One thing better than having access to a valuable colocation data centre business – is having access to a prefabricated modular data centre market that is growing at a compound annual growth rate of 20%. DXN wants to grow its modular data centre service to the vicinity of $60 million plus per annum, in addition to generating annuity income from maintenance services and expanding its colocation services.

Matthew Madden’s vision for DXN is ambitious, but the market is there to support it. Reach Markets sat down with him to ask some questions about what DXN has to offer, how the business differs from others in the market, and why it’s worth keeping an eye on them in the coming years.

What products and services do DXN offer?

DXN takes a unique approach to the market. As a modular data centre business, we have not one, but three parts to our company. All three opportunities are important for DXN, although the data centres are our primary focus.

 The DXN data centre division builds and constructs modular data centres which we use in our own operations. We built our first colocation data centre in Sydney, and we’d like to build more modules (smaller edge data centres) in other capital cities and large regional centres outside of Sydney and Melbourne.

 The key difference between us and others in the market is that our data centres are built in a modular way. We have a big facility with deployable modules inside; each module consists of 29 racks or 200kW power, which is made available to customers. They can choose to take single racks, multiple racks or a whole module. In fact, it’s quite unique that they can take a whole module which we can customise to their requirements. 

We have two other areas of focus: the modules division in Perth, where we manufacture prefabricated modular designed data centres for customers and for ourselves, and our maintenance services division which offers ongoing support for our customers through a preventative maintenance program and for DXN, it also provides an additional annuity stream.

What is a modular data centre and how is it different to a traditional data centre?

Normal bricks and mortar data centres are permanent and rigid. They have to be built into a single unit that can’t later be changed or expanded upon easily.

A modular data centre like the ones DXN offers, consist of purpose-built engineered modules and components which offer scalability and capital efficiency for customers.

We have modules for every purpose in our data centre. We create separate modules for power, cooling, telco and IT just to name a few. In a power module you would have things like a generators, UPS backups and electrical switching.

We don’t build a data centre to its full capacity in one go. This means we don’t have lots of space for customers to take up immediately. Instead we build our centres in stages. The first stage of our Sydney data centre, as an example, offers a capacity of 400kW. Then, as we fill up that space, we can add additional modules to bring it to the next stage. We can do that in a modular fashion much the same way that you use Lego blocks to build something. We just add another block into the piece.

What’s the DXN process – from manufacturing to deploying?

We build our data centre modules to a “9001 quality standard” in a factory setting before we deploy them rapidly without affecting overall site delivery times, in this way deployment times are greatly reduced.

You’re the first containerised modular data centre provider to be Uptime Institute Certified Tier III. What does this mean for DXN as a business?

Our data centre in Sydney has received the Uptime Institute’s TCCF accreditation which means the total construction facility meets the requirements to be a Tier III data centre.

The Uptime Institute is a world body that certifies data centres that meet a certain standard or requirement. Tier III means the data centre is available 99.997% of the time. It’s only allowed to be down 22 minutes a year, in terms of supplying power, communication and cooling.

Being accredited as a Tier III data centre is huge. If you think about all the data centres built in the world only very few are Tier III so it says a lot about the quality and reliability of DXN’s product. On top of that, our Sydney operation is also the world’s first containerised data centre with Tier III. It’s a pretty elite club. 

Who are your customers and what is the market like for DXN?

Different customers are attracted to the three different parts of our business.

For our data centre business, most of our customers are government, enterprise and corporate businesses or channel partners. The channel partners – or resellers – use our facilities to add value to what they do, which is to provide a managed service to their clients. They add value to our racks by installing their own equipment and solutions and sell them on to their own customers.

For our modules business, our customers are telco, data centre operators and cable landing stations. We also extend ourselves into the enterprise and corporate sectors such as mining companies, universities, utilities or retailers with remote locations. The contracts vary, but generally we tend to build customised data centres for a customer’s specific requirements.

You recently entered a contract of about $2.4 million AUD with Southern Cross Cable Ltd. What does this contract mean for DXN going forward?

Southern Cross Cable was the first real broadband and internet cable that came into Australia. It extends from the United States West coast to Australia and New Zealand via Fiji and Hawaii. It has been in production since 2001. It started with 250 gigabits per second but can now manage 23 terabits per second which is extremely fast.

Southern Cross Cable Ltd. recently announced a capacity update called Southern Cross NEXT which it is deploying into the Pacific. It’s going to provide broadband to some of the poorest nations of the world that have had no internet to speak of since the internet was first born. Until now, they’ve relied on slow satellite-based internet. According to the World Bank, for every 10% of the population that has reliable access to broadband, 1.38% is added to the GDP. So, this project is nation building stuff.

The Southern Cross NEXT project will be largely completed by 2020 in terms of deployment. We have created a low-level cable landing station design for the customer to sign off. Once that has been agreed upon, it will go into production. Production will involve us putting some serious paint coating on the landing station because it is required to have a 25-year life span, and we’ll be providing maintenance for the landing station as well.

Southern Cross is a huge brand in the world and they still supply 95% of Australia’s and New Zealand’s internet in the world today. For us to be able to provide cable landing stations in the Pacific is really awesome.

Do you see other data service providers as competitors?

We’re in a market where we are not looking to compete with others. We don’t intend to compete with companies such as Equinix and NEXTDC, because they attract a completely different market from us. We like the idea of building smaller facilities to provide value back to the cloud and as a direct aggregator in different locations.

Where is DXN at as a company right now and what’s your vision for the future?

We want to focus on customer revenue in our Sydney data centre. We have about one megawatt capacity, equivalent to about 142 racks that we can build towards, and we want to complete and sell that before we scale up even further.

We also want to expand our edge data company strategy which involves building a number of smaller facilities in capital cities and large regional centres outside of Sydney and Melbourne. Our goal is to build ten or more data centres across Australia, though smaller in size than the one we have in Sydney.

The modular business is also integral to DXN in coming years. We want to build that up to a business in the vicinity of 60 million plus per annum. The prefabricated modular data centre market is in an explosive growth stage – it’s growing at a compound annual growth rate of 20%.

The third line of focus for us is maintenance services where we are experiencing an extremely strong uptake.

Our colocation business is definitely the number one element of our business. But having a modular division and being able to build services for others helps us bring the company to a cash flow positive position. And the maintenance business provides an ongoing annuity stream that we think is extremely compelling. We’re hoping to pivot the focus to a broader aspect for the company, beyond what Sydney has to offer.

*Reach Markets have been engaged by DXN to assist with private investor management. Past performance is not a reliable indicator of future performance.