Monday, January 23rd, 2017

Time	Event
1:00p	JLL: Expect the Dallas Data Center Market to Have a “Chicago Year” in 2017 Metro Chicago wholesale data center operators, in a similar fashion to the Chicago Cubs, celebrated a marvelous championship season in 2016. But this year, expect a data center leasing pennant to being flying in Dallas-Fort Worth, according to Bo Bond, a Dallas-based managing director for commercial brokerage firm Jones Lang LaSalle. Bond told Data Center Knowledge he expects the Dallas data center market to be up to bat and swinging for the fences in 2017, “because providers in the Dallas marketplace are scrambling to get deliveries to the market to meet the cloud demand, and there are reports of two or three large hyperscale requirements circling the marketplace.” Here’s why Bond is so confident Dallas-Fort Worth will see the same kind of spike in wholesale leasing in 2017 that Chicago enjoyed last year. 2016 Was a “Chicago Year” Looking back at 2015, Dallas was solidly in second place with 42.3MW of net absorption, just behind the 63MW leased in Northern Virginia’s Data Center Alley. The Chicago market at 32.5MW trailed closely behind Seattle/Portland and San Francisco/Silicon Valley markets with 39MW and 38MW, respectively, of net-absorption. A report just released by JLL highlighted Chicago as having 59MW of net-absorption during 2016, a blockbuster increase of 81.5 percent year-over-year. Conversely, Dallas-Fort Worth clocked in with 36MW, representing a modest 7.8 percent decline. Meanwhile, Northern Virginia was in a league of its own with 113MW of net absorption. Notably, this 100 percent jump in Virginia demand year-over-year does not include Amazon Web Services’ voracious appetite for powered shells in Manassas, Virginia. Much of the bump in Chicago wholesale deals has come from hyperscale public cloud customers. JLL research indicates that 86 percent of leasing in Chicago during the past 24 months can be attributed to deployments by Microsoft, Oracle, and other large players. Meanwhile, it is getting more difficult for developers to find suitable sites to meet the demand in Chicago, a high-barrier-to-entry market where developers often redevelop or demolish industrial buildings with access to power and fiber to meet data center demand. Why the Dallas Slump? Many brokers in the data center community are fond of the phrase “supply creates demand.” Urban data center markets like Chicago and Silicon Valley are supply constrained because of a lack of entitled land and utility power, which is not an issue in Dallas-Fort Worth. Bond said he did not foresee the huge spike in demand coming from hyperscale cloud service providers in 2016, and neither did many of his clients. Read more: Digital Realty Signals the Gloves are Coming Off in 2017 Additionally, lease signings for block and tackle corporate requirements slowed at the end of last year in Dallas. However, Bond sees this bottled up enterprise demand as a tailwind: “The last quarter of 2016 saw a buzz of Fortune 1000 Enterprises touring spaces for 2017 deployments.  Many of those customers are already placing purchase orders for new equipment to be placed in ‘soon to be delivered’ facilities. Expect Q1/Q2 [2017] to report solid enterprise colo signings in Dallas.” Dallas – Supply is Back Notably, in 2017 there will be a steady pipeline of substantial new developments coming online. Here’s how Bond delineates the Dallas-Fort Worth wholesale space race: Digital Realty Trust: a small amount of available capacity ‘turn-key’ unencumbered today; however, they have ~10.8 MW under construction set to deliver in 2017 on their Richardson campus, and are rumored to have pre-leased 60 to 75 percent of the capacity under construction. They quietly took down 46 acres of land in Garland in late 2016. QTS Realty: two halls of varying available capacity ‘turn-key’ remaining. They have plans into the city to develop a ground-up data center adjacent to their existing facility and ample land for additional buildings, including a large parcel across the street. CyrusOne: approximately a hall and a half of available today; however, they are likely to announce their next DFW data center development in early 2017, which will be a parcel of land they will develop from the ground-up. ViaWest: 5 MW of ‘turn-key’ capacity in their brand new ground-up facility in Plano just delivered in late Q4’16. Databank: 2MW of available capacity ‘turn-key’ unencumbered today, and have an additional 1 MW under construction at their downtown facility today.  Like CyrusOne, rumored to be in the market for expansion. RagingWire: under construction on brand new campus in Garland.  