Containers/PODS/Data Center in a box - the ultimate hedge?

There has been a ton of stuff going on in the world of technology this summer and I thought it was about time I shared the sum of my discussions this summer and see what other folks are thinking about.

I just spoke to a good friend of mine who is headed to work at Stratus Technologies - the ultra high availability server company and we were chatting about the electricity issues companies are faced with as they virtualize their infrastructure.

Cabinet draws increase when you virtualize - especially with blades - which means electricity USE increases as well. If you use and need more of anything than what you have, you will have a shortage unless you get more. Duh. You can have a 100,000 square foot facility but if it has 5MW available and your new virtualized design requires 10MW, even though you can now put the entire data center into 100 cabinets - doesn't matter the size of the glass my friend - when you take the last sip you take the last sip.

Other topics that have been fun to watch...

Markey-Waxman bill HR2454 that got passed in the House and is up for debate in the Senate next session. Talking about taxing carbon footprints of companies. I am sure taxing carbon profiles of humans is around the corner - especially when they see the tab for Social Security, but I digress...

The Waxman-Markey bill is 1400 pages. I have read a fraction of it. It lays out a cap and trade program whereby companies get an allocation of carbon they can emit, and anything over that they pay a HUGE tax on, or go out to a soon to be created public market (Goldman Sachs is the lead developer) and buy other companies' carbon surplus.

So if I am a data center operator and I like coal and diesel generated electricity because it is reliable and cheap but dirtier than a mud wrestling prostitute, then I will get a hefty tax bill because I emit more carbon than the government thinks I should. OR if I can find an organic, wind, methane, gerbil wheel generating source of electricity data center that emits a tablespoon of carbon each year, I can cut a deal with them to buy their surplus of carbon allowance and keep right on chugging with my diesel and coal.

This, like many other government programs is rearranging deck chairs on the Titanic - there is no real change to the outcome, but we can feel good about appearing to have addressed the outcome.

The other side of this is the cap program. Reduce your carbon footprint period. No trading credits/surplus/etc. reduce your emissions or we will tax you out of business. This has legs, in my opinion and speaks to what is good business, will drive innovation, and help the East Coast and Europeans have cleaner air. If we can get China and India to help out - sweet!

The other discussion I had more than a few times was around data center inventory and the lack of it. It has been leading to higher prices in a down economy, the fact that there is little inventory in the wholesale space - 20,000 square feet and up, and that there will be a tightness felt over the next few years until debt markets can open up, get financing flowing for new projects and space becomes available.

The last discussion area that has heated up even more in the past 60 days has been around containers. There is a LOT more activity out there as people come to realize how slick this solution is, and why it's a hedge against carbon tax (efficiency goes up with power consumption), you can get them quick, so when budgets open up, you can wait to buy as long as possible and get another few dozen petabytes of storage or a few thousand cores up and running in 2 months, and if you pl,ug them into green power and grey water - well, now you're talking extra credit.

The one thing that I am watching closely is based on a question I heard on a recent call - 'Whay are these container deployments fire drills every time?' to which I responded, 'Because they can be deployed faster than a traditional data center EVERY time. Customers know this, it's the data center companies that need to step it up and have inventory ready or the process in place to deploy it more quickly than they are used to.

There is also the issue of zoning too - cities and towns don't know what to make of the containers, especially the ones outside. They see them as 'occupied temporary structures'. To me that definition is a refrigerator box with a schizophrenic uncle and his three imaginary friends in it, not a standard container that there are several thousand of in Newark and Long Beach. Aside from the fact that they are 'occupied' maybe 2 days a year, if that.

Anyway, containers are getting much more street cred and are the ultimate hedge against taxes, portability, density, with the upside of efficiency gains and fast depreciation.