Internet Power Shift Trends to Watch in 2005 Jay Adelson Founder, Chief Technology Officer Equinix, Inc. Telecosm 2004 October 19, 2004.

Internet Power Shift

Trends to Watch in 2005

Jay AdelsonFounder, Chief Technology Officer

Equinix, Inc.Telecosm 2004

October 19, 2004

Forward Looking Statements & Pro Forma

Information

Forward Looking Statements & Pro Forma

Information

Except for historical information, our presentation today contains forward-looking statements which include words such as “believe”, “anticipate” and “expect”. These forward-looking statements involve risks and uncertainties that may cause Equinix’s actual results to differ materially from those expressed or implied by these statements. Factors that may affect Equinix’s results are summarized in our quarterly report on Form 10-Q filed August 2nd, 2004.

Pro Forma and non-GAAP information contained in this presentation can be found in our current Report on Form 8-K filed with the SEC on April 22nd, 2004 and July 28th, 2004.

AgendaAgendaAgendaAgenda

Brief introduction to Equinix

Brief snapshot of how Internet traffic currently passes in the United States

Massive power shifts in the Internet infrastructure over the past two years

Case studies

Business Highlights

Business Highlights

Operates 14 network neutral Internet Business Exchanges (IBXs) in the U.S. and Asia-Pacific for over 830 customers where:

200+ of the largest networks interconnect 8 of 10 largest content sites* colocate Enterprise and US Government colocate their IT

Infrastructure The largest integrators host their Fortune 500 customers

2004 revenue guidance** of $160 - $163 million; 37% year-over-year growth (at midpoint)

2004 EBITDA** guidance of $32 - $35 million; > 70% incremental EBITDA flow-through

* Nielsen-Netratings (July 2004), Media Metrix (February 2004)** Refer to 8-K filed on July 28, 2004 for explanation of guidance, non-GAAP metrics and reconciliation to GAAP metrics

Understanding EquinixThe Hub of The InternetUnderstanding Equinix

The Hub of The Internet

The Internet is a complex network of networks With every major domestic and international network as a

customer, Equinix acts like an “airport hub”, connecting business to the routes/carriers that lead most directly to the desired destination

1,300,000+ square feet in 11 key markets

IBX Centers WorldwideIBX Centers Worldwide

Expanded Expanded Geographic Geographic

PresencePresence

Expanded Expanded Geographic Geographic

PresencePresence

Singapore Singapore Singapore Singapore

Hong KongHong KongHong KongHong Kong TokyoTokyoTokyoTokyo

SydneySydneySydneySydney

HonoluluHonoluluHonoluluHonolulu

NYC Metro NYC Metro NYC Metro NYC Metro

LA LA LA LA

ChicagoChicagoChicagoChicago

DC MetroDC MetroDC MetroDC MetroDallasDallasDallasDallasSan JoseSan JoseSan JoseSan Jose

Inside the IBXInside the IBXNetworks Content Enterprise

Network to Network Interconnection

Network to Network Interconnection

Savings in excess of $10M annually each

Scaling connections in days instead of months

Increased performance with no points of failure

Able to sell telecom services to other Equinix customers from same deployment

Inside the IBX CenterInside the IBX Center

How Content Connects Has

Changed

How Content Connects Has

ChangedBefore Peering

Tier 1Tier 1

$

$$

$

Both content and Tier 2 networks pay transit to reach each other

Tier 1Tier 1

$

$$

$

Savings of between 40% - 70% of bandwidth costs

Significant increases in performance with no hop access to end users

Networks with eyeballs gain dominance over old carriers

After Peering

Public Peering OnPublic Peering OnGigE ExchangeGigE Exchange

How Content Connects Has

Changed

How Content Connects Has

Changed

GigE ExchangeGigE ExchangeGigE ExchangeGigE Exchange

312 ports have been allocated to roughly 140 of the over 825 Equinix customers.

Aggregate peak has exceeded 50gig, well over 100% growth in first half of 2004.

Change of Value, Change of Value, Change in PricingChange in PricingChange of Value, Change of Value, Change in PricingChange in Pricing

Current price of IP transit (connectivity) with 1 year commit at 10-100 megs:

$5-15/M

Current price of IP transit with a 30 day commit at any megs:

$25-30/M

Current price of TRANSPORT (private WAN):

$10-15/M

Before The ShiftBefore The ShiftBefore The ShiftBefore The Shift

In 2001, most content and eyeball networks were 100% transit

A typical broadband network or content paid for every packet delivered

Demands on broadband were limited Costs were rapidly accelerating “We’re waiting for the killer app.” “We’re waiting for proliferation of broadband.”

After The ShiftAfter The ShiftAfter The ShiftAfter The Shift

In 2004, major content is over 50% peered

In 2004, major broadband is over 70-80% peered

Since 2002, report from FCC (September, 2004) indicates the number of broadband users have tripled to 48 million subs

Networks without eyeballs or content have limited value

New applications driving massive change in Internet food chain

Case Study:Case Study:Yahoo! and SBCYahoo! and SBC

Case Study:Case Study:Yahoo! and SBCYahoo! and SBC

In 2000/2001, Yahoo! paid for every packet delivered (transit or CDN)

In 2004, to SBC alone, Yahoo! provisions over 25-30 gigabytes/sec, more than any other broadband network

In total, Yahoo! sends out about 40-50 gigs

SBC now handling more eyeballs and content than most other broadband networks

Next month, all of these figures will TRIPLE.

SBC buys the remainder from Sprint… ?

Comcast is waiting in the wings…

Case Study: NetflixCase Study: NetflixCase Study: NetflixCase Study: Netflix

In 2004, Netflix announces they will be offering downloadable 4gig movies

In 2004, Netflix announces relationship with Tivo

In 2005, Netflix will offer these downloads to their over 2.5 MILLION users on broadband…

Not even technically possible without direct to eyeball network relationships!

Announcements from Amazon.com and Wal-Mart offering identical offerings

Case Study: AppleCase Study: AppleCase Study: AppleCase Study: Apple

Apple iTunes offers the legal digital distribution of large copyrighted content

In 2004, Apple uses a combination of transit, peering and CDN to accommodate demand

Audible.com, AudioFeast and others add other materials, such as books on tape

Volume of content forcing bypass of commodity networks

Case Study: VoIPCase Study: VoIPCase Study: VoIPCase Study: VoIP

Expectation is that broadband is required for consumer VoIP

VoIP providers offering voicemail and other features stored centrally

Non-tech consumers, with adapters, expected to adopt seamlessly

Unknown volume impact, though broadband providers implementing QoS for inter-provider connections

Jay Adelson, Founder, [email protected]