In a major push into edge computing, colocation market leader Equinix will buy Packet, a startup specializing in distributed cloud services. The acquisition will allow Equinix to accelerate the deployment of interconnected edge services, as well as extend into “bare metal” cloud services.
The deal is one of the first major acquisitions in edge computing, which seeks to process data and services as close to the end user as possible. The trend is driven by the increased use of consumer mobile devices, especially consumption of video and virtual reality content and the growth of sensors as part of the Internet of Things (IoT).
Equinix has built a global data center empire, with 200 data centers and 21 million square feet of space deployed across 52 markets. Equinix has always focused on the core of the Internet, building clusters of data centers around major network intersections like Northern Virginia, Silicon Valley, Chicago and Dallas.
Packet is a six-year old startup that delivers automated infrastructure for developers. Its canvas is bare metal cloud – dedicated servers that can be provisioned with cloud-like ease and speed.
Affirming the Business Value of the Edge
Significantly, Packet has been one of the early leaders in edge computing for business, including deploying an IoT network for Sprint. Packet has outlined a vision to deploy its infrastructure across thousands of sites, and has deployed servers at cell towers in micro-data centers operated by Vapor IO and SBA Communications. It currently has 20 data centers and 18,000 customers.
Equinix clearly sees value in Packet’s footprint and capabilities.
“By acquiring Packet we are making it easier for enterprises to seamlessly deploy multicloud solutions at Equinix and extract greater value from our rich ecosystems and global interconnection platform,” said Sara Baack, Chief Product Officer at Equinix. “Packet’s innovative and agile bare metal service, and neutral approach to software stacks, fit our own cloud-neutral model and match our strategy for helping enterprises flexibly deploy digital infrastructure, within minutes, at global scale.
“Our combined strengths will further empower companies to be everywhere they need to be, to interconnect everyone and integrate everything that matters to their business,” said Baack.
Zachary Smith, the CEO of Packet.
“We started Packet in 2014 with a vision to redefine the next wave of cloud with a focus on the distribution and automation of fundamental infrastructure,” said Zachary Smith, CEO of Packet. “This dovetails perfectly with Equinix’s strategy for helping enterprises implement new digital architectures in a growing number of edge locations. The incorporation of Packet into Equinix will accelerate the delivery of enhanced edge services to Equinix’s growing customer base, while continuing to serve the developer community that has come to rely on Packet’s unique offering.”
Terms of the deal were not disclosed in today’s announcement, with Equinix saying it expects to disclose additional details of the deal upon completion of the acquisition, which is schedule in the first quarter of 2020.
Packet has raised $36 million in three funding rounds, with investors including Softbank, Dell Technologies, Samsung, Battery Ventures and Third Point Ventures. Although it has a large customer base, the majority of its revenue comes from its top 100 customers, which are primarily enterprises.
Adding Developer-Friendly Products
With the combined Equinix and Packet solution, enterprises and service providers will be able to build and deploy low-latency services at the edge either through their choice of owned physical deployments, or by utilizing the combined offering, which leverages as-a-service consumption to reduce CAPEX and resource requirements.
Packet’s developer-friendly product, expert talent pool, vibrant ecosystem of management-layer software providers and customer base using the product for live workloads today, will also add important new skills and assets to Equinix’s own product development and management capabilities.
“Enterprises are evolving to become digital businesses, and edge computing will be a necessary enabler,” said Gartner. “Digital business is about the creation of new business designs by blurring the digital and physical worlds, creating new business moments and value through dynamic and transient interactions between people, businesses and things. Cloud computing has enabled scale, innovation, connection and agility at the back end, but edge computing will complement cloud computing by providing more real-time value, more immersive interactions, more data production and more intelligence at the front end — closer to where people and things exist.”
A major edge acquisition early in 2020 shouldn’t be a surprise to Data Center Frontier readers. We projected in our 2020 forecast that edge computing “will drive an active M&A landscape” in 2020.
