Data Center Journal

VOLUME 53 | DECEMBER 2017

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10 | THE DATA CENTER JOURNAL www.datacenterjournal.com very little impact, positive or negative, to their bottom lines. We haven't seen many mergers or acquisitions. New startups and companies going out of business have been equally rare. at's all about to change. Next year I expect we'll see big shake-ups in this space. Although vendors may see an uptick in sales from their "now even larger" estab- lished accounts, they'll be facing the cold reality of lower margins. As the dust settles and companies consolidate and integrate, their purchasing power rises. ey'll start to demand bigger discounts on their larger orders. e largest resellers can keep vast quantities of product in stock, allowing for Amazon-like response and delivery. And with high-volume orders comes better manufacturer rebates. ose rebates will allow the largest vendors/ resellers to cut prices but remain profitable. Medium-size and small vendors will feel the pinch first and the hardest, particularly the niche mom-and-pop resellers. And in this instance, selling in and to edge markets won't be an advantage. Although I hope I'm wrong, I expect to see lots of distressed assets being snapped up at fire-sale prices. But it's not all doom and gloom for data center solution providers in 2018. In fact, there's great potential for smaller operations to thrive and even grow. inTangiBle BenefiTs e biggest advantage the large resellers have is also their biggest weakness. With volume comes a big- box mentality. A comparable analogy is the "buy local" campaign many communities promote. When you buy locally (clothes, food, furniture, etc.) price isn't the motivator. You're buying because of the customer service and the total shopping experience. You place value on the knowledge that retailer has about not only you but also the product. at same philosophy can and should apply to the data center indus- try. Vendors that have unique technical expertise can be incredibly successful in 2018. Vendors should do more than simply sell blanking panels and floor grommets, for example; they should have the ability to assess a data center's environment, then offer solutions or a plan to improve airflow on all levels. Data Centers can buy products from anyone, but they buy from you because you're solving problems. ey may also stay loyal to you if you're by their side from the start. With all this new construction comes the need for a resource that has a deep un- derstanding of data center architecture, not just operations or management. As I mentioned above, knowledge is a powerful commodity. Although quan- tifying its value is hard, its importance is undeniable. Being an integral part of the design and ground-floor build process is a good indicator of assured future business. Again, vendors that have this type of in-house expertise will have an advantage, but only if they rebrand and sell themselves as service and solution providers. For vendors that lack the intan- gible benefits gained by technical ex- perience and thought leadership, 2018 can be the year to get some. Although now isn't the best time for new market entrants in either the data center or vendor space, plenty of financial players and investors want in on this booming industry. As I mentioned ear- lier, money is cheap and isn't expected to become much more expensive any- time soon. Provided your organization has a strong management team in place and can tout strong and extensive data center relationships, third-party invest- ment is a real possibility for growth. ToMorrow's weaTher forecasT To sum up next year's forecast for the data center industry—for both providers and their vendors—I'll use an analogy that's quite popular in my home state of Texas: If you don't like the weather, just wait a minute. Pro- vider M&As might be cooling off, but construction is just starting to heat up. And on the vendor side, we'll see near- ly the exact opposite with few or no brand-new entrants but lots of merged, acquired and rebranded companies. By the end of 2018, I expect clear win- ners and losers to emerge, and being the biggest won't always translate into being the best. ose companies that can adapt and be flexible, regardless of size, have a great shot at "changing the weather" and being successful. n about the author: Mike McClain is the President and CEO of Critical Environments Group, a leading provider of data center and critical environment infrastructure optimization solutions. CEG is the standalone organization that was created after DCiM Solutions acquired IIS Group in 2016. Vendors that have unique technical expertise can be incredibly successful in 2018. Vendors should do more than simply sell blanking panels and floor grommets, for example; they should have the ability to assess a data center's environment, then offer solutions or a plan to improve airflow on all levels.

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