Don Dodge on The Next Big Thing: $500M data centers? I'll take two please

Data centers are popping up all over the place, at $500 million a piece. Google and Microsoft are in a high stakes race to provide computing infrastructure in the cloud for everything from hosted applications and services to video on demand.

My friend Greg Linden wrote an interesting blog about this where he concludes "Trying to build a world of infinite storage, bandwidth, and CPU power, that is Googly. That infrastructure, once built, would be a tool that makes the impossible possible."

Google said it will spend as much as $600 million to build a data center in the Caldwell County town of Lenoir. The North Carolina operations will create 210 new jobs, which will have an average annual salary of $48,300.

Microsoft is planning a new $550 million data center in San Antonio, Texas. This is in addition to the $500M data center being built in Quincy, Washington.

Google has already started building a giant data center in The Dalles, Oregon. Another is planned for Blythewood, South Carolina on 466 acres. The project is expected to cost up to $800M and employ 600 people.

The keys to where these data centers are being built? Cheap power and cheap land. Listen to this quote from MySA.com "

In Central Washington, data center companies like the area's hydroelectric power supplied by local utility companies as inexpensively as 1.5 to 2 cents per kilowatt-hour, Snead said. Microsoft's Quincy center will use about 48 megawatts of electricity annually. The San Antonio center will use roughly 44 megawatts. That compares to the national industrial electric rate of nearly 9 cents, according to the Edison Electric Institute based in Washington, D.C.

Buying up dark fiber bandwidth and building many $500 million dollar data centers is reminiscent of the great Telco build out of the Dot Com Boom back in 1999. This time it is Google and Microsoft, not Level 3 and Global Crossing. I hope the end results are different this time.

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