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So much for the Googley Treats

December 05, 2008

Last May, Google marked the opening of its new data center in Lenoir, North Carolina, by feting the local residents with a big "Googley Barbecue," complete with "Googley Treats," a "Meet-a-Googler" tent, and a "bouncy house in Google colors."

They're not bouncing in Lenoir this morning.

Ed Cone points to reports that Google, having hired only 50 of the 210 workers that it told state and local officials it would employ in Lenoir, is halting construction of its second server warehouse on the site and "has informed all construction workers, from engineers to laborers, that there won’t be any more work on the site for a while." The company yesterday told the state it would not be collecting a $4.7 million Job Development Investment Grant that North Carolina had awarded it in 2006.

The jobs grant represents only a tiny portion of the state and local incentives that Google is receiving for the Lenoir center. "Tax breaks on electricity, property tax waivers and other concessions could still push Google’s incentives package over $250 million in the decades to come," according to the Triangle Business Journal. Google has told the state that it plans to eventually complete construction of the center and meet its job-creation promises, but that as a result of "volatile economic conditions," it has no idea when construction will start up again.

Coming on the heels of Google's announcement last month that it was mothballing its new data plant in Oklahoma, the company's decision to halt work in Lenoir is a clear sign that Google is "moderating the pace of its data center building boom," writes Rich Miller of Data Center Knowledge. "Google spent $452 million on its infrastructure in the third quarter of 2008, which was its lowest investment in capital expenditures since the company began its data center construction effort in early 2007. The third quarter total was well below the record $842 million Google spent on its data centers in the first quarter."

Clouds, it seems, are not recession-proof.


Do I read this right? Doesn't it mean that:

All of Google's building of these facilities is way far ahead of demand. Were it otherwise -- were the theory of how the cost savings of the cloud work true -- then a recession should increase demand for Google's utility and as their advertising revenue falters they should be doubling down building out this capacity.

In other words, the entire effort Google has been making in this area is pure speculation on a long position.

They're way ahead of themselves and the bet that these investments stay "dark" is looking better.

To risk sounding like a broken record: it's the systems software, dummy. The cloud lacks any clear definition as a "platform" hence it persistently lacks apps.

Google needs to completely invert itself, sell access to the raw page cache and map-reduce engine, and go from there. Whether they do that or not they have to plan on swiftly becoming a much smaller company.


Posted by: Tom Lord [TypeKey Profile Page] at December 5, 2008 08:03 PM

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