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Credit Crunch Squeezing Data Center Space 84

Posted by ScuttleMonkey
from the time-to-sublease-cycles-with-virtual-hosting dept.
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."
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Credit Crunch Squeezing Data Center Space

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  • Supply? Demand? (Score:5, Insightful)

    by chuck (477) on Friday May 29, 2009 @06:42PM (#28144975) Homepage

    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.

    • by gbjbaanb (229885)

      Unfortunately, as the supply of data space dwindles, so does the number of servers [bbc.co.uk] 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.

      • Re: (Score:3, Interesting)

        by sexconker (1179573)

        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.

    • Re: (Score:3, Insightful)

      by timeOday (582209)

      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.

      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.

    • Re:Supply? Demand? (Score:4, Insightful)

      by nganju (821034) on Friday May 29, 2009 @07:02PM (#28145169)
      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 [wikipedia.org]
      • by Sparr0 (451780)

        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.

        • 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 mo

          • by Sparr0 (451780)

            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.

            • 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 lik

              • by Sparr0 (451780)

                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 valu
                  • by Sparr0 (451780)

                    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.

      • Re: (Score:3, Interesting)

        by icebike (68054)

        > 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.

        • by TheLink (130905)
          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 i
      • 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".

      • by symbolset (646467)

        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

    • Re:Supply? Demand? (Score:5, Insightful)

      by icebike (68054) on Friday May 29, 2009 @07:05PM (#28145201)

      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.

      • by drinkypoo (153816)

        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 :)

    • 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.
    • by Desipis (775282)

      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.

    • Re: (Score:3, Funny)

      by Thelasko (1196535)
      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.
      • by TheLink (130905)
        There certainly appears to be no shortage of fools and idiots.

        But some of us are running out of patience and good humour.
      • by OttoM (467655)

        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.
  • 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.

    • by icebike (68054)

      Whats the chances that the center you visited was designed for prior generations of hardware, and the current dense racks simply don't need that much space?

      Did Virtual Servers even exist when the contract was let?

    • Re: (Score:3, Insightful)

      by Glendale2x (210533)

      That can be very common when the rack density exceeds their cooling or power capacity. They'll have customers purchase empty space to offset that rack full of blade servers.

  • Our own data center (Score:3, Interesting)

    by Anonymous Coward on Friday May 29, 2009 @06:50PM (#28145057)

    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.

    • by causality (777677) on Friday May 29, 2009 @06:57PM (#28145125)

      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.

      At what point then does it make sense to hire a data center with a fat pipe that's located on foreign soil? If domestic (USA) data center space is becoming a scarcer, and thus more expensive, resource and that point is reached sooner rather than later, wouldn't this represent yet more wealth being transferred out of this country? I don't know how large and significant this market is, but it sounds like one that is only going to become more significant as the need to store electronic data is only going to grow. The summary notes:

      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

      Some stimulus indeed if it encourages wealth to leave this country. Now I am rather ignorant about economics. I can apply basic reasoning like this but I really don't know much about the topic and I freely admit that. Is there any likely way that this would not be the case?

      • by Jurily (900488)

        Some stimulus indeed if it encourages wealth to leave this country.

        Not just wealth. Technology. Plush toys manufactured in China is fine, because that doesn't really require local R&D, for instance. Datacenters, on the other hand, create entire highly profitable industries that move the country forward.

        If this trend continues, soon all you'll have is corn. (Yes, big overstatement.)

      • Re: (Score:3, Insightful)

        by Thelasko (1196535)

        At what point then does it make sense to hire a data center with a fat pipe that's located on foreign soil?

        When latency doesn't matter.

    • Re: (Score:3, Informative)

      by gbjbaanb (229885)

      It probably is the power supply [crn.com]. In the UK, the cost of electricity went up dramatically a year or so ago. Now, space is practically free, bandwidth too, but 20A costs more than your firstborn.

      We put some new servers in our machine room at work, nice 4U 6x4core CPUs, with 32Gb RAM, and 8 SAS drives in each chassis. Come to think of it, I can't think why everyone suddenly has a problem with insufficient supply of power to datacentres.... :)

      • by Sparr0 (451780)

        Who needs 20A?

        Not [linuxdevices.com] me [linuxdevices.com], that's who!

        • by TheLink (130905)
          But what are the figures for:
          concurrent clients/watts
          concurrent clients/$$$
          concurrent clients/rack space

          While ARMs are lower power than Intel x86 CPUs, the x86 stuff nowadays provides very good CPU performance/watt.
          • by Sparr0 (451780)

            concurrent clients/watts = very high
            concurrent clients/$$$ = high
            concurrent clients/rack space = sadly low, owing to the limited selection of low power servers. no one makes a 1u with 8 ARM cores in it... yet :)

        • by Splab (574204)

          Yeah, I can see how one or two of those boxes can compare in performance with what GP was using.

  • 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.

    • by erpbridge (64037)

      I believe rather than moving to 1U servers, many companies will be (and already are) looking at virtualization via VMWare and HyperV. Yes, a 1U server attached to about 2TB space allocated on a backend Clarion and running a lowend Oracle or SQL database functionality is better power wise than a 4-6U server with 2TB(+redundancy) space locally running the exact same functions.

