Servers Australia acquires rival for "millions"

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Servers Australia acquires rival for "millions"
Equinix SY3 facility

Servers Australia has acquired thousands of customers and hundreds of racks in an bid to become the ''largest dedicated hosting provider in Australia".

The hosting provider, which is headquartered on the NSW Central Coast, has purchased the customers, contracts and assets – including computing infrastructure and two data centre locations – from related companies Dedicated Servers, Indigo and Syncom. The deal is valued "in the millions".

It is part of a move by Servers Australia to become the country's top dedicated hosting provider. The company, which was founded in 2006, recently sold its 4,000 shared web hosting customers to to VentraIP so it could focus squarely on dedicated infrastructure.

This latest deal brings "one to two thousand" customers, said Servers Australia chief executive Jared Hirst. "They are very high revenue customers."

Servers Australia has also acquired more than 300 racks and over 3,000 servers within two data centres in St Leonards in Sydney and in Brisbane. Assets include all the plant and infrastructure, the generators, racks, UPS and flooring.

The company operates out of a number of co-location facilities, said Hirst.

"We are one of Equinix's largest customers. We are not planning to move out of Equinix at all. What this means for us is we have secondary sites for disaster recovery, so it is fantastic – all linked via dark fibre back to our main sites and still the CBD."

Local infrastructure-as-a-service providers like Servers Australia have long been warned that hyperscale cloud giants such as Amazon Web Services, Microsoft Azure and Google would swallow the market.

However, Hirst has continued to grow, having secured No. 40 on last year's CRN Fast50 with 34 percent growth to $5.7 million. With this latest deal, Hirst expects a bumper result for 2016.

"People are saying the little boys are being pushed out by Amazon and Google but it is not true. We are fighting back and we are healthy and we are killing it. They are not doing that great of a job," said Hirst.

Servers Australia chief marketing officer Kris Kayyal added: "Our support is really what differentiates us, as we have a large team and when people or companies need help, they can simply call us and get someone in Australia on the phone to help. When they are in trouble it makes a big difference."

Inside Equinix SY3 data centre

The hosting provider is standardised on Super Micro server hardware. Other server vendors require their own techs to come out on service calls, but "with Super Micro, we can do our own warranty", said Hirst.

"If something breaks on a piece of hardware, we offer customers a 30-minute SLA. We stock all of it: RAM, hard drives and motherboards for the Super Micro, so anything that is faulty they send us a new one."

The company's automated provisioning software allows customers to instantly spin up new servers via a web interface. It's the same kind of rapid deployment experience offered by public cloud, said Hirst, but with the benefits of dedicated, physical servers, which are sitting dormant in a data centre, waiting for the press of a button.

Speed of deployment has driven users to adopt public cloud, said Hirst – Servers Australia promises this same immediacy with dedicated infrastructure. "At all of our locations, you can go and choose the specs and hit 'Buy Now' and it turns the server on and spins it up. As far as we know, there is no one else doing it. We have the edge on the game, so by acquiring Dedicated Servers and Indigo, it makes it extremely profitable.

"We looked at their client profile – they are good customers with room to grow but they are migrating to the cloud with Amazon because they need extra resources because they can't wait two or three days for tin to be deployed," said Hirst.

Inside Equinix SY3 data centre

Dedicated hardware boasts a number of advantages over the kind of multi-tenanted infrastructure available from infrastructure-as-a-service providers, said Hirst, not least avoiding the "noisy neighbors" problem of other tenants hogging computing capacity.

Surprise costs are another downside of public cloud, he added. "Bill shock is the biggest [problem] – the number of people who come to me and say, 'I signed up for a $20 account and I got hit for $400 and it was in US dollars."

Servers Australia recently went through "a massive upgrade" in its networking layer with Extreme Networks and Brocade technology. "That will happen at Dedicated Servers in the next two months."

"People can move workloads between states. You can move a server or replicate a server between Sydney and Melbourne at 10 Gigabits. The Extreme Networks switches are phenomenal and the Brocade router protects us against DDoS."

Fibre is provided by Megaport, Superloop and Vocus.

The seller is Jon Eaves, known in data centre circles as the founder of E3 Networks, which he sold to Vocus for $5.9 million in 2010. Over the course of 2014 and 2015, Eaves and business partner Andrew Hardy tried unsuccessfully to raise capital to build out a data centre in the former Fairfax newspaper printing site on the Tullamarine Freeway in Melbourne.

Eaves sold his web hosting company, IntaServe, to VentraIP in July 2015. Then in September 2015, Eaves acquired Datacom's St Leonards data centre – this facility is one of the assets acquired by Servers Australia. Eaves has not joined Servers Australia, added Hirst.

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