khan data commodities

7/31/2019 KHAN DATA COMMODITIES

1/5

The concept

A network of container datacenters connected to the internet cloud primarily by

satellite link, and based in Mongolia. The datacenters operator provides storage and

computing processing capacity for the growing country needs, and sells excess

capacity to brokers worldwide.

What?

Datacenters (DC) are facilities where computer equipment is running applications

to serve companies, government and regular internet users; DCs are the brains and

blood of the internet.

The Cloud simply means that applications are provided on demand, so companies

can buy just the services that they need, without large investments or technology

staff. This means that every minute, byte or bit of service provided can be traded for

a price, just as oil or gold. Cloud is now a commodity, is the new oil.

K H A N

D AT A C O M M O D I T I E S

Percy Venegas

To get rich and be sucessful get up early, work hard, and find oil. ~J. Paul Getty

Central Asia markets

Global markets


2/5

Why?

Because demand is growing exponentially...

As seen in other transition economies in recent years, the need for DCs to

support the growth of the financial sector, telecommunications and new

enterprises will skyrocket in Mongolia soon.

The growth of Central Asian economies is currently being limited by the lack

telecommunications infrastructure to access data services, those markets are an

untapped opportunity.

At a global level, companies are continually investing in having access to cloud

computing solutions, because of the growing demand to store and process data

from transactions (internal databases, online commerce, etc) and interactions

(social networks, online video, etc).

Because is the right time to enter the market...

Most companies prefer to buy cloud computing capacity, because is less expensive

and more flexible than building their own DCs.

Security is nowadays a great concern in internet communications, satellite links

provide the higher degree of security and reliability for this kind of data traffic.

Because the economics are great...

Today, new advances in cloud computing and clean energy allow DC operators to

scale easily, with less start-up capital and low maintenance costs:

Instead of building a DC, modular containers can be assembled; instead of

using expensive fossil fuel and electricity, renewable energy can power the

containers. Satellite links allow to connect different locations and act as a big

DC to serve specific customer needs, without expensive telecommunication

infrastructure in place -regular links used only as redundancy. Useful life for

the equipment needing replacement is over 10 years.

Because of the type of project, a mix of investment coming from private equity

and international development assistance (at no cost) can be used to finance the

implementation.

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Percy Venegas


3/5

How? The business model

Revenues from datacenter sale: The DCs containers are ordered to manufacturers

in US/Canada, but the IT applications configuration and marketing can be

outsourced to countries with low overhead costs (Asia, Latin America). As the fixed

costs are low, final price depends on the applications provided, so the margins are

very flexible and in the range of millions of dollars per unit. Who is the customer?

Financial services and telecom companies, and government -in Mongolia.

Revenues from services: Not all the resources from the DC are used all the time,

excess capacity can be sold to other companies using long term contracts, in

partnership with the owner of the DC. As the fixed costs are already covered and

variable costs are low, this is close to pure profit. Who is the customer?

Manufacturing and IT companies in Mongolia, and Central Asia, also in Russia and

China.

Revenues from Bandwidth brokerage: Capacity during Mongolias non peak hours

can be sold as traffic that companies in America/Europe will use during their peak

hours, on a daily basis. As the fixed costs are already covered and marginal costs are

zero, this is pure profit -and the traffic can be sold at a premium price, because the

datacenters are marketed as green due to the use of clean energy in a developing

country . Who is the customer? International cloud bandwidth brokers.

Operation overheads: Low. IT maintenance can be automated and/or done locally

for daily tasks, remotely for difficult tasks. All energy can be produced by

renewables, fossil fuel only for backup. Perimeter security is required to comply with

service level agreements.

Scalability, Replicability: A DC location can grow as needed (containers are mounted

as modules), new facilities can be quickly added to the network in other Central

Asian countries with similar regulatory/geographical conditions.

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Percy Venegas


4/5

Why Mongolia?

