Becoming the largest NaaS provider in the world
The arrival of Megaport’s new CEO Michael Reid just over a year ago coincided with the rise of AI into the enterprise mainstream and signalled the start of a significant turnaround in the business which wants to be the largest Network as a Service (NaaS) provider in the world. Australia’s Megaport offers flexible and secure network connections, allowing businesses to easily link to cloud providers, data centres, and internet exchanges worldwide through its NaaS service
platform.
The company’s strong turnaround and profitability continues under Reid and his message is that Megaport is investing in growth – and multicloud AI is going to drive what this may look like. In the past 12 months, the rise of generative AI has driven a surge in demand for computational power and specialised hardware, particularly GPUs, to handle AI workloads. This has led to increased investments in upgrading infrastructure, enhancing cooling systems and improving energy efficiency to support the intensive processing needs of AI models.
At the same time, data centres have been optimising their architectures to accommodate the high throughput and low latency requirements of GenAI, while also expanding their capacities to meet the growing needs of AI-driven applications across various industries. With a subscription-based pricing model and a marketplace ecosystem, Megaport facilitates rapid, direct connections to major cloud services and between data centres, leveraging strategic partnerships and a broad geographic footprint to serve multinational enterprises.
“When I first stepped into the role, we asked our customers what they wanted from us and a huge amount of them said simple Internet that can be spun up in less than 60 seconds, and that’s what we’re good at,” said Reid.
To ride this emerging AI wave – and, more broadly, to address multicloud network complexities that result from it – Megaport has been busy hiring 20-plus go-to-market roles, implementing next-gen sales tools, relaunching MegaIX in North America and most recently, launching its Global WAN service. Today it is offering 100-gig port availability across North America and is finalising its 400-gig backbone upgrade. Reid believes Global WAN will be a game-changer for Megaport. Its first deal was $1.4 million in annual recurring revenue contracted over three years – prior to this, Megaport’s average deal size was $38,000.
“This is an incredible opportunity to go back to our existing customers, of which we have 2,800 plus and take a new opportunity to them,” said Reid. “It also gives us a great opportunity to attract incredible new customers to us.”
Automating multicloud
In the early days, Megaport was about connecting to the cloud from the data centre. Then it became about connecting between clouds and global connectivity. Reid believes that with the arrival of Global WAN, the model is now connectivity as a service everywhere on the planet.
“We’ve got 800+ different locations with over 2500 pieces of technical infrastructure, and not a single human runs it. It’s totally code,” he said in a recent podcast hosted by Redd Digital [available at https://www.youtube.com/watch?v=NV4KolHRX3w ]
“So in 60 seconds, you can connect anywhere on our platform…high level connectivity as a service.”
“AI is absolutely exploding, changing the world….there’s a huge lack of understanding of what that will be, and that’s because we actually don’t know what it will be,” he said, adding that this is leading to companies doing “fear investment”.
“You see companies globally worried that we’re going to be disrupted, not necessarily by AI as such, but by the competitor that embraces AI better than they do. So you see a pivot towards just do whatever it takes got to get in this space,” he said. “AI is is sort of hot at the moment. But I would say that there’s a lot of tech that’s been around for a long period of time that most companies haven’t yet worked out how to embrace.”
The company’s global position means it can see networking trends early. Reid said that in the US, AI is moving so fast that some data centres are not only out of current capacity but also capacity for the next three years. “We’re talking about data centres that have been taken private off the Nasdaq…have billions of [US] dollars per annum invested in them to just build the largest, most insane things you’ve ever seen, and they’re totally full.”
He added hyperscalers are struggling to find suitable land for their campuses. “There’s no shortage of capital…There’s no shortage of companies to go and build these things out…They’re all building at a rate of knots,” he said. “The challenge for them is power.” He added that as a result, nuclear power has come back into industry conversations because the challenge is real.
Multicloud conundrum
A decade ago, people suggesting that there would only be one cloud for all – AWS – would have not seemed insane. In the enterprise space, the reverse has happened since and many find themselves interacting with two or more public clouds. A company may be running AWS and then through a merger becomes an Azure customer. Then Google Cloud offers a fab new AI analysis tool and the enterprise is now getting a headache. Meanwhile, Oracle comes along and says
“you’ve been with us for the last 30 years of database, and so you’ve now got Oracle Cloud.”
“Now your entire database, sits in another cloud that’s not even connected to that cloud and so Megaport becomes the connector between all those clouds,” said Reid. “We’re becoming the largest NaaS company on the planet because by landing in over 850 data centres and then building this huge network backbone globally.”
“What’s really interesting about that is the AI revolution right now is demanding massive data shifts from one data centre to another and we’re seeing the rise of the next cloud, which is the GPU as a service play,” he said. “And that is crazy interesting, because Nvidia is sort of, to an extent, fragmenting the market even more by having all of these GPU as a service companies appear, but they can only appear in certain number of locations.”
He added: “And so the Megaport story [is] we can take you from where you are with your data to wherever you need to get to…and you need to get to these GPU as a service clusters via a mass connectivity in 100 gig connectivity across the United States, across the world, wherever that may be, because you need to train a model, and it’s costing you a million dollars a month to train the model…and it’s saving you X dollars by landing in whichever other place.”
“So, yeah, the future is constantly complex, but companies like Megaport are trying to simplify and enable that,” said Reid. “For us, every sort of premise of every single thing that we build is hyper-automated. We’re the only NaaS company that can, in 60 seconds, connect you to anything on our platform and not a single human is involved.”
At Interconnect World Sydney
Megaport CEO Michael Reid will be delivering the keynote address titled “How will the evolving requirements of cloud shape the future of connectivity and networking infrastructure and technologies?” at Interconnect World Sydney at the Hilton Hotel on 7 August 2024.
The inaugural event brings together the industry’s leading telcos, ISPs, IXs, TMT investors, government agencies along with key enterprise decision makers. These stakeholders will consider key technology and investment trends and address best practices in terms of the connectivity of digital infrastructure. To find out more and to register please
visit: https://interconnectworld.com/events/sydney-interconnect-world-2024/
[Author: Simon Dux]