Gartner About Equinix CEO’s Sudden Departure: ‘Equinix Top Heavy in Its Executive Ranks, This Created Friction’

Equinix CEO Steve Smith [photo] led the global data center operator during a decade of massive growth, last week he suddenly resigned, while Executive Chairman Peter Van Camp has been appointed interim CEO of the company.
Last week, Steve Smith suddenly resigned as CEO of multi-billion dollar colocation data center company Equinix. There wasn’t any clear reason given by Equinix for the fact that Mr. Smith was stepping down so suddenly after leading the company through a massive growth phase since 2007. 

Steve Smith came from HP, where he led a $16 billion business unit. When he started his job as CEO of Equinix back in 2007, the company had 43 colocation and interconnection data centers located in 18 metros and 10 countries. Their revenues were $419.4 million and it didn’t even have any presence in Europe then. Today, Equinix has expanded its operations to include 150 colocation data centers in 41 metros and 21 countries. The data center operator’s annual reported revenues now exceed $3.6 billion while its employee headcount has increased to about 6,000 in total.

Based on these statistics you may conclude that Steve Smith has done a great job for Equinix. Nevertheless, he decided to step down all of a sudden while Equinix only declared that Smith made “the difficult decision” to resign as CEO, and from the Equinix Board of Directors, after exercising poor judgment with respect to “an employee matter.” No further comments.

M&A Equinix

Now, Gartner has reacted to the abrupt departure of Steve Smith. Although Gartner says it doesn’t tend to trade in speculation, they want to share their opinion on the situation to inform clients about Equinix and whether they have to rethink colocation data center contracts in negotiation or renewals.

In a blog post by Ted Chamberlin, Research Vice President at Gartner, the global research, and advisory firm states that “Equinix has always been top heavy in the executive ranks. That has created friction and at times, stifled needed innovation.” Gartner wouldn’t be surprised if an internal candidate like Equinix COO Charles Meyers or Karl Strohmeyer (President Americas) would be picked as Smith’s successor.

Hyperscale/Wholesale Focus?

Gartner does expect a potential shift in Equinix’s market focus. They also expect the change in management “will pump the brakes on M&A” where until now Equinix seemed to be unstoppable in acquiring new data center assets and further developing interconnection and cloud-enabled offerings. Gartner does not expect “an immediate need to rethink contracts or renewals,” however as “day to day operations at Equinix will remain unchanged.”

There might be some change in market focus though. Last year, Equinix shifted its market focus more and more towards wholesale leases to attract hyper-scale cloud providers, says Gartner. This shift would represent fundamental changes in requirements however with regards to data center layout and power distribution design. In the past, Equinix was focused on enterprise sub 1MW deals instead, and Gartner doubts if this change in focus towards wholesale leases will continue once Equinix has appointed its new CEO.

For now, we can only speculate about what changes or not the leadership transition will bring to Equinix’s go-to-market strategy in the worldwide colocation data center and interconnection market.

To read the full blog post by Gartner on the Equinix leadership transition, visit their website.

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