of the company revolves around attempts at bullying and intimidation by management. "
    "They're still running the place as if it were a real estate company while telling clients that it is a technology company. Clients can tell the difference and it will soon catch up with you."

    This is from their own employees... crazy.
    Johnathan Tran
    NationwideBandwidth.com
    The Web's First Telecom Broker since 1999
    Email: sales (at) nationwidebandwidth.com | Skype: NationwideBW

  14. #14
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    I've heard Digital is a difficult place to work. A bit of a grinder.

    I'm trying offer perspective on why DRT bought Telx and their broadening of their target market. It makes sense given the management changes.

    That said, I'm not confident that this will work out for DRT. Telx's margins have been pushed to the limit with high pricing for XCs. It will be interesting to see how DRT reconciles this with their historical OpenIX support.

  15. #15
    It will be very interesting to see how this turns out in the future we noticed issues when Zayo bought out CoreXchange

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