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."

Comments

Re:The states don't win on these deals....

[Shados]

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.

Streaming Gaming

[Enderandrew]

I think Apple will take a page out of Nintendo's book and reinvent casual, portable gaming. Imagine streamed games to your iPhone?

Another relocation incentive deal?

[ErichTheRed]

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.

• Several posts have already pointed out instances where a company moves in, sets up, then closes their operation as soon as the free power/zero taxes run out. This means that all the people who were employed are either unemployed or (if they're lucky) forced to move somewhere else. Companies can play this game as many times as municipalities will allow them to.
• Especially in economically depressed areas, where the company may be one of the only high-wage employers, what happens when a worker at the company loses their job? If the spouse works, is there any employment opportunity beyond your company and retail/service jobs?
• On the local front, an employer coming to town and increasing average wages may sound good, but it's only good for the employees of that company. Locals who don't work there have to deal with higher housing, food and other prices. Local businesses have to raise wages to keep up with the newcomer, which means they have to charge customers more.
• I know a lot of people claim that the rich pay a lot of taxes, but it seems to me that reducing their companies' tax rate makes local budget problems even worse. As good as it would be, running a local government is not free. You need to pay for roads, schools, police, etc. Economically depressed areas that don't spend money on these things stay economically depressed (bad infrastructure, crappy schools and teachers, high crime due to the underfunded police.) Instead of forcing middle class taxpayers to pay more taxes, share the burden with those who can afford it more.

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!