Equinix Breaks Ground on Eighth Silicon Valley Data Center

Equinix has kicked off construction of its eighth Silicon Valley data center, expecting to bring online new capacity next year in one of the hottest data center markets. The building, SV10, will be constructed at the company’s data center campus on Great Oaks Boulevard in San Jose.

The company is in the middle of a global expansion push, building new data centers and expanding existing ones in the US, Brazil, Hong Kong, Japan, Australia, and in multiple European countries. It acquired the property on Great Oaks last year.

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Silicon Valley is currently one of the tightest data center markets in terms of available supply. Karl Strohmeyer, Equinix president for the Americas, agreed: “It’s why we’re investing so much in new data centers (in Silicon Valley).”

He expects the first phase of SV10 to come online in the middle of next year. The building will eventually support 14.4MW, but the first phase will provide room for about 800 IT cabinets. Equinix will build it out in three phases, Strohmeyer said.

The company is not out of available inventory in Silicon Valley, as it recently launched the final phase of the SV5 data center on the Great Oaks campus. “We have capacity, so it’s not like we’re in a dark situation,” he said.

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Equinix doesn’t run out of capacity as quickly as wholesale data center providers, who today are having trouble keeping up with demand for large chunks of space in key markets like Silicon Valley, coming primarily from the biggest cloud service providers.

Karl Strohmeyer, president for the Americas, Equinix (Photo: Yevgeniy Sverdlik)

Equinix is a retail-colocation player with a lot of emphasis on network interconnection. As such, the company is very selective about the type of customers and deployments it pursues.

It covets customers that need access to the ecosystem of network and cloud providers present in its data centers, such as Google Cloud Platform, Amazon Web Services, or Microsoft Azure. “They use us to get access to all the counterparties they want to interconnect to,” Strohmeyer said.

It also prefers that those customers don’t require a large footprint at any one facility. “I’m not going after their compute. That undifferentiated colo we can leave to the wholesalers out there. I want that interconnection dynamic.”

Equinix has turned down many customers because they didn’t fit its criteria, he said. “We’re very selective.”

Every customer whose business model values the interconnection ecosystem is valuable to other customers that make up that ecosystem. There are about 200 customers in one of the buildings on the Great Oaks campus. If one new interconnection-focused customer comes in, the facility’s value increases for all 200 of those existing customers, Strohmeyer explained.

“Over time the yield on the deployment goes up, because the number of interconnections per cabinet goes up,” he said.

A city government official and a group of high-level infrastructure staff from several major technology companies, including Google, Oracle, Autodesk, and Netflix (all Equinix customers), attended a groundbreaking event at Equinix’s Great Oaks campus Wednesday.

While Netflix has moved its core infrastructure from its own data centers to the public cloud operated by Amazon Web Services, the caching infrastructure that makes up the video streaming company’s content delivery network continues to occupy colocation data centers around the world operated by multiple providers, including Equinix.

Equinix, the world’s biggest data center provider, has spent $13 billion on building data centers since it founded in 1998, CEO Stephen Smith said while speaking at the event. Today, the company has about 8,000 customers, according to him.

San Jose vice mayor, Rose Herrera, also spoke at the event. The data center industry is very important to the city government, primarly because of the significant tax revenue it generates for the municipal coffers, she said.

“To me, [Equinix] is number one,” Herrera said. They certainly are the hub of hubs.”