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Credit Crunch Squeezing Data Center Space
miller60 writes "Many companies have saved money by leasing wholesale 'plug and play' data center space instead of building their own facilities. But the credit crunch has slowed the construction of new data centers, and analysts say this will create a shortage of data center space in 2010 in key markets like northern Virginia and Silicon Valley where demand exceeds supply. The situation is already becoming critical for companies with large space requirements, as indicated by a flurry of leasing recently in northern Virginia, where the remaining space may be quickly absorbed by government stimulus projects."
As the supply of data center space dwindles, the price will go up. When it goes up enough, it will become profitable to build new data centers, and it will happen. It's the economy, people.
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I visited a Q9 datacenter about 2 months ago, and probably half of the floor space didn't even have racks put up yet. I'm not going to say that's representative of all datacenters around here, but I certainly hear plenty of colo facility commercials on the radio.
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Yes, it is indeed the economy. Just as you say, the price will go up as data centre space becomes more sparse. The profit can then be spent on more data centres.
We've been fighting to find decent data center space for a good while here in Tampa, FL. Level(3) keeps saying they cannot provide enough power to fully utilize their facilities (we read that as holding onto premium real estate for the high bidders) and other data centers we've looked into are either ludicrously expensive or force us to use their connections to the internet which we, as an ISP, really don't want to do.
Unfortunately, as the supply of data space dwindles, so does the number of servers to put in there. So all's well.
Sales of servers worldwide fell almost 25% in the first three months of 2009
Revenues for Unix servers fell 17.5% compared with the same period a year earlier.
Microsoft Windows server revenues fell 28.9% to $3.7bn and Linux server revenues fell 24.8% year-over-year to $1.4 billion, its lowest in five years.
Though, people would still be using Linux, just not paying for it anymore. With Windows you can't say the same.
And more low power ones. This will be a self correcting issue.
It is probably true that there is too much energy and wasted space at the EXISTING data centers as it is.
hell there are plenty of data center in a sea container concepts out there you could rent a bit of parkinglot if you had to.
If you mod me down, I will become more powerful than you can imagine....
Yes, and knowing ahead of time what the economy is likely to do is the key to making money from it, which is something some people are very interested in.
What's going on with slashdot? If I click on a story link, like
http://hardware.slashdot.org/story/09/05/29/2010202/Credit-Crunch-Squeezing-Data-Center-Space
I get a "connection reset by peer" error message. This occurs with firefox, lynx, even wget.
But if I change the url to
http://slashdot.org/story/09/05/29/2010202/Credit-Crunch-Squeezing-Data-Center-Space
then everything works fine.
It's been happening for some time. Searching with google or the slashdot search function doesn't turn up anything.
What gives?`
It's already profitable. The credit crunch has quashed new centers from being built because the credit markets are frozen due to irrational fears, something the supply/demand model does not account for. When the space dwindles the new centers will be built but there's a lag, it's not instant, also something supply/demand models do not account for. Let's leave the Econ 101 classroom theory alone and take a look at the real world. http://en.wikipedia.org/wiki/Behavioral_economics
There are 2 kinds of people in this world. Those that can keep their train of thought,
And in markets where demand does not exceed supply there will be no shortage.
There's more to the world than NOVA. Unless you have ITAR requirements for government work.
Temporary shortages of things like this are the ultimate Non-Story.
If we want to really HoZe this industry, let the government step in. Otherwise will the hand wringers please shut up and sit down and let the market handle this!?
Yes, financing may be tight, unless you are Google or Amazon, or Apple, or IBM, or Microsoft. But it it IS a problem you haven't built your business case very well. There are Venture Capitalists out there roaming around looking for ways to put their money to work, and infrastructure is a lot more reliable then next weeks "big thing" software project.
Sig Battery depleted. Reverting to safe mode.
Old news.
I used to work at a VERY LARGE worldwide Telco/ISP. Most of the data centers (almost 40 Class A and hundreds of lower class) locations were closed to new systems due to power and space constraints. We had to retire a system in order to place a new anything into it and the power utilization had to be less than the previous equipment because networking equipment was using more power than ever before (fibre uses more power than copper).
Then we bought an RBOC that had some space and power available in their data centers - the explosion of new projects trying to get placed into them was unbelievable.
All this was 2-3 years ago.
I think you meant to say, "so does the increase in the number of servers".
If server sales fall, the number of total server still increases as long as the number of servers being removed does not exceed the number of new servers being racked.
How you want to count virtual servers is up to you.
Does this mean more people will be employed in building data centers? Or simply that the gov't itself will require more space, as implied by the "northern Virgina" reference.
It will become *MORE* profitable. Therefore reducing the need for credit (when you have a shit ton of cash, you don't need to finance it) and allowing them to be built. Let's leave Econ 202 out and leave it up to those with a degree in this crap, dumbass.
The traditional supply/demand model does not need to account for credit. When the price of existing data center space goes up, the companies running those data centers will make more profit, and thus be able to build more data centers without credit.