The first 250,000 square foot building delivering Phase 1 8MW in May. Aligned Data Centers: their model is a bit different based on their proprietary deployment, but estimates have 2MW immediately available with the ability to deploy rapidly. T5/Lincoln: developing a 155,000 square foot building with 2.25 MW’s delivering in Phase 1 in August. Compass for TierPoint: Compass is delivering a 30,000 square foot ‘turn-key’ building for TierPoint in Allen. “Additionally, Skybox will deliver a powered shell in Q1; Stream is moving dirt on a powered shell that should deliver Q3; Ascent is retrofitting the former Capital One-occupied data center for Q3 delivery,” Bond said. Investor Takeaway Bond laid out some convincing arguments to explain why Dallas should have the leasing success Chicago enjoyed last year. In light of the JLL report, and Bond’s view of Dallas-Fort Worth supply and demand fundamentals, investors should closely watch where those hyperscale deals and Fortune 1000 enterprise deployments land during the first half of 2017. The entire JLL 2017 Data Center Outlook can be found here. (Comment on this)
5:15p	Cooling Systems for High Power Density Data Centers Erich Hamilton is Director of Engineering of DAMAC. There has been ongoing talk since 2002 that high power density data centers would replace low power density data centers. The theory is that a higher density will increase efficiency while reducing energy bills, however, with these benefits also comes the risk of cooling failures. Today, a data center where each cabinet consumes more than 10 kW is considered high power density. The density can also be measured by the amount of energy consumed per square foot, which is why many high power density data centers are built up rather than out. As rack densities continue to grow, data center manufacturers and designers are having to come up with more efficient cooling solutions to offset energy consumption. The traditional data center design is unable to cool these higher density data centers, which has led to the development of cooling solutions, such as: CRAC units; racks featuring water-chilled, rear-door cooling units; and aisle containment structures. Unfortunately, more often than not, simply expanding an infrastructure and adding CRAC units (large computer room air conditioners), is not enough. Rear-door, cooling units and hot and cold aisle containment structures are the most popular and efficient cooling solutions. Effective airflow management is a successful solution that prevents a data center from overheating, while also being cost-efficient. A rear-door, cooling unit utilizes liquid cooling technology to exchange hot air for cold air. The rear door holds cold water in a closed loop system, which offsets the heat generated by higher density racks. Basically, it is an air exchanger that requires no fans or moving parts. The aisle containment structure is a prefabricated system that incorporates all the components of aisle containment design into a freestanding unit. It is comprised of a base unit frame that is an aisle containment platform and is used for cabinet anchoring. Both hot and cold aisle containments will help improve the efficiency of a data center’s traditional cooling system. Unlike the rear-door, cooling unit that exchanges hot air for cold air, hot and cold aisle containment structures minimize the amount of hot and cold air that mixes together. A cold aisle containment’s purpose is to contain cold air, while keeping hot air out. This is done by installing end of row doors, aisle ceilings or overhead vertical wall systems, which allows the cold air to be directed into the air intakes of the servers. Hot aisle containments are the rows in which the servers pour heated exhausts. Like a cold aisle containment, a hot aisle containment’s role is to prevent cold and hot air from mixing; however, hot aisles face the air conditioner ducts and send hot air through to be recycled into cold air. As the data center industry continues to explode with the ever-increasing demand for more data, high power density data centers will continue to grow in popularity. Operation managers are now tasked with reducing power consumption and increasing efficiency. Having a high power density data center increases performance and output, but also having an efficient cooling system in place will greatly reduce a company’s energy bill. Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Penton. Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library. (Comment on this)
7:55p	Hardware Import Tariffs Could Change Microsoft Data Center Plans in UK Microsoft will consider halting its data center construction plans in the UK if Brexit results in import tariffs on hardware from China and Eastern Europe, a senior company official said. In a speech last week, British Prime Minister Theresa May said she would propose that the country exit the European Union’s single market as it exits the union itself. If that happens, the UK will have to renegotiate trade deals with countries outside of the EU (to replace EU’s trade deals), which could have huge implications for companies doing business in the UK. Today, a report emerged that UK officials would start trade negotiations with countries outside of the EU as soon as the formal process for exiting the union kicks off, which is expected to happen by the end of