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:let me guess

[evil_aar0n]

And virgins. Don't forget the virgins. No deal is complete without them.

Tax breaks for the rich?

[Anonymous Coward]

From TFA:

would offer income tax breaks to companies that invest more than $1 billion over nine years

Why should a company receive more tax breaks because they've gotten big enough to be able to drop $1 billion on a data center? If they can afford $1 billion, they can afford whatever taxes apply. How about you cut the taxes for small companies who struggle because of monopolies like Apple? Stop helping the companies who obviously don't need the help, and start helping the businesses who are risking having their doors closed forever because of a shitty economy.

Frankly, I'm sick of seeing the rich get the gold platter treatment.

Re:Tax breaks for the rich?

[Darkness404]

Its simple, this will create jobs. Apple is going to hire a massive amount of contractors to build this, probably have to hire some consultants, have to buy the hardware, etc. All this goes to help other companies and the economy. Honestly, it makes more sense to just abolish most taxes and establish a pay-per-use system and abolish all government granted monopolies, but thats just me....

Re:Tax breaks for the rich?

[j1mmy]

Business taxes should be the first to go, because businesses don't pay taxes. Their customers do. The only thing governments accomplish when they tax businesses is they raise the cost of goods and services.

Re:Tax breaks for the rich?

[Fastolfe]

This isn't about helping Apple. It's about helping the local communities that would benefit from Apple building a massive datacenter there. Local people get hired to do the construction. Some get hired to operate it. Others relocate just to work there. These workers need housing, restaurants and retail. This is money that flows from Apple, to its employees and contractors, to your town's businesses, to your town's residents. If you want your local economy to improve, it's in your best interests to give companies like Apple an incentive to build in your town, instead of someone else's. This means things like tax breaks.

Re:Tax breaks for the rich?

[LordNimon]

Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

Are you implying that many millions in Maryland left for other states because of the tax? Have you considered that perhaps there were many millionaires who lost a lot of money, and therefore were no longer millionaires?

Re:Tax breaks for the rich?

[slamb]

Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

You seem to be trying to lead readers into believing that the tax increase caused the drop in millionaires. If so, you're badly mistaken or dishonest, and judging by your post's score some people were stupid enough to fall for it.

Correlation is not causation! larry bagina failed to mention other, more significant factors. Namely that we're in a recession! The S&P 500 index went down 36% between 2008-01-01 to 2009-01-01! Many, many, many people's income and net worth has gone down (though not all of us were so lucky as to be above $1 million to begin with), and tax revenue has fallen all across the US! Several major states are broke! Given the economic climate, it's ridiculous to even suggest that the tax increase is at all related to the drop in millionaires without doing much better, such as:

• showing theoretically that the tax increase was significant enough to cause so many people to no longer be millionaires.
• showing that many millionaires have moved out of Maryland.
• using a comparable state with no tax increase as a control, demonstrating that Maryland's fall was much greater. (This is hard, though, because there are so many things different between states, so it's a tough argument to make that another is "comparable".)

Re:Tax breaks for the rich?

[jcr]

Are you implying that many millions in Maryland left for other states because of the tax? Have you considered that perhaps there were many millionaires who lost a lot of money, and therefore were no longer millionaires?

I'm sure that the crash was a big factor, but it's quite easy for anyone in Maryland who wants to pay less taxes to just move across the border into Delaware, Virginia, or Pennsylvania.

I know several people who've moved out of California for that reason.

-jcr

Re:Tax breaks for the rich?

[Anonymous Coward]

B) In any reasonably free market, where price elasticity of demand is neither infinite nor zero, any tax break (or tax) will be split between the business and the consumer. The business can sell more by lowering its prices (and you can bet its competitors are interested in doing the same too).

Now, that said, you probably don't want business taxes to be zero, because businesses cost the state money one way or another. It would be better for the costs to be in line with what what they pay. You'd also like things to be reasonably fair, and not have one business pay all sorts of taxes while another gets things for free, otherwise you're just distorting the labor market and making business success a function of lobbyists, friends in government, and political popularity, rather than business merit.

Re:Tax breaks for the rich?

[cowscows]

If you eliminate business taxes, then customers are still going to pay those taxes, the government is going to get that money somehow. It's just that instead of paying through the purchases of goods and services, we'd get taxed directly to make up the difference.

I'd prefer that the businesses pay for their share of the nation's infrastructure via taxes. Sure, they're going to pass that cost along to me in their prices, but then when I'm spending money, I'm making a more informed decision, because what I'm being charged better reflects the true cost of the production of those goods/services.

Re:Tax breaks for the rich?

[McGiraf]

The point, if you ignore the Monaco part, it's that if the wealth is mostly controlled by a few they have the power influence legislation to accommodate them by threatening to leave (people or corp.). By using this power they grab even more of the wealth and more of the power. Better ditribution of wealth prevents this from happening.

Re:Tax breaks for the rich?

[ceoyoyo]

Correlation is not causation!

Wow, I hate that sentence. I don't think I've ever seen it used properly here. The correct objection in this case is: "one data point does not indicate a correlation."

If the OP watches Maryland raise and lower taxes many times, and if the number of millionaires in Maryland tracks well enough to yield a strong probability that a correlation exists, THEN you may object that correlation does not imply causation. Although in that case you're arguing that a third factor consistently both causes Maryland to raise taxes and millionaires to leave.

Re:Tax breaks for the rich?

[Macrat]

B) In any reasonably free market

All things are possible in fantasy land

Re:Tax breaks for the rich?

[adolf]

But for a datacenter? Particularly one which exists to serve but one company's products? How, exactly, does this attract other companies to an area?

In your IBM example, it is pretty plain that other companies had a strong desire to be geographically near to IBM. The reason is obvious: It's easier to sell stuff to the guy across town, than it is to sell it to the guy across the continent.