      However, IF that functionality is capable of being run on a VM guest, you could put that and 20 other virtual servers in a maxed out (f

      • Fusion on a DL580? Fusion is for Mac's. You did mean ESX or vSphere? Right?
        • by erpbridge (64037)

          Sorry, I meant vSphere. Was trying to think off the top of my head what was next after VMWare Infrastructure. I should have gone and looked rather than try to depend on memory.

  • there's shitloads of empty building space out there. the only real limitation you might have is prime locations near major pipes, but even if this is the case high speed microwave links are pertty cheap.

    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.

    • Afaict the issue is thet all the fitting out of the building (power, aircon, raised floors etc) and ordering of things like massive power feeds from the local powerco, massive network infrastructure from the local communication provider(s) and massive generators takes time. You can't just buy a generic building and have a high grade datacenter in a month or two.

      • by timmarhy (659436)
        define massive, i've worked in petro chemical plants so my idea of massive energy use is a power plant using more than 60 terajoules of natural gas a day?

        if your talking a cluster of 100kva diesel gensets then sure it might well take a few months to have it all up and running. i would have thought getting those fat network links to a telco would be the major challenge.

        • if your talking a cluster of 100kva diesel gensets then sure it might well take a few months to have it all up and running.
          lets say a 1U server uses 100W and aircon and UPS overheads push that up to 200W. You can fit about 40 1U servers in a standard rack (with say a network switch and console/kvm server in the remaining two slots) so that is about 8KW per rack.

          So assuming your UPS's present a unity power factor to the supply (modern large ones are pretty close afaict) a 100KVA generator would do about 12.

          • by Dice (109560) on Friday May 29, 2009 @11:21PM (#28146765)

            Small to medium sized datacenters are in the 100s of racks range. They measure power capacity in megawatts (MVA).

            Typically, though, your real constraint is the cooling system. For this reasons the datacenter most of my clients are in gives you a certain amount of floor space for a certain amount of power when you buy a cage. The power works out such that you couldn't really fill a whole 42U with 1U servers, let alone blades.

            • by timmarhy (659436)
              in that case it'd probably be easier (and cheaper/ more reliable depending on where you live) to build your own power plant. natural gas would be the logical contender, i wouldn't even want to think about trying to organise that kind of juice to a new location.
        • by Kadin2048 (468275)

          The bigger and even medium-size datacenters have dozens of generators. Huge ones, too; they need to be able to put out megawatts and still have N+1 or N+2 in case one goes down, maintenance, etc.

          I don't know if the slowdown in new construction has cleared the backlog any, but about a year or two ago, the big limitation on datacenter construction (or at least startup) was sourcing the gensets. Everything else might be in place and ready to go, but if customer contracts specified redundant power supplies wi

  • ... analysts say this will create a shortage of data center space in 2010 in key markets ... where demand exceeds supply.
    And in markets where demand does not exceed supply there will be no shortage.

    • by icebike (68054)

      And "Key Markets" makes no sense in the internet world.

      Unless of course the "Key Markets" seeing this shortage are having a hard time finding sites willing to COLO their kiddy porn servers for fear of having the entire place seized by US Marshals.

      Does it matter if your server is across the country or across the state any more?

  • by gelfling (6534) on Friday May 29, 2009 @07:03PM (#28145173) Homepage Journal

    There's more to the world than NOVA. Unless you have ITAR requirements for government work.

  • Very Large Telco/ISP (Score:2, Interesting)

    by Anonymous Coward

    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

    • RBOC?
      Is that like an evolved EKNS?

      • Re: (Score:3, Interesting)

        by drmofe (523606)
        Regional Bell Operating Company. OP has it about right - the fixed costs of establishing a new centre are huge, so you leverage what you have to the max. Interesting point about fibre using more power overall than copper - all those 40A PSUs in core switches.
    • by icebike (68054)

      Sounds fishy to me.
      Power demands of rack servers have been falling dramatically for years. There would be no problem swapping 4 or 5 servers onto a single U1 using virtual machine technology and using less power over all and requiring less fiber too.

      Maybe the problem of said Telco was failure to keep up with technology.

      • by Ungrounded Lightning (62228) on Friday May 29, 2009 @08:51PM (#28146023) Journal

        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.

        • As someone involved in designing the servers ...

          Make that "... designing the networking equipment ..."

          • by TheLink (130905)
            So you're saying the network equipment ASICs and stuff are still in the P4 era?

            Does that mean the power consumption for the network stuff will drop soon? Coz my current computer uses a lot less power than my old one (despite being way faster).
            • No. It means it will continue to go up (on a basis of watts per cubic foot).

              For the next couple years it will go up as this high-leakage stuff is deployed (although there are already some low-power chips in the works that will drop in and be deployed with them, which will mitigate it.) Then newer stuff will start coming out.

              But the newer stuff won't necessarily replace the older stuff, which will stay in service for years. And the newer stuff will trade the lower power for more packet processing - both m

  • What does the stimulus package have to do with this? All I find in the articles is

    We still don't know about the government requirements coming out of the stimulus package, which could have a big impact on supply.

    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.

  • Gerr... what?? (Score:4, Informative)

    by moogied (1175879) on Friday May 29, 2009 @07:50PM (#28145581)
    I am sitting in a data center right now.. we are at about 65% of "total capacity" and at about 85% of our current capacity... our 6 other data centers are in similiar situations. We have some big names looking at moving into us, which means they will be leaving other places soon.

    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.

  • by billybob_jcv (967047) on Friday May 29, 2009 @10:10PM (#28146439)

    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.

  • 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

    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

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