Friday, May 23rd, 2014

Time	Event
12:00p	Did Washington State Just Loose Microsoft’s $1.1B to Iowa? Back in 2008 Microsoft and Yahoo halted Quincy, Washington, data center construction projects. The reason was tax breaks, or lack thereof.  The spat was eventually resolved and the companies built numerous server farms in Quincy. Microsoft’s recent announcement of a $1.1 billion dollar data center build in Iowa, however, has led some to suggest that there may have been a sequel without a happy ending. Last month, the Seattle Times published an editorial saying the Iowa project was a billion-dollar lesson to the State of Washington. The state legislature adjourned this year without extending some high-tech tax breaks that were set to expire, and six weeks later came the Iowa news. Tax-break shaming The editorial is not the first time Washington State lawmakers have been shamed for inaction on data center tax breaks. During the 2008 confrontation Microsoft’s state government affairs director DeLee Shoemaker said: “States such as Iowa and others have come on board with very attractive tax incentive packages to get data centers to locate in their communities. These other states that are in tough economic times and are looking to attract new business and new investments … Washington state is no longer competitive for this type of business.” The strategy worked. Pressure from the tech companies got the taxes reinstated and Quincy bloomed. Today, there are nine large server farms and a growing community in what was once green-bean country. “Tax incentives are becoming one of the more important factors in selecting a site,” Rick Kurtzbein, data center analyst at 451 Research, said. “It extends from the state level down to the local municipality. There’s a bunch of activity in Minneapolis, for example, in part thanks to tax cuts.” Iowa is not new for Microsoft, which already has a data center in West Des Moines, first announced in 2008. The company has big footprints in both states and is in position to pit them against one another. In December of 2013, Microsoft was looking to expand in Quincy, stating intentions to acquire 200 acres of land. Iowa offered a $20 million break of sales tax, and Washington was competitive, but only if construction commenced before July 2015, when the tax breaks were set to expire. Shoemaker went on record saying that Iowa went after the business harder and noted once again that failure to offer tax incentives made Washington look less competitive for future decisions. But Microsoft may simply have been setting groundwork for a better tax environment in its home state in the future. Quincy offers a lot of cheap and environmentally friendly power, generated by hydroelectric plants, which alone makes it a very attractive location. “I believe that some manipulation goes on on the part of tech giants,” Kurtzbein said. “States will compete with one another for these large deals. There’s an opportunity to play them against one another.” Incentives do work for states On the opposite coast, for example, the State of Virginia sweetened the pot in fear of losing construction projects to surrounding areas, and DuPont Fabros, Microsoft, Digital Realty, Capital One and RagingWire all announced intentions to invest and take advantage of the beefed-up incentives. Construction there is booming. Texas also decided to add incentives, and more data center construction followed. The economic impact of data centers is undeniable. “Data centers themselves hire relatively few employees, however, the businesses that colocate in the larger facilities can certainly add to the jobs,” Kurzbein said. “Hosting companies, cloud companies or really with any enterprise, you can see an increase in jobs around the customers that go into these larger data centers. Those employees use local restaurants and hotels if they’re travelling. In the best of all worlds, you get a ‘herding’ effect, where you attract more and more providers.” The herding effect is now happening in Iowa, where massive builds from Google and Facebook are also in the works. Google’s investment in the state blew past $1.5 billion. Facebook has already started construction of a second 476,000 square foot building to house its growing armada of servers. Now Microsoft is spending $1.1 billion. (Comment on this)
12:30p	HP to Lay Off Thousands More Than Planned HP will lay off up to 16,000 more employees than it planned to lay off previously as part CEO Meg Whitman’s turn-around plans meant to return the company to growth. HP has been on a restructuring kick for the past two years, laying off employees, reshuffling department heads and adjusting its product portfolio to reflect changes taking place in the IT market. The Palo Alto, California-based IT giant announced the restructuring plan in 2012, including a 34,000-person workforce reduction. On Thursday, however, along with its second-quarter earnings report, the company said it would increase the target number of eliminated positions by 11,000 to 16,000. About 41,000 employees will have left HP as part of the restructuring by the end of 2014, Whitman said on the company’s earnings call with analysts, and the remainder will be let go in 2015. The layoffs are not limited to specific divisions or geographical regions. “It will be across almost all the business units and across all the geographies,” Whitman said. HP reported $27.3 billion in revenue for the second quarter – down 1 percent year over year. Net income was $1.3 billion – up 18 percent from the same period one year ago. Earnings per share were $0.66 – up 20 percent year over year. Shares drop after accidental earnings leak HP accidentally released its earnings report on its website one hour before the scheduled release time on Thursday afternoon. Its shares dropped by 2% following the accidental leak, but regained some of that loss in after-hours trading after the official announcement. After a decline between about mid-2010 and late 2012, in which period the company’s shares went from more than $50 per share to about $12 per share, its share value has gone up and down but generally stayed on an upward trajectory. HP shares were trading at close to $32 per share after hours on Thursday. Whitman satisfied with turn-around progress Whitman said the turn-around was on track and sounded optimistic about the future. “I believe we’re well positioned as we enter the second half of 2014,” she said. Besides optimizing operations, HP is focused on innovation, the CEO said, highlighting a number of product initiatives the company kicked off during the first half of the year that she said were critical elements of its innovation agenda. These were the Helion cloud computing initiative launched earlier this month, the partnership with Foxconn to go after the hyperscale server business announced in April, the launch of a converged-infrastructure system for SAP HANA in March and kick-off of the OpenNFV program, targeted at the telco market for Network Function Virtualization. (Comment on this)
