from the all-the-better-to-analyze-future-acquisitions dept.
Private equity firms are gobbling up data centers:
Merger and acquisition activity surrounding data-center facilities is starting to resemble the Oklahoma Land Rush, and private-equity firms are taking most of the action.
New research from Synergy Research Group saw more than 100 deals in 2019, a 50% growth over 2018, and private-equity companies accounted for 80% of them.
[...]The question becomes is this necessarily a good thing? Private equity firms have something of a well-earned bad reputation for buying up companies, sucking all the profit out of them and discarding the empty husk.
But John Dinsdale, chief analyst for Synergy, said not to worry, that the private equity firms grabbing data centers are looking to grow them. “This is a heavily infrastructure-oriented business where what you can take out is pretty directly related to what you put in. A lot of these equity investors are looking to build something rather than quickly flipping the assets,” he said via e-mail.
He added “In these types of business there isn’t that much manpower, HQ or overhead there to be stripped out.” Which is true. Data centers are pretty low-staffed. It was a national news item several years ago that Apple’s $1 billion data center in rural North Carolina would only create 50 jobs. That’s true for most data centers.
So larger data centers are, apparently, good, but how does that affect the competition landscape with fewer players?
(Score: 4, Informative) by Ethanol-fueled on Wednesday February 05 2020, @01:18AM (9 children)
Ahh, there's that word again, the word I have heard used when my employers were bought out by private equity firms. That word is "grow."
That's growing the profit margins, not physical or personnel assets. Which means that it's gonna be unpleasant for those who work in the data center. The summary mentioned that even big data centers run with only 50 people, so half will be laid off and any slack will be picked up by existing remote administration. Tech support will suffer and turnover in all departments will be a regular thing. There will be some kind of intrusive throttling in place, and new tiers of service will be introduced to further the price/performance divide. The boardmembers and shareholders will see handsome bonuses and dividends, and the customers and employees will eventually leave to another provider which will also eventually be bought out in the same way.
This is an easy way to gut an organization and get rid of all those expensive people you can't fire or lay off without being sued, and replace its workers with local cheap labor and stinky foreigners.
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @01:24AM (5 children)
They could likely sack a ton of people if they stopped doing that mainanince crap, everything is redundant anyway right... they just need to flip it before too many systems have become non redundant
(Score: 1) by Ethanol-fueled on Wednesday February 05 2020, @01:58AM (4 children)
If by "maintenance" you mean fire an experienced tech and promote the Mexican janitorial maintenance guy who barely knows English to "technician," without giving him technician pay, then yeah, that's the kind of "maintenance" you're gonna get when a private equity firm buys out your data center.
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @05:49AM
I've worked in the print industry a long time. It has been shrinking with companies going belly-up for decades. Every time a company starts cutting back on maintenance of the machines it is time to start looking for a new job. It is a very easy short term saving, and won't bite them in the ass for six months or so. By then they are bankrupt anyway.
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @09:17AM (2 children)
He mopped and opened the servers? Were you going for something specific there or where they the only words you knew that were relatively close? Also, how does one mop a server?
(Score: 2) by c0lo on Wednesday February 05 2020, @10:00AM (1 child)
With a mop, of course.
Otherwise, you can just use a sponge. Here's a tutorial for laptops, but it's not that different for servers https://m.youtube.com/watch?v=IhEDh3qptAI [youtube.com]
(large grin)
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @08:04PM
That's somewhat hilarious. A friend of mine had that exact same HP model (or it looked an awful lot like that) that his 3-year-old washed for him after hearing him say he wanted to "clean" his laptop later. The hard drive was ok, but can't say the same for the rest of it since she did it while it was on and plugged in.
(Score: 5, Insightful) by PartTimeZombie on Wednesday February 05 2020, @01:31AM (1 child)
A pretty good comment spoiled by the last three words.
(Score: 2, Interesting) by Anonymous Coward on Wednesday February 05 2020, @08:09PM
Conservatives: The free market without regulation is best.
Major companies: Lets offshore and hire cheaper foreign labor.
Conservatives: No, not like that.
(Score: 2) by Snotnose on Wednesday February 05 2020, @02:26AM
Wish I could mod you up more.
Back in the 80's, when I was in my 20's, my company was growing like gangbusters due to 2 main things: Microprocessors and Reagan's defense spending.
