Why IT Co-location Centers Will See a Boom in 2009 Despite the Macroeconomy

By Chris Preimesberger  |  Posted 2008-12-29 Print this article Print

In the midst of a painful recession, i/o Data Centers, which houses about 150 SMB IT systems, secures $56 million in venture capital and becomes a poster child for a burgeoning market. Analysts expect co-location to be a hot sector in 2009.

It wasn't what anyone would consider a major IT news story when it broke earlier in December, but it was an important clue to how the IT co-location business can be expected to play out in 2009 and beyond.

i/o Data Centers, which serves as the physical home for about 150 small- and midsize-business IT systems, announced on Dec. 10 that it has secured a whopping $56 million in  venture capital from Sterling Partners.

In this slumping macroeconomy, that's a bonanza not unlike scoring the tie-breaking goal in the last minute of a World Cup championship.

i/o Data Centers' servers and routers have quickly filled to capacity its first facility: a 125,000-square-foot, next-generation secure building that the company opened two years ago in Scottsdale, Ariz. With its fresh new capital and a psychological head of steam, i/o Data Centers is now planning to open two more data centers: one in Phoenix and another in Northern California, Colorado or New Jersey. And it's certainly not the only company taking advantage of this huge market.

IT co-location is the provision of space, bandwidth, and power in a data center, with the customer being required to provide and manage the computing hardware. Data centers that provide this service are called co-location centers; most are independently owned and operated.

In general, most analysts and industry insiders believe that the co-location and Web hosting businesses will thrive in 2009, despite the weakening macroeconomy. This is because as companies look to economize in their IT budgets, they are beginning to look more closely at hosted services as a way to avoid capital expenditures that include new servers, switches, software, and affiliated licenses and services.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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