5:30p	Sweden Considers Tax Cuts to Lure Data Centers Expecting high demand for data center space in Europe over the next decade, the Swedish government is considering changes to its tax code to make the country more attractive to data center builders than its neighbors in the Nordics. A newly appointed government commission is going to study the feasibility of a massive reduction on taxes for electricity use – from the current 20 cents SEK per 1 kWh to 0.5 cents SEK – according to a spokesman for Business Sweden, a company that promotes and facilitates business investment in the country. “Today the Swedish government has appointed a commission to investigate the possibility that even service companies should be able to take advantage of the lowest tax rate for electricity use,” the spokesman wrote in an email Thursday. Swedish newspaper Dagens Industri quoted Minister of Finance Anders Borg saying the review of energy taxes was intended to make Sweden more competitive with its neighboring Nordic countries. Data center construction in the Nordics has been on the upswing over the past few years. That part of the world is attractive for large data center builds primarily because of cold weather and abundant and relatively low-cost hydroelectric energy. Facebook brought one data center online in Lulea, Sweden, about one year ago, and in March announced that it had broken ground on construction of a second building on the campus. Swedish communications technology giant Ericsson said in 2013 that it would build two data centers in the country over the next five years. A company called KnC Miner is building a 10 megawatt facility in the vicinity of Facebook’s campus to host servers that mine bitcoins. London-based wholesale data center provider Hydro66 announced the launch of its newest facility in the same area as KnC Miner’s project earlier this month. In 2011 Google brought online a data center in Hamina, Finland, and the Dagens Industri article suggested that perhaps the Internet giant decided to build in Finland and not in Sweden because the latter had higher taxes on imports. Sweden’s government’s review of the tax code is not limited to energy tax rates. The government is also considering lowering corporate tax from 22 percent to 20 percent, according to the Business Sweden spokesman. (Comment on this)
7:00p	ROOT Shaking Up Montreal Colocation Prices Montreal has all prerequisites of a strong colocation market: cheap hydro power, cool climate and great connectivity to New York, Toronto and Europe. Jason van Gaal, CEO and founder of colocation startup ROOT Data Center saw opportunity in Montreal and decided this was the time to strike. The company is investing $20 million to retrofit a building in the city into a colocation facility. Construction is on track to complete in August, and open in September. The twist: ROOT is offering retail colocation at wholesale prices. “By using a next-generation green cooling technology, the first of its kind in Montreal, we are able to consume 50 percent less power than our nearest local competitor,” van Gall said . “This unique competitive advantage, combined with rates negotiated with Quebec Hydro, will enable us to provide colocation services at a price point 30 percent less than our nearest local competitor and 70 percent less than competitors in Ontario and other states and provinces.” The company is using a cooling system by KyotoCooling (now owned by Cloudsite) for this build, which together with cold weather will drive free-cooling efficiencies. The system uses a “heat wheel,” also known as “rotary heat exchanger,” for airside economization. Real estate and power in Montreal are also cheaper than in other cities, and this combination is what van Gaal says will enable the company to provide services at much lower rates than competitors do. “We’re saving on the operations side and passing to the customer,” van Gaal said. “We’re using green technology, and new technology that wasn’t available five years ago to drive efficiency.” Other providers in the market include iWeb (now a part of Internap), Peer 1, CenturyLink and Sungard. High power density, no raised floor ROOT’s facility will provide 5 megawatts at full build-out. The first phase will launch with 2.5 MW. It will be able to handle 3 MW to 3.5 MW of critical IT load, according to van Gaal. It is designed to support 30 kilowatts per rack across the entire data center floor. The design achieves high densities by using slab floor (instead of the traditional raised floor), ducted hot-air return and cooling-infrastructure efficiency. TekSavvy on board as investor and tenant With an anchor tenant on board, the startup is well capitalized. TekSavvy, a Canadian Internet service provider, has signed on as both a tenant and a strategic investor in the Montreal data center. “We’re pleased to partner with ROOT,” Marc Gaudrault, CEO of TekSavvy, said. ”ROOT is a company that focuses on offering high-value, reasonably-priced products that bring real competition to the marketplace.” Demand for colocation kicking in The colocation business is not new to van Gaal, who founded ROOT after selling another colocation company he started to the Canadian telco and media giant Rogers Communications. After selling the firm in September 2013, he studied the market and saw that demand for data center space in Montreal was outpacing supply. “In terms of technology adoption, U.S. seems to lead,” he said. “We’re laggards, and Quebec lags the rest of Canada. I see guys who built data centers in house in the past. Colocation adoption is just occurring. Demand is going to kick in.” (Comment on this)
8:30p	Static Beauty of Cloud Infrastructure Across Three Screens As cloud computing permeates more and more of our lives, artists increasingly attempt to understand it and reflect it in their work. Earlier this month we highlighted a musical work by composer Matt Parker based on recordings of ambient noise he had collected inside a data center at Birmingham City University in Birmingham, England. Another artist, Timo Arnal, has been fascinated with the visual aspects of data centers. He has produced a three-screen video installation, using material shot at Telefonica’s facility in Alcalá de Henares, Spain (just outside of Madrid). The installation is on display at Big Bang Data, an art exhibition that opened this month in Barcelona. Called Internet machine, the film is “about the invisible infrastructures of the Internet,” Arnal writes. “In this film I wanted to look beyond the childish myth of ‘the cloud’, to investigate what the infrastructures of the Internet actually look like. It felt important to be able to see and hear the energy that goes into powering these machines, and the associated systems for securing, cooling and maintaining them.” Here is a trailer for Internet machine. If you happen to be in Barcelona, visit Big Bang Data to check it out across three screens, as intended. Internet machine (trailer) from Timo on Vimeo. (Comment on this)

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