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KHAN DATA C O M M O D I T I E S

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

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.
Global markets

Central Asia markets

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.

Percy Venegas

KDC

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 nancial 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 exible 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 trafc. 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 specic 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 nance the implementation.
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Percy Venegas

KDC

How? The business model Revenues from datacenter sale: The DCs containers are ordered to manufacturers in US/Canada, but the IT applications conguration and marketing can be outsourced to countries with low overhead costs (Asia, Latin America). As the xed costs are low, nal price depends on the applications provided, so the margins are very exible 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 xed costs are already covered and variable costs are low, this is close to pure prot. 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 trafc that companies in America/Europe will use during their peak hours, on a daily basis. As the xed costs are already covered and marginal costs are zero, this is pure prot -and the trafc 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 difcult 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

KDC

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 nancial services. Opportunity to diversify economy to other commodities, and reduce country risk. Diversication 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 Russia companies that require extra security (i.e US companies doing business in China). Benets 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 exible.
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Percy Venegas

KDC

Additional benets: 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 diversied business technology expertise, having lived around the world working for both large public and privately owned rms such as Intel Corp and Photocircuits Corp, and as a consultant in a number of industries ranging from online marketing and securities trading 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 Internet Services 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 Certied). 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-renewableenergy http://www.china-daily.org/Scientic-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