 from San Francisco, extracting the signal from the noise. It's theCUBE, covering ConsulConnect Live 2015. Sponsored by Consul, there's your host, John Furrier. Okay, welcome back everyone. We are live in San Francisco for Connect 2015. This is theCUBE's SiliconANGLES flagship program. We go out to the events and extract the symptom noise. I'm John Furrier. My co-host, Jeff Frick, our next guest is Tim Nichols, Vice President of Sales of Raging Water Enterprise Solutions. Welcome to theCUBE. Thank you. So what do you guys do? Let's talk about what you guys do and the data centers and how it all relates to this. Great, well, we're actually, what I would call pure play data center provider. So we provide that fundamental layer. We were just purchased or an 80% equity stake was made by NTT communications. Let me see, it was 14 months ago, actually. And in that case, what we've become is the foundation or the data center foundation for all the NTT companies internationally in the United States. So, typical Colo. We do everything from a retail Colo single rack environment all the way up to multi-megawatt tenants. So what's the big deal with the customer base right now? Because Console Connect is a new way to essentially do something old, old way, which is connect end to end boxes or if you will services. But with the cloud now here, the internet's unreliable. How does that relate to what you guys do? You guys are deploying a footprint for customer housing data center on premise. Private cloud is big. Well, before we, you know, we actually got here, I think in a very interesting manner because we were keeping that very carrier neutral, you know, data center platform positioning and philosophy. And what we found out is that we were actually looking at it from possibly the wrong direction. What we saw was the requirements coming from our customer base. We do have some large customers, a lot of Silicon Valley customers as well, and they were requiring Direct Connect. And the services and the manners of which we provided it previously by just being carrying neutral and allowing them to connect individually with either internet circuits or, you know, direct point to point connections wasn't satisfying their needs moving forward. As soon as that came about, it actually opened up a whole new avenue for us with our clients. And, you know, people say creating hybrids or ecosystems, but from my perspective, I look at it as the ecosystem for the clients. So now not only are we the data center provider, but we can also open those doorways and windows to other services that they need. So is it not providing the service they're looking for because it was too complex or they needed an assist or wasn't enough options? Or what part of it was kind of missing that now you've got something to offer them? From a technical perspective, most of it has already been addressed except for some of the security concerns and denial of service attacks and that thing at a global level. But from a technical perspective, connecting to the locations that they needed to be connected to has been done for years. The problem is it's becoming increasingly complex. The scale that they needed is constantly changing and we all know how difficult it is to order a circuit from a telecommunication provider with lead times and so forth. So what they wanted was something simple, something cost-effective and something secure. So by offering these type of solutions, they address all three problems in one solution. What's the top conversations you have with the customers? Because, you know, we're hearing multiple things like obviously cost is one, hidden cost is the other, DDoS attacks, security, they range, they have the kind of pattern to them. What are you hearing? Scale, I think, is probably one of the biggest things that we hear personally. You know, the best clients for us are clients that are always growing. That growth comes about in a lot of different perspectives being, again, the co-location, that fundamental provider. What we look for is basically selling power. How much more power can we sell you? But what you see is some of the things that are holding us back are those kind of incremental services or incremental products or offerings that you can offer your clients. So scale, how do they increase their capacity in small manners in multiple directions simultaneously? And the security aspects and things of that nature usually aren't direct conversations that they'd have with us because that's not something that, from a co-loc provider, that we're dealing with. Well, for a facility standpoint, it's always footprint scale, right? Like, I'm growing, companies are growing, they find themselves and dollars are significant, so they want to put it in the cloud, for instance, so they don't want on-prem. Yeah, so, from a cloud perspective on-prem, it's moving to, I don't think there's any pure plays anymore. You know, I can take myself back to some of my first co-location deals back in the middle 90s, and the big objective was to try to hold on to a single client, not let them go to multiple data centers. You had to let go of that real early on. And now there's other services that are offered as well. You know, again, the hybrid cloud, using other companies, using Microsoft and Amazon to augment additional services. I mean, one of the things we talk about with the Internet of Things is Moore's Law, and things are getting smaller, faster, cheaper, as they say. And are we going to come back to the telephone closet mentality, where it wasn't just POTS lines playing on telephone service, but actual data centers besides telephone closets? I mean, you can imagine that kind of footprint. I mean, you're seeing that trend where you got the mega center, mega data center, some cloud, and then some kind of new, smaller data centers. I don't think the mega center is going to disappear. And for a while I thought it was. I really thought it was. But what is going to keep the mega centers alive today is just the economies of scale that you get out of some of those facilities. I mean, we have 80 acres in Ashburn, Virginia that we haven't begun developing yet. So that's going to build. 80 acres. 