Aligned to the national competitiveness strategy:

The boom in mining and heavy machinery sectors is accelerating the creation of

local capital markets, requiring DC technology solutions to support the expansion

of financial services.

Opportunity to diversify economy to other commodities, and reduce country risk.

Diversification towards a value added-knowledge based economy, promoting high

tech exports and reducing brain drain (i.e Mongolian IT professionals that remain

in US-Europe for lack of local opportunities).

Provide alternatives for development while preserving natural resources and

supporting climate change mitigation initiatives.

Location advantage:

Neutral position allows to sell services to North American, China and Russiacompanies that require extra security (i.e US companies doing business in China).

Benefits national security, as governments as less keen to enter into aggression

with a state where its businesses run critical operations.

Low exposure to natural disasters, compared to competitors (for instance DC

operators in Iceland face high risk of volcanic activity).

Alternative energy sources are abundant -lakes for DC cooling, sun/wind/biomass

(horse manure) for power, making possible a truly carbon neutral operation.

Low real state related expenses, equipment mobility is easy.

Availability of top local IT talent to maintain operations.

Quick time to market:

No cluster development required -DCs are standalone, supply chains are simple.

No infrastructure requirements -no power grid or telecom network access

necessary.

Regulatory environment is still flexible.

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Percy Venegas


5/5

Additional benefits:

Adds capacity to the country telecommunications infrastructure.

Provides both investors and government with protection against volatility of other

commodity prices.

Reduces dependence on foreign technology providers for critical national

interests.

About the author

Percy Venegas has a vast and diversified business technology expertise, having lived around the world

working for both large public and privately owned firms such as Intel Corp and Photocircuits

Corp, and as a consultant in a number of industries ranging from online marketing and securitiestrading to organic agriculture. He serves on the board of advisors of the Social Venture Capital/Social

Enterprise Conference for Latin America, the Caribbean and South Florida.

Mr.Venegas holds a pre masters degree in Electronic Engineering from Instituto Tecnologico de Costa

Rica (Area of research: Design and Implementation of a Monitoring System for Critical InternetServices in Distributed Servers), earned his MBA in International Business from MIB School of

Management, Italy and Sun Yat Sen Universitys Lingnan College-MIT Sloan, China (Area of research:

Holistic Branding as B2B Marketing Strategic Advantage: The Case of The Data Centers Business in

China), and received his Masters in Sustainable Development and Corporate Social Responsibility

from EOI Escuela de Negocios, Madrid Spain. He is also trained in Project Management (Intel and PMI

Institute coursework) and Computer Networks (Cisco Certified). He speaks four languages.

References

http://en.wikipedia.org/wiki/Cloud_computing

http://www.information-management.com/news/cloud-10017640-1.html

http://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-

energy

http://www.china-daily.org/Scientific-News/China-Mobile-Data-Center-3-year-plan-released/

http://www.nytimes.com/2010/01/13/world/asia/13beijing.html

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Percy Venegas
http://www.china-daily.org/Scientific-News/China-Mobile-Data-Center-3-year-plan-released/http://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.information-management.com/news/cloud-10017640-1.htmlhttp://en.wikipedia.org/wiki/Cloud_computinghttp://en.wikipedia.org/wiki/Cloud_computinghttp://www.nytimes.com/2010/01/13/world/asia/13beijing.htmlhttp://www.nytimes.com/2010/01/13/world/asia/13beijing.htmlhttp://www.china-daily.org/Scientific-News/China-Mobile-Data-Center-3-year-plan-released/http://www.china-daily.org/Scientific-News/China-Mobile-Data-Center-3-year-plan-released/http://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.peachygreen.com/going-green/opera-data-center-in-iceland-runs-on-100-renewable-energyhttp://www.information-management.com/news/cloud-10017640-1.htmlhttp://www.information-management.com/news/cloud-10017640-1.htmlhttp://en.wikipedia.org/wiki/Cloud_computinghttp://en.wikipedia.org/wiki/Cloud_computing

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