Absolute rubbish.
Do a google search for:
"data+center" near Los Angeles
"data+center" near El Segundo
etc.
There is an *lot* of colocation available. Furthermore, as long as there are good network connections, electricity, and water, it will not be difficult to set up new datacenters - a shortage would be short lived at best.
The only way I could forsee a shortage would involve something catastrophic happening to either California's power or fibre.
I'm not sure those who build data centers are making their decisions solely based on the cost of operation. Economy says that in many applications, data centers are basically redundant since their only purpose is to relay data back and forth; often it would be much cheaper to implement a peer-to-peer solution that for the most part keeps the data out. Still, data center owners are eager to pay the cost just to lay their dirty hands on the wealth of information they can dig into. I'm not sure changing cost of operation could change these greedy policies. We will see more and more data centers being built no matter what. I see a future with millions of data centers, standing there like giant honey pots designed to lure, trap, and enslave the naive and trusting, and suck their innocent blood through targeted advertising, exploiting our every weakness and dirty secret.
> also something supply/demand models do not account for.
I'm sorry, but thats just wrongheaded.
Supply and Demand does not "account" for anything. Price does.
Lead time, credit availability, competition, quality, speed, permitting issues and, yes, Supply and Demand are ALL accounted for by the final Price. And so is behavior, reluctance to take risk.
It is all encapsulated in the price.
I suggest you have left too much of Econ 101 in the classroom, if you ever attended at all.
Sig Battery depleted. Reverting to safe mode.
India has a pretty firm grasp on data centers now, India's economy is doing ok at the moment.. so net effect? No data center shortages.
Total capacity is if we actually used all of our available space instead of dedicating some of it to on-site tape storage, admin cubicles, increased our eletrical capacity to max, and same with AC. You won't see a data center shortage, you will however see an upsurge in datacenter remodeling.
So basically, -1 troll/offtopic is really slashdots way of saying "I hate that you thought of something before me."
Time will tell.
Maybe, instead of needing more space, pc's will get faster, hard drive space will increase and redundancy (although needed), will decrease.
But maybe it will be as simple as you suggest. But as that price goes up so will the price of my cheap web hosting - etc, etc. Very rarely to price increases not get passed on to someone somewhere.
It doesn't matter how profitable a potential business is, if you can't raise the capital to build it, it won't get built.
Sounds fishy to me.
Power demands of rack servers have been falling dramatically for years...
Read the post more closely. It's the networking equipment that is chewing up more power. You have to make up for it by using lower-power(-input) servers.
As someone involved in designing the servers I can attest that they ARE taking more power. (Part of that is that they're doing more stuff than just hot-potatoing packets. Part is that they're putting more bandwidth into each RU (Rack Unit {of height in a rack}). And part is that the currently-deploying generation of networking equipment uses custom chips built in the stage of silicon feature shrinkage where the leakage got so big that it is consuming as much power as the computation - the generation before the foundaries figured out a way around that and started cutting the leakage fraction back down.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
their only purpose is to relay data back and forth
It's rational efficiency when we then simply leave the data in one place and avoid all of this. It's capitalism when we instead try to move it back and forth infinitely fast to "create wealth".
Repeat after me: There is no such thing as a shortage in a free market.
Whenever you read a story about a shortage of something, 9 times out of 10 it's bull. Shortages only occur when artificial price controls are put on goods and services.
One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
Capital and credit goes to where it can be used to generate the most profit. At the moment, those places are 1) a government expanding it's size and tax base, and 2) the recipients of trillions of dollars in government hand-outs.
This has nothing to do with "irrational fears" or "behavioral economics". These are soulless corporations exploiting government force, waste and stupidity. It's all quite rational. It's just not a "market".
"I assumed blithely that there were no elves out there in the darkness"
We tripled the number of servers and halved the space requirements by virtualizing as much as we could. The only things we couldn't put in a VM were stuff with specific HW requirements (like fax server boards and tape robots). Many large companies are just afraid or unaware of the capabilities of virtualization. The big software companies also aren't helping. For example, Oracle needs to get over it and figure out that many midsize companies don't need RAC for performance or 24/7 @ 99.999% - there are many, many businesses that really can tolerate an app being down for under an hour (or less) while the VM is brought up on a different physical box. The current Oracle license model completely fails in an environment where you want to run mulitple VMs on relatively cheap multicore, multiprocessor blades.
Or is this news total bullshit? Seriously, Slashdot, I've lost faith in you temporarily quite a few times now but it's starting to get ridiculous. If people need bandwidth or webspace or anal porn with hermaphrodites they won't be disappointed by the internet, so stop it already.
As someone who is pretty familiar with the datacenter industry, I find this to be a ludicrous assessment. Yes, I'm sure there is a credit crunch that's slowing the building of new datacenters, but that's because the whole damned economy has been slowing down for the better part of a year already. Apparently they haven't taken into account the fact that sales of rackspace are slowing down as businesses try to consolidate their technology to better cope with the recession.