March. Those countries include China, US, New Zealand, and Australia. One of the most worry-some aspects of those negotiations for Microsoft (and likely other big users of IT equipment) is potential imposition of new import tariffs on data center hardware assembled in Asia and elsewhere around the world. A lot of the gear that goes into Microsoft data centers is produced in China and Eastern Europe; other hyperscale cloud platforms, such as Amazon, Google, and Facebook, also outsource hardware production to countries where it’s cheaper. Tariffs on hardware imports would substantially increase the cost of doing business for these companies, which every year spend billions of dollars on data center infrastructure. “We’re really keen to avoid import tariffs on any hardware,” Owen Larter, Microsoft’s UK government affairs manager, said last week in a Microsoft webinar on the implications of Brexit for the technology industry. “We’re looking to build out our data centers at a pretty strong lick in the UK, because the market is doing very well,” he said. “If all of a sudden there are huge [import tariffs] on server racks from China or from Eastern Europe, where a lot of them are actually assembled, that might change our investment decisions and perhaps we build out our data centers across other European countries.” Trump’s Trade Views Have Similar Implications for US The new US President Donald Trump’s promises of imposing new tariffs on foreign imports carries even bigger implications for hyperscale data center operators. The US continues to be the world’s largest cloud services market and the place where the bulk of their data center capacity is. Microsoft alone signed leases for more than 125 MW of new data center capacity in North America last year. Those facilities will need to be filled with servers. Trump’s transition team has floated a proposal to impose import tariffs as high as 10 percent. While a core Trump campaign issue, making imports more difficult – especially imports from China – is something pro-trade establishment Republicans oppose, so any effort to impose additional tariffs on international trade by the administration will not be an easy win. Cross-Border Data Flows Key to Cloud Growth Another big issue for Microsoft and other cloud providers is data flows. Today, a uniform set of rules governs cross-border data flows in the EU, meaning data from any EU country can be transferred and stored in any other EU country, because they’re all deemed to have equally adequate safeguards. Once the UK exits, its security measures may be reassessed as a country and if found subpar, transferring customer data from other countries in Europe to one of the two recently launched Microsoft data centers in the UK will not be as simple as pushing bits across the network, Larter warned. The UK is the EU’s largest cloud market, expected to double by 2019, he said. “That kind of bright future is probably not going to be possible if we make it a lot harder to transfer data and store data from the EU and into UK data centers.” Brexit would also mean the UK and the US would have to negotiate a new framework for transferring data between the two countries. Currently, cross-Atlantic data flows are governed by the Privacy Shield agreement between the US and the EU. Larter pointed out that Trump’s enthusiastic signals of support for business between the US and the UK would suggest a smooth path to a new data-flow agreement, however. The UK government has strong economic incentives to push for easy and seamless cross-border data flows. Nearly 80 percent of the country’s GDP is services-based; legal, advertising, financial services “are the engine of the UK economy,” Larter said, and they happen to be data-driven by their nature, so Microsoft will be pushing for international “data liberalization” to be at the heart of any future trade arrangements. (Comment on this)
9:49p	United Says IT Outage Resolved, Dozen Flights Canceled Monday United Airlines expected minimal impact to its operations Monday from a major system outage the previous day, which grounded its domestic flights for hours. An IT issue prevented United pilots from getting aircraft weight and balance information pre-takeoff, leading the airline to request that the Federal Aviation Administration issue a ground stop for its flights. The outage affected more than 200 flights. A United spokesperson did not say what exactly had caused the outage, describing the cause vaguely as “an IT issue” in a statement emailed Monday. The airline cancelled about a dozen of the 4,500 flights scheduled for Monday and expected a “small number” of short delays. It issued a ground stop for all domestic mainline flights at 5:30 pm Central. The issue was resolved and flights started resuming 2.5 hours later, the spokesperson said, adding: “Today we are expecting minimal impact to our operation due to this issue. We have issued a system-wide waiver to allow customers to change their flights, and we apologize for the inconvenience this has