80 acres. So it's suited to support over two million. And the NAP is right there, so you got right on the backbone. So what the benefit is of putting all that facility in one location is really the economies of scale you get out of putting all that services in one location. You get the economy of the substation, you get the economy of your power distribution plant, your cooling systems, and so forth. So I think, as you said, cost of ownership and cost is always a driver. The mega centers are going to help in that. We also just purchased 40 acres outside of Dallas, Texas. So that's going to be a substantial build as well. So we're seeing Facebook, all these big web scale companies certain doing data centers all over the place. Certain incentives obviously to go in certain regions. Is there a footprint territory, geography in the U.S. that's preferred? Is there, or is it more driven by power and, but? You know, we've gone through a, you know, the history of data centers to me is kind of interesting. You saw the East and the West Coast build up around the maze, originally. You know, may East, may West, and then you saw the data centers evolve that were really ISPs, ISPs with a data center service on top of them. So the big value proposition was multiple carriers in a single cabinet or a single location. Then you saw the driver for cost and you saw people kind of drive to those. Now you're seeing a driver toward tax incentives, I would say is the big thing today where you can deploy easily. But the one thing that I think is really important that a lot of time gets jumped over is personnel resources. Everyone likes to build a really cheap data center in the middle of nowhere and they forget they have to staff it. And we all believe in the dark data center but it doesn't yet exist fully. You need people there, you're always going to have to deploy people. So it is locked to certain locations. It's locked to geographies that have good network connectivity, that have good cost of power and that have great personnel that can run these. What are some of the cost side of it? I mean, we hear that price of transit's dropping. Why do you connect with transit's dropping so low? Why? The transit, from a location perspective, it's not as much of the transit cost as it is making sure you build in a location where you can get access to fiber providers. And sometimes it's substantial from a CapEx cost just launching in a location. Even though you're building a large facility, 14, 16, 20, 50 megawatts of critical load, you usually start out with something smaller, two, four, six megawatts, which is going to cost you a few million dollars, but when you have to tack on that extra cost of digging fiber into it, the additional 10, 15 million, it starts to make it difficult to pencil out for those first few years. So finding something as close as you can to those legs, to that fiber that you can tie into is important. From a transit perspective, it's pretty aggressive, pretty price competitive out there. So what's next for you guys? Growing, on-prem, hybrid cloud, what's that mean? For us, it's really continually building that foundation across the United States. Again, as I mentioned, the charter is to become that data center platform for all the NTT communication companies as well as growing our own business. So you'll see us moving into multiple markets across the United States. We're looking at the big markets first, but we're really taking those drivers and directives from our existing client base. And how will the basis of competition continue to evolve? I think that was a good kind of interesting thing, how it has evolved. We always hear about power, power, power. You always hear about latency. You hear about the mega data centers as much for latency and data transfer as more and more of this stuff has shifted up there and you got the old classic TLD move that compute to the data, the data that compute. Internet of Things is coming. We're going to have just massive influx of additional data flows. So how does your guys kind of competitive situation continue to evolve? You know, great question. And you know, only time will tell, but personally I think the biggest obstacle in the data center industry itself is capital. And if you have access to good cheap capital, you'll do well. If you see companies that are extending themselves for capital, they're not going to be price competitive. It's all about growth. You said Internet of Things. I mean, you saw what's happened to data centers ever since the mobile phone has really become a portable app. Now with my air conditioning system and my dishwasher being hooked up, it's just more and more devices. Well, more data, but also real time. Latency and jitter are huge issues now. I mean, they were huge issues before. But now. In voiceover IP, okay, yeah, a little drop call, but now you got real time. Self driving car can't be almost real time. Yeah, and the expectations from the customers is becoming more and more that way. They want to click a button and do something immediately. It's not about waiting for it. Tim, final question. What about this show for the folks that are watching that didn't attend here? I was just a pretty nuanced show, but really important infrastructure, critical infrastructure. What is this show all about? Console Connect Live 2015. What is it all about? I think it's an old story, but it's never been one that's really grown. And I think what this is showing now is all of these things that are needed to really stimulate the growth and across the technology industry rely on networking. That's all it is. And we've hit the ceiling from that public internet today and we have to have other solutions. And this is really going to be a driving force to helping for us and I think for everyone. So more headroom for opportunity. It moves the ceiling up for us. And I think that's going to be a great thing for everybody. It's kind of like standing up straight, kind of like cavemen, kind of at some point, walking a wreck and evolving species of networking. So we're right at the monkey right now. We're just trying to stand up. Moving out of the Neanderthal phase of networking. I mean, networking is always the bottleneck and we always hear that 100% of the time. Yep. And it changes from what direction it is, whether it's up or down and so forth. But we're, you know, right now, I think the biggest challenge is reliability of connectivity. You know, it's just, it's a must. Awesome. Tim Nichols, thanks for coming inside the Cube, sharing insight here at Console Connect. We appreciate it. Live in San Francisco, we'll be back more live after the short break. Thank you.