IO Data Centers announced in early December that it will be splitting into two companies in an effort to attract additional investors and resolve confusion about the company’s identity that may have been holding back business in the past.
There are two main focuses to IO Data Centers. One is selling colocation service within its network of global data centers. The other is selling modular data center hardware and infrastructure management software for other organizations to use in their facilities. While it seems as though the two sides of the business would complement one another, they have started getting in the way. Customers of the hardware offerings are often competitors in colocation services, making them reluctant to work with IO at all.
Going forward, the two operations will be handled by separate entities. IO will control the sale of colocation services while a new company, BaseLayer, will sell the infrastructure solutions.
“We really have two scaled businesses,” said IO co-founder and CEO George Slessman. “We’re now at a point where to continue delivering focus and clarity and allow us to continue to grow, we made the decision to split the company into two businesses.”
Separation Provides Opportunity For Growth
Slessman said that the colocation business had been growing more than 50 percent each year since the company was created in 2007. With more than 700 customers, IO is currently the second largest private colocation provider behind Global Switch, which is significantly larger. IO operates five facilities totaling 2 million square feet of data center space. Four are in the U.S., including a Phoenix data center that is one of the largest facilities in the world. A Singapore data center serves as the company’s international headquarters and a sixth facility, a London data center, is set to open in 2015.
The market for IO’s software offerings is also growing, but not at the same rate as the colocation sector. The slower growth of that part of the business sometimes worried investors and Slessman hopes the split will increase investments for both sectors.
George Slessman will stay on as CEO of IO, while his brother Bill, who is currently the company’s CTO, will transition to CEO of BaseLayer. The separation of the two entities is expected to be completed in early 2015.
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