Who’s (Not) Building Datacenters?

I posted this on my blog at http://theec.blogspot.com, but thought it would be interesting on Sophia’s blog as well.

The recent economic climate has put many datacenter construction projects on hold. I know of several, major, South Bay-area projects (totaling approximately 700,000 square feet) which have recently been scrapped or delayed indefinitely. Those that are being built are also facing rising energy costs (a major component of the price of operating a datacenter).

What will these delays and rising costs mean to businesses? For large businesses, these factors might delay datacenter buildouts, which can impede or delay IT equipment purchases. A 10,000 square foot datacenter might hold 7,000 servers. At a price of $4K each, this would be $28,000,000 worth of servers. A rough guesstimate might place the IT equipment value that those 700,000 square feet of datacenters could hold at roughly $2B. That’s a lot of Silicon Valley business for Dell, Rackable, IBM, HP, Sun, Cisco, Juniper, and others that can’t be fulfilled until there is a place to put those servers and power to power them.

Another possible impact to business is that rising costs and declining datacenter availability might help propel SaaS offerings (think Salesforce.com) and cloud computing platform providers (think Amazon EC2). Perhaps the tradeoffs between an SAP-based CRM module and Salesforce.com will tilt a little more in Salesforce’s direction when there’s no datacenter floor space to hold new servers.

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