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Pricing Under Pressure
Economic slowdown, space glut lead to 'fantastic deals'

By Rich Miller
CarrierHotels News Staff
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  • << PREVIOUS PAGE: Economic '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



  • Overview
  • Disaster Recovery
  • The Space Glut
  • The Economy
  • Pricing Issues
  • The Road Ahead

     


    Colocation 2002
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