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Apple Plans $1 Billion iDataCenter
1sockchuck writes "Apple is planning a major East Coast data center to boost the capacity of its online operations, and may invest more than $1 billion in building and operating the huge server farm. That's nearly twice what Google and Microsoft typically invest in their massive cloud computing centers. The scope of the project raises interesting questions about Apple's plans, and has politicians in North Carolina jumping through hoops to pass incentives to win the project. The proposed NC incentives build on a package for Google that later proved controversial."
Funnier is something that happened here a while ago. A very large telecom company that everyone here has heard of opened an employee center after being given a rediculous amount of benefits, tax deductions, paid lease, etc for a few years.
They did hire as many people as they said they would. Then came the day when the deductions and all the free stuff ran out, as per the contract. On that very day, they announced they were closing all operations in that area and fired everyone.
Fun stuff.
I think Apple will take a page out of Nintendo's book and reinvent casual, portable gaming. Imagine streamed games to your iPhone?
http://blindscribblings.com - Tasty pop-culture in conceptual fashion.
http://en.wikipedia.org/wiki/EA_Montreal
http://en.wikipedia.org/wiki/Ubisoft_Montreal
http://en.wikipedia.org/wiki/Eidos_Montreal
In short, subsidies made Montreal (and the province of Quebec in general) one of the top hubs of video game production in the world. Similar measures in British Columbia have also contributed in positioning Canada in the video games industry.
You know, that mini-touchscreen tablet that everyone thinks is coming? Instead of allowing people to use google-docs and discover that the touch interface doesn't work with regular software, Apple has been developing its own cloud computing software applications. With your $1,500 purchase of $300 of hardware, you get to use Apple's cluster-farm to write your iDocs (assuming your net connection stays up).
First, I've never been a big fan of these side deals that state and local governments make to entice businesses to relocate or expand to their area. I understand why they do it, but there's a flip side that a lot of people don't realize.
Second, I actually have reverse experience with this. I live in the Northeast, which is not the cheapest place in the country to do business by a long shot. The company I work for has decided to relocate a lot of their work down South. That's great if you love the heat and don't care about moving. Tech workers are often the first to consider in any move like this -- I seriously think executives believe a stereotype that all tech workers live in a one-bedroom apartment or with Mom, have posessions that fit in half a U-Haul, don't care if they live in Boston, MA or Branson, MO and will move wherever the company tells them to. This has happened to me at 2 companies before (I'm on Offered Relocation #3 now,) and I'm not going (again.) That decision boiled down to a few things for me. First, I really like living where I live -- I don't think I could be happy where they're relocating. Second, if I did move, it'd be one-way. Sure, you can sell your house in the Northeast and buy 2.5 of them in the South, but you'll never be able to move back without huge sacrifice. Third, even if I kept my salary, there' s no guarantee I'll keep my job. Companies aren't the same way about their employees anymore -- even if you do an awesome job and have a long tenure with the company, they won't blink at the idea of letting you go. Then what? The local market salaries are 50% less than they are back home. Fortunately, I'd have savings from not spending all my money on a new house, but I know way too many people who would move down and live like kings on the salary differential.
As I said, I definitely get why municipalities jump at the chance to get a new employer in town, and why employers pursue these tax incentive deals. But just like they taught the MBAs in Economics 101, everything has externalities and nothing is free!
I worked for a company that had received huge state and local tax incentives to build a new HQ in Kansas. The incentives had provisions that required the company to maintain a certain number of employees and very high (for the area) average salary. It took 2 years to build the building, and it was a model of "green" construction that had all the state & local politicians creaming their pants. 30 days before move-in, the company was bought out. The buying company had no choice but to let them move in - if they didn't, they would immediately owe a big chunk of money to the state. But, the new company also began downsizing the Kansas staff, and in January they announced that we no longer met the provisions of the incentives. So, they are now going to move out of that brand new building and try to lease it out at a loss until they can figure out how to get out of this mess.
The final result will be MORE downsizing of the Kansas staff than would have ever happened without all this nonsense - and the state of Kansas will lose both the tax money and an employer.
There was stupidity a plenty in this deal - the company for thinking they needed to build a Taj Mahal while sales were tanking, the state for believing they needed to cut them an incentive deal, the buying company for acquiring this pig for $2B or me for taking a job in this industry!