One quarter we only grew by something like 20%, when The Powers That Be thought it should be 25%. Big layoff. Gave one wet behind the ears kid a nice fluffy towel.
When the dust settled America realized it was saved by a porn star.
(Score: 2) by legont on Wednesday February 05 2020, @01:27AM (3 children)
My employer - a big bank - does have serious data center shortage for at least a year already. My bet is cloud providers and data center investors will suck many businesses dry.
"Wealth is the relentless enemy of understanding" - John Kenneth Galbraith.
(Score: 3, Insightful) by PartTimeZombie on Wednesday February 05 2020, @01:33AM
That might be the key. Pouring money into an industry to consolidate it into a cartel, or even better a monopoly, is a pretty good business model.
(Score: 3, Interesting) by MostCynical on Wednesday February 05 2020, @03:12AM (1 child)
How long before major data users (banks, etc) start buying their own data centres?
"I guess once you start doubting, there's no end to it." -Batou, Ghost in the Shell: Stand Alone Complex
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @07:49PM
Uhh, they don't.
They do not have the expertise to run the DC, they would have to hire people who actually know how to manage the whole DC operation with it's personnel.
What they do is to hire managed service providers to run the stuff for them and are increasingly migrating all workloads they can to the big hyperscalers (AWS, Azure, Google etc.) and those workloads are still managed by the MS providers. The (traditional) banks (businesses) don't want to have their own IT personnel for the infrastructure since it is not their core business and is not seen as cost efficient.
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @01:57AM (2 children)
If that is true, maybe the PE firms are looking at monetizing in a different way.
(Score: 2, Insightful) by fustakrakich on Wednesday February 05 2020, @02:09AM (1 child)
Data is the new Oil
This is true. Theses data centers are very leaky.
La politica e i criminali sono la stessa cosa..
(Score: 1) by fustakrakich on Wednesday February 05 2020, @02:12AM
Sorry 'bout that. I was watching Phantom Menace
La politica e i criminali sono la stessa cosa..
(Score: 0, Funny) by Anonymous Coward on Wednesday February 05 2020, @02:43AM
Very scary to watch
We are doomed DOOMED!
(Score: 5, Insightful) by Anonymous Coward on Wednesday February 05 2020, @04:11AM (1 child)
Definition of capitalism: The art of making money with the work of others.
They call themselves "private-equity firms", I call them fucking parasites.
(Score: 5, Insightful) by stretch611 on Wednesday February 05 2020, @06:25AM
Actual parasites are insulted by this comparison.
Private equity firms really are the worst of the worst in a capitalistic society. They are nothing but a "greed above all else" business.
Ethanol-fueled was correct in the initial comment on this article, they are looking to lay off staff, increase prices where they can and decrease services and support. They will wring out every bit of profit they can and make their customers (and employees) suffer. If you are hosted at one of these ISPs, you will try to get out and go somewhere else, but that will only work up until the point that they buy out all the competition.
You know those big surprise medical bills that got so bad that even congress tried to do something about it last year... At its heart is (no surprise) PE firms. They bought up many of the staffing companies that provide doctors to emergency rooms. They do not negotiate in good faith with the insurance companies leaving them off the approved list of most insurance companies, just so that they can hit you with those huge bills when you have no choice in the middle of an medical crisis. And why did it stall in congress, ofc, PE firms paid off many congress critters to make the draft bill more favorable to their profit concerns. https://www.nytimes.com/2019/09/13/upshot/surprise-billing-laws-ad-spending-doctor-patient-unity.html [nytimes.com]
PE firms have also loaded up debt on otherwise profitable companies (usually with a lot of debt due to excessive "management fees") until they can't afford it any more and go bankrupt. (see Hostess as an example.) They also really like the retail industry... In addition to the excessive fees, one thing they like to do is to sell a companies (already paid for) real estate properties to a company associated with or outright owned by the PE firm, and charging the company rent on the property. Not only does this increase the operating expenses of a company while benefiting the PE firm's profit, when the company goes broke, they already own the prime real estate to sell or continue to rent to someone else. (e.g. Sears/Kmart, Toys R Us, and MANY MORE.)