caused.” Legacy IT Industry-Wide Issue Outdated legacy IT systems are an industry-wide problem for airlines, and upgrades are extremely difficult because the systems have to keep running around the clock. The networks are very complex, having grown over decades, but big and expensive overhauls are needed, Bob Edwards, United’s former CIO, told Bloomberg last August, following a Delta Airlines system meltdown that grounded flights globally. That outage, caused by an electrical-equipment failure, cost Delta $150 million. As the incident demonstrated, technical glitches can be extremely costly for airlines, which have to issue refunds to customers whose flights are cancelled or delayed as a result. Read more: Delta: Data Center Outage Cost Us $150M Edwards retired in 2014 under pressure that followed several disruptions at United, according to Bloomberg. “I don’t believe the flight ops, maintenance, passenger service systems, crew and dispatch applications are engineered with the level of redundancy needed,” he said in an interview with the news service last year. “Mistakes will happen, devices will malfunction.” In 2015, another United system outage, caused by a network connectivity issue, disrupted customer ticketing and the airline’s ability to dispatch crews. Answering a question from an analyst about its passenger reservation system on a recent earnings call, United president, Scott Kirby, said the system was fully operational and ruled out switching onto a different system. The United spokesperson did not answer a question from DCK about the airline’s plans for preventing IT outages in the future. (Comment on this)
10:15p	Trump Advisor Kushner: Modernizing Government Tech Mission Critical (Bloomberg) — As Silicon Valley girds for a possible rollback of net neutrality, the H-1B visa program and other prized policies, here’s a bit of potentially favorable news: The administration of U.S. President Donald Trump seems to be ready to embrace the “Obama tech surge,” the organized insertion of technologists and modern digital tools into the highest branches of the federal government. Early this month, leaders of the U.S. Digital Service and other tech teams under Barack Obama met with three members of the Trump transition: Reed Cordish, assistant for intragovernmental and technology initiatives; Gerrit Lansing, chief digital officer at the Republican National Committee; and Dirk Eyman, the RNC’s director of network operations. The Obama techies presented their efforts and reported back that the meeting went well, according to a person briefed on the discussion. Then about two weeks ago, Todd Park, an Obama tech advisor and former U.S. chief technology officer, received this e-mail from Trump advisor and son-in-law Jared Kushner: Todd, Thank you to the leadership of the US CIO, USDS, TTS, and OSTP for the detailed presentation of their initiatives. I have heard only great things about you and the program you have built. The continued dedication to modernizing Government Tech is a mission critical task and we look forward to working with the many talented, dedicated tech professionals in these offices. Yours, Jared These niceties, contained in a correspondence reviewed by Bloomberg, don’t mean much if they aren’t backed up by action, of course. But it does signify that the Trumpies see the former administration’s technorati as fellow bureaucracy-busters and not as part of an Obama-era legacy program to be gleefully rolled back. Yet, there’s lingering anxiety around whether these programs will endure. Last week Wired’s Backchannel described the Obama tech surge as a bipartisan effort that counts as “one of the great achievements of the last eight years.” The goal was not only to nudge the federal government to embrace modern innovations like cloud computing but to inject tech thinking into public policy and to enlist professionals who understand disciplines like agile development, human-centered design and data-driven decision-making, Backchannel reported. Over the last few months, the various tech departments have reported on their progress to Congress. Accomplishments include modernizing the federal government’s procurement process and working on a tool called Login.gov, which aims to one day enable the public to access multiple government services with a single username and password. And of course, the tech surge eventually revived Obamacare after the debacle that was the initial rollout of the Healthcare.gov website. It’s too early to take the early signals from the Trump folks at face value because, as Backchannel reported, we have yet to see what will result. One thing to watch will be who Trump appoints as his chief technology officer to succeed outgoing CTO Megan Smith—or whether a president with Luddite tendencies even bothers to fill the position. And of course, there’s the lingering question of whether there can be any such thing as bipartisan work in the current politicized environment. (Comment on this)

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