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Cloud to send colocation into the sunset

By Max Burkhalter
October 14, 2014

Colocation centers rose to prominence over the last decade as the companies sought a cheap, safe alternative to managing their own racks of servers. Paying for infrastructure at a colocation center also eliminated the need to pay for real estate, and these factors drove the industry to becoming a multi-billion dollar market. However, greater refinement and adoption of cloud storage has effectively spelt the end for the multi-tenant data center market. Investors can avoid future pitfalls by taking close look at the future of colocation.

Cloud as commodity
The cloud has functionally commoditized a long list of the IT services that were once provided at a cost by data centers, according to Data Center Knowledge. This shift occurred as Infrastructure-as-a-Service giants like Microsoft Azure eliminated the need for unique hardware. This technological flexibility allows companies like Google and Amazon to build enormous data centers in low-cost environments and use inexpensive cloud services to undercut longstanding colocation centers. In addition, in-house IT teams are now able to utilize the cloud to develop much more cost-effective in-house data centers. Inexpensive technology like serial to Ethernet devices make building robust private data facilities a cinch. Unfortunately for colocation centers, these developments are likely to render the industry obsolete.

No colo is safe
The CEO of Romonet, Zahl Limbuwala, penned an open letter to colocation investors last week, says Data Center Dynamics. His blog post noted that each and every data center niche is at risk of being made irrelevant by the surging dominance of the cloud. Limbuwala predicts that colocation customers will soon begin to leave these services in droves as far cheaper, cloud-driven alternatives appear on the market. Ramonet calls for colocation centers to start generating new revenue streams in order to outlast the coming shifts in customer demands. The letter also warns that there is little hope for colocation centers to last on as short-term transition facilities. A company's entire file system can be virtualized and transported from one location to the next with ease, removing the need for a go-between. Romonet's report is not so bleak to suggest that those with stake in the colocation business sell their holdings immediately. However, buyers should be wary of their investment as a center's big hosting contracts begin to expire.

Perle's serial to Ethernet converters make it simple to connect serial based equipment across an Ethernet network and creating a smaller data center in-house. The Perle IOLAN range of Console Servers, Device Servers and Terminal Servers feature built-in support for IPv6 along with a broad range of authentication methods and encryption technologies that are ideal for your company.


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