Equinix, a leader in colocation and interconnection services, has announced its decision to discontinue its bare-metal infrastructure-as-a-service (IaaS) offering, Equinix Metal, by June 2026. This move reflects the company’s strategic shift back to its core services such as colocation, interconnection, and hyperscale solutions, which it believes are more aligned with its long-term business objectives. Existing customers of Equinix Metal have been assured that their service and support will remain unchanged in the upcoming months. Moreover, Equinix is offering flexible month-to-month contracts to provide its users ample time to transition to alternative solutions or migrate their workloads.
Origins and Performance of Equinix Metal
Acquisition of Packet and Launching Equinix Metal
Equinix initially ventured into the bare-metal market through its $100 million acquisition of Packet in 2020, with the launch of Equinix Metal occurring later that year. This service was envisioned as a way for the company to expand its cloud service offerings and diversify revenue streams. However, the venture did not pan out as anticipated in terms of customer adoption and market penetration. Despite the infusion of resources and a promising start, Equinix Metal struggled to gain the foothold and traction necessary to be a profitable part of Equinix’s portfolio. CFO Keith Taylor noted in a recent earnings call that the bare-metal service contributed a mere 1.25% to the company’s total revenue, which did not justify its continuation.
Factors Behind Market Performance
Analysts, including senior analyst Alan Howard from Omdia, observed that the bare-metal business model differed significantly from Equinix’s traditional specialization. Equinix’s primary focus has been on offering colocation and interconnection services, which are integral to the company’s identity and market strength. The introduction of a bare-metal service required a different set of operational competencies and market strategies that did not align seamlessly with Equinix’s existing framework. This divergence contributed to the service’s underperformance, further leading to the decision to discontinue it.
Competitive Landscape and Strategic Realignment
Current Market Dynamics
The decision by Equinix comes amid a highly competitive environment dominated by tech giants and specialized bare-metal providers. Companies such as HPE, IBM, Oracle, AWS, Google, and dedicated bare-metal providers like Vultr have created a fiercely competitive market landscape. Despite the market’s significant growth potential, projected to increase from $8.5 billion in 2023 to $19.1 billion by 2028 at a compound annual growth rate (CAGR) of 17.4%, Equinix decided that maintaining its bare-metal service was not sustainable. This strategic move underscores the importance of staying aligned with core competencies to navigate the rapidly evolving data center infrastructure environment successfully.
Focusing on Core Competencies
Equinix’s shift underscores its commitment to focusing on its primary strengths and delivering the most value to its customer base. To facilitate a smooth transition, Equinix is offering flexible month-to-month contracts, giving users ample time to migrate their workloads or find alternative solutions. This approach aims to minimize disruption and ensure customers can adapt without facing immediate deadlines or service interruptions.