Therefore, it made sense for companies that either had existing business with IBM, or would like to do business with IBM (or any business that might support any of these entities, and so on) to set up shop next door. But, again, a datacenter? Stuffed full of Apple hardware to support Apple's computing cloud?

There's a reason why the place will only employ 100 -- it's a datacenter! You've got cable monkeys, parts-swapping monkeys, HVAC monkeys, and janitorial (hell, you might even class all of these roles into "janitorial"), plus some management to deal with them. And that's...all. Everyone else associated with such a datacenter will be just as able to do their work over the network from anywhere, as they would from an office in that building.

The folks working at that datacenter won't be decision-makers. They won't be buyers. They won't be marketers. They'll just keep the thing running.

How, again, does this help encourage growth in that area? I mean, sure: Spending $1 billion on a new datacenter is sure to get the union trades all hot and bothered over bidding on the construction, but once it's built, who cares?

Unlike traditional manufacturing, their product is a long series of bits on teh Intarwebs. There aren't mountains of raw materials coming on by truck and rail and leaving as finished products on pallets. There is no major consumption of goods. About the only thing that changes, once it's built, is that the power company will have shored up their services a bit to serve the area, the telephone company will have a few more circuits to look after, and a paltry 100 people will have a new job.

Welcome to 2009.

dollars != capacity

[Anonymous Coward]

"The $1B price tag is nearly twice what Microsoft and Google typically invest..."

Is that because Apple is using its own hardware? Google and MS should be able to get a hell of a lot cheaper hardware using commodity mobos than Apple using its own expensive machines. Of course, Apple's margins are 50%, so one wonders if they're charging themselves retail or wholesale.

Of course

[Darkness404]

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

Of course, this is Apple, all Apple hardware is going to me more expensive then typical PC hardware. On the plus side all machines can be running OS X.

Re:Of course

[RiotingPacifist]

dammit i was gonna use that troll!

Re:let me guess

[rwwyatt]

Good Luck finding virgins in North Carolina! oh Wait, There must be 72 slashdotters somewhere in NC.

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

[nrasch]

It cracks me up to keep seeing states jumping through hoops and giving away all sorts of tax revenues for these big companies to set up shop. Then, later on, the company reveals that only about 30 jobs are going to be created in actuality, and the state has lost more than if they had just let the deal pass them by.

I have yet to hear of a happy ending for one of these deals for the state, and I'd be happy to be corrected if some one has a link....

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.

Surprise?

[Longjmp]

So, Apple is changing from a hardware company to a media company. Who would have guessed that after iTunes, iPods and iPhone (iPad next?) Seriously.

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?

Re:let me guess

[Laxori666]

I like how this was modded "insightful".

Re:let me guess

[Anonymous Coward]

Apple is a computer company. They have more virgins than they know what to do with.

Re:let me guess

[maxume]

Yes, but why was this modded insightful?

I figured out the Data Center Configuration!

[failedlogic]

Pffft! This is so easy to figure out, they don't need a veil of secrecy. I've already figured out the datacenter setup.

I decided Apple should setup a lot of Mac Pros for their data center. Reason: Cost to Performance Ratio. Don't go telling me Apple is more expensive than Dell. You cannot compare the two since Dell does not sell AppleCare.

I went on the Apple Website, to order 999 Maxed out Mac Pro systems with RAID cards, 32 GB of RAM and max hard drives, and 3 year Apple care. Did the same thing with some Xserves (but this has support contract + something called a "Promise VTrak E-Class 16x SAS RAID Subsystem"). Whatever. My only concern is maxing out the shopping cart so that I know I am getting the best possible configuration. Note: Apple's systems are more expensive in the Europe which is why they are setting up in the US.

I also included next business day shipping (at 999 systems its $5,000 and BTW is was the same price as 2 business day shipping so I'm not splurging).

Here's my tally:
999 Mac Pro (Maxed out) Total = ~ $16,000,000
999 XServe (Maxed out)Total = ~ $86,000,000

So for $1 Billion, Apple could have

(1,000,000,000/16,000,000) * 99 = 6,187.5 Mad Pro Systems
(1,000,000,000 / 86,000,000) = 11.627907 * 99 = 1,151.16279 XServe Systems

Footnote: Use these numbers with a grain of salt as I explain below.

1) I didn't account if Apple will give themselves a discount. If they wait for back-to-school time, they might give themselves a free iPod and printer with each system purchase. Probably not the Xserves though. All the more in favor of the Mac Pro.

2) Also, I used Google to do the math. Since they likely want to compete with Apple, they might be up to what I am doing (even before it is indexed) and are intentionally fudging the numbers.

Re:I figured out the Data Center Configuration!

[c_forq]

Also, I used Google to do the math. Since they likely want to compete with Apple, they might be up to what I am doing (even before it is indexed) and are intentionally fudging the numbers.

It's in the lab features, it's called under the "Pre-Index" feature. They use a precognitive algorithm to predict how the internet will change before the changes are posted. I've heard rumors that their are multiple precognitive algorithms though, and that they don't always agree.

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!

Re:let me guess

[drquoz]

I'm in NC! *raises hand* Don't ask about the other hand....

Re:let me guess

[jollyreaper]

Good Luck finding virgins in North Carolina!

Look for girls who can run faster than their brothers.

Re:let me guess

[Jared555]

Yeah, probably should have been redundant because there is no new information in either his or the parent post.

Re:let me guess

[Anonymous Coward]

Moderators went berserk O_o

Re:let me guess

[Anpheus]

That was a bit Too Much Informative.

Re:let me guess

[Anonymous Coward]

c-c-c-c-C-C-COMBO BREAKER!!! seriously. if this gets modded insightful, i loose my faith in humanity.