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'Chilling Effect'
While the sudden demand for off-site backup and disaster
recovery services provides some price support in that sector,
the news isn't nearly as good for bandwidth, colocation
and data center space.
"There
is tremendous pressure on pricing," said Alexander
Muse of Layer One. "There is, however, an absolute
floor that I feel can be maintained."
Other industry veterans said the lower level of activity
makes it hard to gauge pricing trends.
"The lack of deals getting signed is, to me, a far larger
problem than whatever price these deals get done at,"
said Wanger.
"It's difficult to assess pricing in such an environment,
but anecdotally we are hearing that well-known enterprises
with good credit are getting fantastic colo and bandwidth
deals if they want them," he added.
In its most recent survey in July, the online exchange Band-X
estimated the average price for a rack in North America
at $1,000 a month. But many providers are discounting to
fill empty space. As an example, this week Gateway Colocation
began offering racks at $400 a month in its Seattle facility.
Several other developers and analysts said that once the
current supply-and-demand problems are resolved through
consolidation, prices should recover somewhat.
"I
have to believe prices will be down (in the short term),"
said Jensen. "If the supply of services was substantially
curtailed, at some point that could bolster prices, but
I doubt that will happen soon enough to prevent price deterioration."
"Given
the amount of once-future space that has been put on hold
or shelved altogether, there is a better chance for supply
and demand to come closer to a balance," said StratSoft's
Forsyth.
NEXT:
The Road Ahead
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Overview
Disaster
Recovery
The
Space Glut
The
Economy
Pricing
Issues
The
Road Ahead

Colocation
2002
The
guide to
power and space
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