But the recession won't cause a shortage of datacenter space any more than it will cause a shortage of big screen TVs at Walmart.
I've been in a lot of datacenters lately that look like rec rooms. The servers have all been squished into a corner, and there's a vast open space where racks used to be where you could play hard drive shuffleboard if you wanted to.
It's not because of budgets. It's because you can virtualize 8 maxed out servers from 3 years ago, or a full rack of lightly loaded ones and put them in one 2U box now that draws less current than any single one of them. Demand for service has grown in those three years, but not nearly as much as consolidation and virtualization has served. So the vast growth in server rooms has stalled because... it's not needed. Unless the pace of progress slows, it'll never be needed.
/and that's good for carbon emissions and power production.
Help stamp out iliturcy.
It's not always "all encapsulated" in the price.
:).
And that's how some people make a lot of money and how others end up losing a lot.
There are a lot of things bundled and not bundled in the final price. Stuff that most economists are clueless about.
Q: How many economists does it take to change a lightbulb?
A: Economists don't change lightbulbs - they continue writing papers in the dark while waiting for the invisible hand to do it.
An economist can help tell you which bulb is more economical to use, or whether it's better to change the bulb or sit in the dark.
But if you want to understand the "invisible hand", you'd have better luck asking someone who actually understands people.
The invisible hand does so much stuff
There certainly appears to be no shortage of fools and idiots.
But some of us are running out of patience and good humour.
Repeat after me: There is no such thing as a shortage in a free market. Whenever you read a story about a shortage of something, 9 times out of 10 it's bull. Shortages only occur when artificial price controls are put on goods and services.
Reapeating something does not make it true. But congrats. You have given us a source of infinite stupidity.
"Whenever you read a story about a shortage of something, 9 times out of 10 it's bull."
I don't believe there's ever been a shortage of bull.
And did you exchange a walk on part in the war for a lead role in a cage? - Pink Floyd.
Every heard the old adage that "It takes money to make money?"
As a side benefit, maybe it will move more businesses towards cloud computing, and then the idle time on Amazon and Google servers can go to good use :)
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
The traditional supply/demand model does not need to account for credit. When the price of existing data center space goes up, the companies running those data centers will make more profit, and thus be able to build more data centers without credit.
It doesn't work that way, most companies balance themselves on credit- so if it turns out that they make more money it is owed somewhere or invested somewhere in an I scratch your back you scratch mine credit swap, if the main lender dries up the line then you get a ripple that goes all of the way around-
realize that when you lease a data center they send you a bill that has to be paid, there isn't some big bucket in the office of the data center that you walk into on the 1st and drop cash into and that money isn't immediately on hand so that in and of itself needs to be accounted for as accounts are the same "virtual" money as a line of bank credit.
most companies balance themselves on credit
...and those are the companies that are suffering from the "credit crisis". What I said applies to responsible companies.
And you get the money, with which you will adage-ly make more money, by raising your prices when demand goes up... I don't see what you're getting at.
What I said applies to responsible companies.
you totally missed the point- the only companies that don't balance themselves on credit are mom and pop shops that don't do much business- retail, service, supply etc. all balance themselves on credit because in order to pay salaries, purchase equipment, buy stock to sell- all requires an investment of credit and not a cash investment- that is not how business is done since debt vs. holdings are counted differently to the value of the company. A company that operates in cash is less valuable hence less likely to be able to grow since growth has to be leveraged on credit as well.
I don't know what you consider "mom and pop", but the last two places I have worked have been 150-300 employee businesses that operated without permanent debt.
I have trouble seeing how a company with $1M in available credit is worth more than a company with $1M in cash on hand, all else being equal.
there is a difference between permanent debt and operating credit, permanent debt means that a company is permanently in the red wheras the amount of operating credit is dependent on the financial assessment of the company- if the company operates conservatively within it's credit it won't be in the red- it can pay off it's creditors but it does need to have the operating credit in order to function as I am sure that the places you have worked did.
companies actually are seen differently by their cash value and credit- cash on hand for a company is not normally seen as a positive since it is showing that the company is not expanding, in order for a company to be considered a growth company it should be slightly extended beyond it's value and show exponentially growing profits- it is kind of stupid from a person 's point of view but from the POV of investors and CFO's the extended company is seen as an investment brand since VC is attracted due to it upward mobility
I dont think that I have ever worked for a company that was actively seeking VC, or exhbited greater than linearly growing profit. I think we are talking about two very different kinds of company. The ones you describe fail often. The ones I am talking about stick around for decades.
I'll admit I don't have my fingers on the pulse of IT, but when I heard about Google's data centers in shipping containers, I thought it seemed like overkill. Why do you need to move data centers? Everything is global on the interwebs.
But in retrospect, the idea is brilliant. They clearly anticipated the sort of localized shortages in IT infrastructure that this article describes. I bet their feeling pretty smart right now, as they drive their data centers from West Texas to Northern Virginia....