NaviSite Launches Second Silicon Valley Data Center

Time Warner Cable-owned cloud and managed service provider NaviSite has brought online a new data center site within a Digital Realty facility in Santa Clara, California.

It has had a data center in nearby San Jose for more than 10 years. The company now has nine data centers in the U.S. and U.K.

NaviSite is focused on growing its enterprise hosting business, and the Santa Clara expansion is part of that effort. It leverages the robust network backbone operated by its parent company as differentiation for its services.

This is a third data center NaviSite has leased from Digital. The two companies have also formed a sales alliance, meaning NaviSite will have access to other tenants in the data center provider’s facility. Digital has been making more and more of these sorts of alliances, realizing it could no longer sustain growth by focusing strictly on providing its traditional bare-bones wholesale data center services.

NaviSite has taken 3.5 megawatts of capacity with Digital in the supply-constrained Silicon Valley data center market. Commercial real estate analysts say there is currently a lot more demand for data center space in the region than there is supply, prompting wholesale providers, such as CoreSite and Vantage, to race to build out additional capacity. Digital is going through a portfolio-optimization phase, focused on getting rid of non-core properties rather than building more.

NaviSite used to provide colocation services but shifted focus about five years ago, getting out of the colo business and doubling down on managed services, including cloud and enterprise hosting.

In 2011, it was acquired by Time Warner for $230 million in an episode that was characteristic of the time. That same year, Verizon acquired Terremark, and CenturyLink acquired Savvis. Telcos were buying data center and cloud service providers to diversify their revenue streams and to compensate for shrinkage in traditional telco services. Such acquisitions still take place from time to time but not as often. The last high-profile example was the acquisition of data center provider ViaWest by Canada’s Shaw Communications in 2014.