US data center giant Equinix announces it is acquiring bare metal cloud provider Packet, a NYC startup that has raised over $36M
Ron Miller / TechCrunch :
Context & Ripple Effects
Equinix has spent years buying its way into new layers of the stack: the $3.6B Telecity acquisition extended its colocation footprint across Europe in 2015, and Packet was its first move up from renting space to selling compute itself. Packet had positioned its bare-metal API as a leaner alternative to AWS and Azure, raising a $25M Series B led by Third Point Ventures on that pitch.
The deal closed two months after announcement at $335M — roughly ten times the startup's total funding — a premium that signals how much value Equinix saw in owning an automation layer for physical servers rather than building one.
First-order effects
- Packet's bare-metal automation now runs across Equinix's global colocation footprint, letting enterprise customers provision dedicated servers through an API instead of a facilities contract.
- Packet's backers, including Third Point Ventures, exit with a return well above the company's ~$36M raised, validating the bare-metal thesis against hyperscaler incumbents.
Second-order effects
- Rival colocation operators now face customers who expect cloud-style self-service on dedicated hardware, forcing them to build or buy equivalent orchestration layers rather than compete on square footage alone.
- AWS and Azure lose a niche challenger whose differentiation was exactly what Equinix's enterprise base wanted — bare metal without hyperscaler lock-in — tightening the big clouds' grip on that segment.
Third-order effects
- The pattern points toward data center operators consolidating into full-stack infrastructure sellers — space, power, and compute in one contract — a direction Equinix continued with the MainOne acquisition in West Africa.
- As operators internalize compute resale, intermediaries like Amp, which buys excess data center capacity to resell to startups and universities, emerge to arbitrage whatever capacity the giants don't monetize directly.
The trend: Colocation providers are absorbing bare-metal and cloud layers so they can sell compute directly rather than just the space it sits in.