Did anyone else read TFA and immediately flash back to 2001-2002 and hundreds of thousands of square feet of data center space sitting empty?
http://www.crn.com/it-channel/18838014;jsessionid=QYMHD1PL3SZSYQSNDLPCKHSCJUNN2JVN
http://www.internetnews.com/xSP/article.php/898681
Not necessarily. If you're trying to attract high-tech companies to an area that has no tech workers, then it makes sense to give the *first* company an incentive to build there (with smaller and smaller incentives as more companies come in). If there aren't any tech workers already in the area, it's going to cost a big company a lot of money to bring them in. That's a very real, tangible cost to the company.
Once the area is established and has a good number of tech companies and workers, the tech workers (who tend to make good money) will settle in because they can always find a new job at another company nearby. Then they'll spend their larger-than-average salaries on eating out, going to the movies, and all those other things that bring in sales tax dollars and put money into the pockets of "regular Joe" types.
To give you an example of this, consider the neighboring Colorado towns of Boulder and Longmont. Back in the early '60s, Longmont was largely an agriculturally-focused town and Boulder was, well, Boulder. In the '60s, IBM built a large plant smack dab between Boulder and Longmont and it employed thousands (my parents met while both were working for IBM, incidentally).
Before long, other tech companies (like Maxtor, Seagate, WD, StorageTek, National Semiconductor, DigitalGlobe, Amgen, Intrado, Xilinx, AMD, Webroot and more) opened up new offices and plants (or started in) in the Boulder/Longmont area. Housing prices started growing faster than the national average. Longmont's population exploded from about 23k to about 71k; Boulder's population increased by half, from about 66k to about 94k.
By the tech boom of the late-'90s and early-'00s, the Boulder/Longmont area had more tech workers per capita than Silicon Valley and housing prices were well above those of the surrounding areas. Even after the tech bubble burst, there was still plenty of new activity. The Boulder/Longmont area has seen amazing economic growth, and a much of that can be traced back, directly or indirectly, to IBM opening up its plant and employing thousands of tech workers where there were none before.
Now, in the case of this Apple datacenter, with only 100 employees, it's hard to see if that will make a large enough impact to help the local economy in the way that IBM's plant helped that of Boulder and Longmont, but sometimes you just need to take that first step to bring that company that everyone's heard of to your area; then maybe others will follow.
And *that's* why it sometimes makes sense to give businesses tax breaks.
170 Comments and still no-one has linked this datacenter to the coming MacTablet and the mobile ME. What about the tablet operates mostly on internet??
Funny, that sounds exactly like Dell's Call center in a small, economically distressed Southern Oregon town. Except Dell never quite hired as many as they said, later got sued for labor violations... (requiring people to be there up to 20 minutes before work, at their desk and ready, but not clocked in, etc...) And Dell trashed the building, and the city, which leased them the property, had to clean up the mess afterwords.
What are we going to do tonight Brain?
You sir, are a happy peon.
How so? By believing that I can perform a valuable service to businesses, negotiate my pay, earn a good living, save my money, invest wisely, and become a millionaire? That makes me a peon?
Maybe I should follow the groupthink. Believe I can perform a government-mandated service to businesses (like being a CFL inspector), join a union and force people to pay me extortionate wages, become rich off extortionate pay, and then have the government tax the #*^$ out of me to give it to my neighbor the who sits on his porch every day smoking and drinking and collecting welfare checks...? You know--I like my way better. You don't have a right to my money.
There's no place like
If PC pricing is transparent you will get less competition and potentially higher prices... Think about the following... Apple... Transparent? HA! Oh wait their margins are glorious!!!
Right--so in answer to my question, you would respond 'you are correct'.
Forgetting Apple and their 'opaque' process, there's a reason the company I work for gets most of the business in my town. We are cheaper all around. Our computers are cheaper because we don't purchase them retail (paying tax) and then resell it to customers. We buy as a distributor (not paying taxes) and then sell them to customers (who pay the tax). Now if we were being taxed on the PC--do you really think we'd be eating into our profits, or increasing the sale price? I tell you we won't be eating into the profits.
Drop the tax off completely, and we're going to keep selling the computer at the same price we've always sold them at--but the government wouldn't get their chunk. Lower taxes usually equal lower prices. There aren't too many companies that are stupid enough to raise their prices in exchange for lower taxes. Of course there aren't many governments that cut programs and lower taxes in the first place...
There's no place like