Lawyer Bait

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Monday, April 12, 2010

The Issue of Scale - Part 2 - The Basketball through the Python

What a difference a week makes...

QTS announced they will bring up to 1M square feet into the market after they purchased a former chip fab plant in Richmond VA.

Digital Realty Trust announced they they are full as is DuPont Fabros in Northern VA and they will both be expanding to the tune of ~100K feet each. In total that is roughly 120 MW, I am not sure on the time period over which the inventory will be rolled out.

So given that coming into the year, about 9Mw were taken per quarter in Northern VA, and the recent leasing of at least that much in March means that things are growing not abating. That does not include the ~1200 MW that the Government will need to start planning for consolidation starting in 2011.

So this example brings me to the next issue of scale which is reality of expectations.

Specifically expectations that the available space will be there when needed. If the Government or the Systems Integrators think that 1200MW will just appear, then lets look at reality.

Lets say 12 agencies need 100MW each. With 10 -20MW available in any given quarter as move in condition - i.e. we tour it, we like it, we want it, price is fair, where do I sign, space is finished condition - this means in ten years the space will be there. Ten years to do a consolidation that has been set to take two years. For each agency.

At a cost of $1200/ft, and 10k ft = 1.2 MW and 1200 MW are needed/100 per agency... For 100 MW the capital needed is $1B. Times 12 = $12B. For ~1M sq. ft.

Investors are you listening? That is $12,000,000,000 that is needed to fund building data centers that are green, efficient, and presumably modular in design and deployment. For one project from one customer. In a two year time frame. I mentioned that the power had to be green right? Oh and did I mention that gear needs to be ordered to replace the old stuff, moved if it's still good and in working condition, and all brought together within specific windows to minimize downtime? People can't NOT get their Social Security checks.

Using an industry estimate of 4 months to complete a 10k ft computer room - 1,000,000 square feet/10,000*4 months/12 = 33 years if we start now. No, that does not factor in economies of scale/parallel building projects, etc.

If we deploy 1M square feet at once then maybe to get a shell up takes 2 years, but figuring out how to chunk it up is a different story, and also where the time gets eaten up.

How much of the space needs to be in a SCIF and/or adhere to DCID 6-9? Where is the failover site going to be to make things redundant? Is all the data and equipment at the same level of security? Should it be? How do we connect it all?

I can hear the Cloud pundits say - put it in 'the cloud!'

How many of them have 12MW of cloud deployed let alone 1200? Does the data stay in the US? Can they prove it? Are all the facilities secure? How secure? Why do I have to pay to move data from site to site? How many vendors, license agreements, leases, and operations people, technologies, and methodologies do we need to be aware of?

Some of the apps can move to the cloud, along with the associated data and some of it already has been, however I am willing to bet that it is less than 1%. So this is a big opportunity and I sincerely hope that we as an industry can help keep it simple, eat this virtual elephant in bites, and save money for the taxpayers.

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