By Melanie Turek, Senior Vice President, Nemertes Research Inc.

May 19, 2006

News that Equinix Inc. (Nasdaq: EQIX), is opening new data centers in the Chicago and Los Angeles areas, building a new data center in the Chicago area, and expanding in the New York area, supports a growing trend: IT executives are struggling to support their own data center needs thanks to increased power and cooling demands, and are often faced with the need to build entirely new, costly centers as a result. Equinix plans to invest about $165 million to build out the first phase of the new Chicago center—an indication of just how much money can be involved in creating a modern-day data center, and of the growing appeal of co-location.

When we asked participants in Nemertes’ latest benchmark, “The New Data Center,” to list their top data center challenges, they highlighted power capacity (64%), server and storage growth (57%), and cooling (57%). All three relate to growth, and the corresponding capacity constraints that challenge IT executives. Facing a strategic choice between “sprawl” (the “white box” model in which companies deploy more and more commodity servers) and “dense” (in which companies deploy dense blade servers or dense 1U servers), most companies are choosing “dense.”

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