When it comes to tangible stuff at least, abundance can turn to scarcity pretty quickly. For the past year or so, I’ve been hearing that the huge post-bubble glut in hosting space is history – that the supply of quality data-center space is tightening, and prices are rising. An article in today’s New York Times, by Kristina Shevory, provides some further evidence. After years of losses, the hosting industry is becoming profitable. Indeed Digital Realty Trust, an aggressive investor in hosting space, with 54 centers in its portfolio, “was the best-performing real estate investment trust in the country [last year], giving shareholders a 78 percent return … Now, the company is looking for one- and two-story office buildings that can be turned into Internet hubs or server farms.”
The big roadblock to expanding the supply? Electricity. Blade-stuffed centers suck up so much juice that some utilities just can’t handle the demand. “Power demands, which are now often the largest or second-largest expense for a data center, have helped lead to ballooning construction budgets,” writes Shevory. “It costs Equinix about $600 to $800 a square foot to build a data center, compared with $450 to $500 five years ago.”
It’s funny to think that real estate and electric power are what’s scarce in computing today. For the would-be utility computing giants, like Google and Microsoft, they’re particularly huge budget items. Call it the revenge of the old economy.