1. TRD$5.1:$The$Build$vs.$Buy$Decision$
Erik$Levi:,$CEO,$Open$Data$Centers$
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2. TRD$5.1:$The$Build$vs.$Buy$Decision$2013$
In$an$industry$dominated$by$REITs$and$capital$sources$
interested$in$large$scale$new$construcIon,$there$are$profitK
making$opportuniIes$available$for$less$tradiIonal$growth$
strategies.$
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3. The$State$of$the$IT$Industry$
IT$is$Moving$Toward$the$Data$Center$
! Cloud$CompuIng$vs.$Local$CompuIng$
! New$regulatory$requirements$
! New$IT$business$opportuniIes$(e.g.$Swaps$market,$analyIcs)$
! Rack$density$increasing$–$but$not$at$the$rate$we$believe$(1)$
! ConInued$decrease$in$telecommunicaIons$costs$
! ConInued$increase$in$power$costs$$
(1)$Source:$Data$Center$Dynamics,$2013$

4. The$State$of$the$Data$Center$Market$
Bigger$is$be:er?$
• ConInued$increase$in$data$center$demand$$
• 9m$new$square$feet$of$space$available$in$2013K2014$(1)$
• ConInued$consolidaIon$in$the$industry$
• Total$DC$investment$increase$beyond$$120$billion$in$2013$(1)$
• REITs$realize$a$relaIvely$low$cap$rate$(7.25K7.75%)$(2)$
• New$builds$cost$in$excess$of$$1500/sq$foot$
• “BIG$Build$Syndrome”$–$Is$bigger$really$be:er?$
(2)$Source:$DRT$Release$1/31/2013$

5. The$View$From$The$Street$
SAS$Models$and$Customer$Ownership$Are$Key$
• Managed$Service$Providers:$1K2x$$
• Small$Data$Centers$(1K3$locaIons):$3K5x$
• Data$Centers$with$Managed$Services:$5K7x$
• Data$Centers$with$integrated$SAS$Models:$7K15x$
• FaciliIes$based$providers$(e.g.$cable$operators):$5K8x$
• Long$term$expectaIons$for$data$centers:$5K7$year$ROI$

6. Market$Entrance$Strategies$
What$does$it$all$mean?$
• Build$new$faciliIes?$
• Upgrade$exisIng$faciliIes?$
• Buy$exisIng$faciliIes$(conversion)?$
• Acquire$(purchase$exisIng$revenue$generaIng$faciliIes)?$

7. Merits$and$Disadvantages$of$a$New$Build$
Pros:&
! Build$to$spec$
! Longer$lifespan$
! Predictable$model$
! Choice$of$geography$
and$locaIon$
Cons:&
" Expect$to$spend$more$than$
$1,000/sq.$h.$
" Lack$of$carriers$in$iniIal$
build$
" High$inerIa$in$customer$
a:racIon$
" Startup$issues$
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8. Merits$and$Disadvantages$of$Upgrading$
Pros:&
! PreexisIng$customer$
base/no$inerIa$
! No$concerns$about$
carrier$density$
! Low$markeIng$spend$
Cons:&
" PotenIally$high$build$cost$
" No$improvement$in$overall$
market$diversity$
" ExisIng$issues$may$persist$
" Resource$constraints$
(power)$
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9. Merits$and$Disadvantages$of$a$Buying$ExisIng$Facility$
Pros:&
! Very$low$upfront$capx$
! ExisIng$carrier$density$
! Rapid$market$entry$
! ExisIng$spec*$
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Cons:&
" RemediaIon$of$exisIng$
faults$
" Cannot$choose$specific$
geography$or$locaIon$
" May$be$moderate$inerIa$
" ExisIng$spec*$
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10. Merits$and$Disadvantages$of$Acquiring$
Pros:&
! No$inerIa$
! High$carrier$density$
! Probably$high$power$
density$
! Instantaneous$
market$entry$
Cons:$
" Buying$revenue$is$
expensive$
" ExisIng$faults$
" ExisIng$culture$
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11. Thank$you$
Erik%Levi),%CEO,%Open%Data%Centers$
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elevi:@opendatacenters.net$
(212)$796K5502$
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