Of course, they dissect a company that fails into nothingness... without a single care in the world for the (soon to be ex-) employees of that company. In the case of Sears, they even failed to make the court ordered payments to the ex-employees compensation fund and blamed a 3rd party for not honoring their agreement despite having control of that 3rd party.
And last, but not least... Think you will take advantage of this and profit yourself... Try again... For the most part, unless you have millions that you are willing to commit, they won't even talk to you; preventing all but the filthy rich from profiting at the expense of everyone else in the world.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 0) by Anonymous Coward on Wednesday February 05 2020, @02:14PM
I agree with the earlier comment about "growth" as referring to growing the profits, not making a better business. That is decidedly how all these private equity firms work. I'm sure this will mean introducing more tiers of service. Staff reductions and use of cheaper remote workers. But, that's not what I'm thinking about.
Data centers are expensive to build and maintain. That is why we have dedicated data center businesses. And there are some pretty big economies of scale to be had. As noted it doesn't take much staff to run a big data center because a lot of those jobs you only need one or two people. BUT you need those one or two no matter the size of the data center. It's those economies of scale that make the decision to build vs rent easy. It's hard to pay back the cost of building a data center unless you are building a big one.
But, server rooms are pretty cheap. And right now it can be even cheaper to put most of your office servers in a nearby data center instead of the server room. The server room needs backup power and ventilation at a minimum and for any decent number of servers, it's going to need some extra power too.
The thing is, pretty much ever tech know what is needed and any decent finance person can estimate the costs of those things. So, for the small or medium business there is a tipping point where it becomes more cost effective to use a spare meeting room or storage room as your server room and stop paying the data center.
The other major reason to go with a data center is reliability and service. But if those disappear, which is pretty common with the private equity business plan, then the techs at the companies that are using those data centers will start blaming the data center for the outages. AND any decent tech will have the evidence to back those claims up. Which eventually brings us back to the build our own server room solution.
The big cloud providers, and probably a few of the medium cloud players, already have their own data centers. So they won't be (much) affected. If anything, this will drive even more business their way.
(Score: 3, Interesting) by jmichaelhudsondotnet on Wednesday February 05 2020, @04:06PM
The .org thing is a perfect example. We hear ethos is buying it, then later discover it is controlled by thrive, and then later find out this is connected to patreon and surprise surprise a blood relative of a member of the new york jewish mafia and zionist enterprise.
Mitt Romney, guess what, funded by Maxwell, his entire life story is this.
The shadow inc company and pete buttigieg that singlehandedly torpedoed the entire anti-fascist moment of the united states, guess what, turns out very wealthy zionist guy behind it too. And soros. And pete gets free airtime on day one of his campaign from...jeffrey zucker, just look up his affiliations but you should be able to guess.
If you want to have a computer on the net in a cage or cabinet watched under sas 70, you have to trust those people running the company they won't just bend the rules and epstein your server.
If there are no such trustworthy actors in the entire data center field, or if there is only that last one, and everything else is just cloudy and no admins ever see their hardware or audit it, then we are in a two tiered system.
Top - Everyone working for the rich people, chosen by them for their loyalty and ignorance. (then of course the very top)
Bottom - No one here can verify anything with computers or history or current events at all whatsoever, everything can be faked, everything can be backdoored, no devices can be opened, no ownership entities can truly be understood, and every technology in the world can be broken in your life if you are ever on the shitlist of those at the top
A clearer illustration scenario for what I am trying to explain with my work at my site could not be devised:
https://archive.is/ws6XQ [archive.is] decopage 1
decultification.org which is to say 'investment capital firm' is not the *type* of organization that should ever operate a data center used by human beings
https://jmichaelhudson.net/top-info-memes/ [jmichaelhudson.net] you cannot remain free if you are not able to detect conspiracies against you. full stop.
jmichaelhudson.net/anti-zionism you cannot deny that there is an occult nature to what is coming out of israel and that for the last ten years israeli companies have fed us a line of shit about their commitment to privacy
https://archive.is/2MFbn [archive.is] and these alligator smile garbage stooges need to be told to take their fake money and shove it up their ass
This is a full frontal attack of the idea of you ever being to have your own computer, and in 10 years, when it comes time to audit your brain interface hardware, you will have to use the unauditable hardware from the same people. The matrix or skynet take your pick, but life liberty and the pursuit of happiness is not on the menu.
You are.
Any questions?