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No room at the data center

October 25, 2006

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.


We just left Equinex because they could handle our power density needs. They could only put a single blade center in a rack for us. And their other cages were full. So we moved to another co-lo who could do 5 blade centers in a rack.

Posted by: JohnO [TypeKey Profile Page] at October 25, 2006 06:24 PM

What's interesting about this is the impression that people have of the web being this shiny new digitally clean place that exists "in the machine".

But there are real costs to maintaining the WWW and they're felt the physical world. As the web's demand for power increases so will the toll on the environment in terms of energy consumption and pollution. The web might not seem so cool once the true costs are known.

Posted by: marc moore [TypeKey Profile Page] at October 25, 2006 06:25 PM

Iceland has cheap, renewable electricity with a large surplus of availability. I wonder when/if bandwidth to Iceland will ever be sufficient & reliable enough to start moving datacenters there.

Posted by: finn [TypeKey Profile Page] at October 25, 2006 06:51 PM

So when does America bring in nuclear power reactors? When does the world? There's a lot of electricity generation to be had, if we tapped it. Still it does appear finite.

Posted by: Michael Chui [TypeKey Profile Page] at October 25, 2006 08:24 PM

This is a salient reminder to the economics of abundancy crowd that if the lunch appears to be free, then you just don't know who is paying for it.

Posted by: michael webster [TypeKey Profile Page] at October 26, 2006 03:45 AM

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