Data Center Cooling Equipment: What is the service tail of a CDU (Coolant Distribution Unit)?

Our main finding is that CDUs do not have near the service tail that larger heat rejection equipment like chillers do. Over a ~25 year period, we compared the revenue and margin multiple on initial capex revenue / operating profit for both a chiller and CDU. For chillers, the present value revenue multiple on initial capex is ~4x, with an operating margin multiple of ~6x for the service tail since service revenues happen at higher margins vs. initial capex for new equipment (we assume new equipment operating margins of ~15% and service operating margins of ~25%). For a CDU (assuming a ~10 year useful life), we estimated a revenue multiple of ~3.6x over the same period (not that different from a chiller) but an operating margin multiple of closer to ~3x, which is half what we see for a chiller. This is primarily driven by the fact that equipment changes that happen at the end of a CDU's useful life take place at much lower equipment margins than today. For investors, we do not think the