Nick Carr [03.06.07 07:01 AM]

"How do you invest around data center construction?"

One of the big unanswered questions is whether or not a vibrant industry will emerge to supply the components for the new megascale data centers. If the Google model - build everything ourselves out of commodity parts and free software - becomes the prevailing model, the role of suppliers will be slight. But if Google turns out to an anomaly, then there could be lucrative opportunities for suppliers (think what GE and Westinghouse did as suppliers to electricity powerplants). Sun is one company that's betting the farm on the latter model, as I discuss here:

http://www.roughtype.com/archives/2007/02/the_future_of_c.php

It will be interesting to watch.

Nick

  Al [03.06.07 12:37 PM]

One wonders what Microsoft and Ray has up there sleeve, I hope its open platform as most of the startups tenmd to carry Macs and hack in ruby!! If waht Microsoft is building is to Microsoft orientd the startups aren't going to swallow it. I also think that the waterfall approach that MS is applying here rather than the evolutiuonary/agile approach that Google has mustered over the last few years could also be a weakness for MS's offering.

However competition is good, if they can offer EC3/S3 competition aswell as Google API commpetition that isn't platform specific I for one will be very interested. If they don't they might have a lot of wasted data facilities!!

regards
Al

  steve [03.06.07 06:08 PM]

Building data centres of that size is what I do, but I've only seen them for a specific purpose where network communication is very intensive and the workloads are not highly parallel.

I can't really see why Google or Microsoft would want to concentrate resources into one place, when their current business is bandwidth to the world. Multiple smaller data centres would seem to be more suitable, as that would increase the number of pipes and reduce points of failure.

Google may be doing semantic analysis of large amounts of information, which would fit in with their plans for collecting data for an AI to read. Microsoft sound like they're playing me-too with the same infrastructure, so they can quickly copy whatever Google do next.

I wouldn't have been so quick to write Microsoft off, but their very competent research division seems to have almost no input into their products. On the other hand, waiting until a trend is established then buying into it is cheaper and quicker than trying to start the trend.

Being one of many also explains why Microsoft is the more successful business, despite Apple repeatedly being the trendsetting innovators. Google and Apple working together is really the partnership to watch here.

  nicolas [03.07.07 02:54 AM]

Interestingly, I think operations is what most executives fails to get.

I see it in my company, a investment banking firm, where, for instance, we "invested" 200 MEUR on a software project, most developpers do not know about continuous integration, let alone source control.

Of course, the said project is 3-4 years late (planned to finish in ... 2012 !)

Now, when I try to explain to an executive that this approach is bound to fail, I simply don't know where to begin, mostly because they don't get any of this stuff.

  Rich Miller [03.07.07 07:56 AM]

"How do you invest around data center construction?"

Digital Realty Trust is a REIT that specializes in data center construction. It's been buying up vacant industrial buildings for conversion to premium data centers, and now has about 1.5 million square feet of development space. Equinix, Savvis and Terremark are all publicly-held and building multiple new facilities. The data center demand noted by Paul boosted shares of those companies last year, and they have continued to outperform through the recent turbulence:

http://www.datacenterknowledge.com/archives/2007/Mar/05/data_center_builders_weather_downturn.html

A niche opportunity is in cooling, as DC managers struggle with high-density hot spots. HP and IBM are working this opportunity, and Liebert (Emerson) and APC (Schneider) are veterans in this niche. Chip-level cooling is seen as the next frontier.

On the start-up front, a San Jose company called Rohati is in stealth mode, and promising next-generation data center technologies.

  Jesse Robbins [03.07.07 08:37 AM]

Building these "mega data centers" is creating the very real risk of a "mega outage" due to severe weather, natural disasters, and plain old human error.

What happens to your app that runs in (or depends on services running in) the "cloud" - when the data center you are tied to goes down for a few days?

As we build these new platforms we must avoid creating tightly coupled systems with isolated silos of control.

  Tim Dueck [03.07.07 11:37 AM]

We have seen the data center ups and downs since the early 90's. Right now there are two areas where there is good demand. The first is among Fortune 500 firms who are scrambling to comply with regulatory requirements for reliability and security in their information infrastructure, usually requiring a second or even third data center. The Sungards of the world are just not capable of performing adequately in the post 9/11 world.

The second area is among the Fortune 1000 companies merging or acquiring other companies to achieve economies of scale. The data center costs are one of the first to be analyzed for savings and it usually turns out that the combined entity has several that aren't really necessary or are under utilized.

Most of the companies that deliver the real expertise in data center design and construction are privately held A/E firms or construction firms. I know a venture capital fund that has invested in an A/E firm about five years ago to take advantage of the data center market.

The big players are as follows:

Construction:
Holder Construction (http://www.holderconstruction.com)
MA Mortenson (http://www.mortenson.com)
Gilbane Companies (http://www.gilbaneco.com)

Design:
EYP Mission Critical Facilities (http://eypmcf.com)
Syska Hennesy (http://www.syska.com)
CCG Facilities (http://www.ccgfacilities.com)
Reliable Resources (http://www.relres.com)

  Jennifer [05.07.07 10:59 AM]

I am doing some research on the colocation and managed hosting markets and was hoping to set up time with some of you experts to discuss: 1) outlook for capacity and pricing over the next few years, 2) competitive landscape, 3) likely penetration of virtualization / utility computing and the impact on colocation and managed hosting providers.

I am able to offer compensation to anyone who has deep expertise in these fields and would be willing to chat on the phone for 30-60 minutes. Please give me a call at 646-562-8539 if you would be interested in speaking with my team.

Thanks,
Jennifer Hsiao
Bain & Company