back to article Will Google regret the mega data center?

In the wake of Microsoft's decision to remove its Windows Azure infrastructure from the state of Washington - where a change in local tax law has upped the price of building out the proverbial cloud - the company's former director of data center services has warned that Microsoft and other cloud-happy giants may soon find that …

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  1. Phil 33
    Go

    Sun's data centre in a shipping container?

    Didn't Sun come up with a data centre in a shipping container concept a while ago?

    All you would need to do is hire a large chunk of land that is close to the required utilities and stack them up as high as you are allowed. When some shortsighted town hall politician decides he wants a slice of what you're making by raising taxes you simply truck the containers overnight (after your software migrates the load to a backup pool in your other locations) and setup in a new location you've scoped out for this eventuality.

    Of course the logistics aren't trivial, but it should be do-able.

  2. Andrew Yeomans

    Don't forget Moore's law

    Cloud providers also need to watch Moore's law. You've just invested megabucks in your new cloud-centre, but 18 months later someone can do it for half the price. "First mover" might easily become "first loser".

  3. Anonymous Bastard

    Cargo ships

    When most if not all data centers are fleets of floating data ships in international waters (free cooling and wave power yay!) taxation from individual countries will become a moot point. Unless they tax the internet itself.

  4. WinHatter
    Grenade

    Sun shipping container

    Everybody laughed at them ... but here comes the revenge.

    For those who missed the LOL

    http://www.sun.com/products/sunmd/s20/

  5. Robert Forsyth

    The state wants fuller employment

    These States give these tax breaks to encourage local full employment, after the data centre is built, it requires few staff to keep it running, but consumes resources (power, land, investment-money and local amenity).

    Microsoft are trying to 'blackmail' Washington into a tax break, not realising that Washington sees their employment purse is empty.

    Obviously, Microsoft have damaged their own brand value, which might have been another reason to have their data-centre in your state.

  6. James Pels

    Commercial use for BOINC?

    Not really my area but could cloud thingumies be run from BOINC clients (a al SETI, etc.) or similar?

    There would probably be some limitations here but the servers we host at work spend a lot of time not doing very much and if there was money to be made hosting cloud apps I am sure we could be talked into it...

    Presumably BOINC (or even some of the peer-to-peer apps) could be used to monitor who is doing what and manage billing accordingly?

  7. Anonymous Coward
    Anonymous Coward

    Off shore

    One step further from Phil's suggestion then.

    We now have data centres in a number of containers so what would be the issues of utilising an 'old' container ship moored off shore somewhere or even an old oil rig platform?

    Just think of the cooling potential of all that water. Yes, I know you could not use sea water for cooling (directly) but you could dump heat into a tank of 'clean' water and then use sea water to cool the 'clean' supply. Lets face it, the temperature of the oceans below, lets say, a couple of hundred feet or so starts to get pretty chilly.

    In the right location a wind turbine or two could be utilised for power.....

  8. James 100

    Moving the data centre itself

    Sun did indeed, and apparently Google have been using this on a large scale, with exactly this result: if their pile of servers in California becomes a problem, whether due to taxes, energy costs or just shifting user patterns, they can stick some or all of those containers on the back of trucks and drive to Oregon, Nevada, Michigan - wherever it makes more sense to put them now.

    I wonder if this is affecting Amazon too, and if WA will back down once their targets move out of town?

  9. Graham Dawson

    @Phill

    Better yet, put them on a boat. Google surely has the cash to invest in a set of geostationary satellites with big fat data pipes on them, or perhaps they can just trail a cable to the nearest piece of coastline...

    Actually that could work. Some sort of floating platform, like an oil rig only bigger. you could call it Fat Caroline. Where's the patent office?

  10. Anonymous Coward
    FAIL

    Idiot legislators

    They already had the company's business presence and the electricity from all the power these things swallow up. In addition there's taxes on employees and the land the company uses. Then there's the money the employees bring into the area from living and buying there. More people making good money equals more of everything. Nice steady money.

    But that's chicken feed compared to what could be made from a "sales tax" on the data these centers provide. The obstinate lawmakers want more money and lose everything. It's like trying to charge professional athletes income tax in a state or country they visit only to play a game in. Technically they're in their rights, but it's a boneheaded move that is unpopular in the long run.

  11. Laurent Somers

    Google doesn't have *one* mega data center

    Seems to me Google is doing *exactly* that, by having 40 datacenters, and not 1. Their datacenter-in-a-box is probably another tool in their strategy.

    Divide, and conquer.

  12. Kotonoha
    Stop

    @Phil 33

    Wasn't that Google?

  13. amanfromMars 1 Silver badge

    Moving the Play on ....a Level or Three.

    "The web-based development and hosting platform is currently in technology preview mode."

    MeThinks the more accurate version of that thought is the web-based development and hosting platform is currently in technology peer review for prewoven view mode/BetaTested MODeRN Satellite. An Astute Senior Service Stealth Facility ......MODeRN Virtual Platform/AI Phormation for Advancing Nationals and InterNetionalists ..... Primed and Prime Led Non State Actors and Actresses on AIRole for the Time of Our Lives? :-)

    Ca Ira.

    "Data Centers should be immaterial components for the cloud providers. Nothing more than containers or folders in which to drop their operational code." .... I agree, Cade, and is that not what they actually now are?

    Renting Space on Mars delivers no Earthly Problems so that would seem to be a Glorious Investment Locale for Cloudy Operations and MODified Programs/Penalised Projects. Beware of Pretenders and Fraudsters though , the Cowboys who would try to Steal the Thunder and Lightning from NINJAs, for they are the Dead Wood and Bush Meat for Razing Fires and Raised Vultures into Central Control/Core Source Maintenance and New Unit Build ...... AI Node Propagation. Avoid them like the Plague for they destroy themselves with unwarranted greed and tainted base feed.

  14. bart

    Both ways

    Umm . . . Aren't the folks that are responsible for siting these mega centers a bit addled in thinking that their services will not be assessed taxes at some point?

    Site scouting consultant: "Let's site in (Yourtown, Yourcountry) because they don't charge x or y tax, or their rate is low, and we have secured x or y benefit from the community. They don't know what to make of us, so we'll stay under the radar and make money hand over fist. This is a great opportunity."

    Smart VP of Cloud Seeding: Thanks for the in depth analysis, Mr. Consultant. The door is in Thisroom, this Thistown.

  15. Anonymous Coward
    FAIL

    software to move infrastructure...

    Already exists - live migration! (e.g. VMotion)

  16. Henry Wertz 1 Gold badge

    Oil rig?

    "We now have data centres in a number of containers so what would be the issues of utilising an 'old' container ship moored off shore somewhere or even an old oil rig platform?"

    Sealand did EXACTLY that. I don't know if they used containers, but they had an off shore data center on an oil rig. Problem? It burned to the ground.. well, water. I don't know if this was a machine fault, or just that it was like a 80 year old rig, but anyway.

  17. Anonymous Coward
    Anonymous Coward

    bait & switch

    While the idea of abstracting the software layer to make data center utilization more modular and protect against hardware failure is cool...the other comments about tax avoidance is classic BS.

    Look at the big picture: new business, new company trying to establish business operations; community provides a tax-free incentive; company starts making $1 BILLION profit per month; community says, "Ahem, the little grocery store down the street is NOT enjoying tax-free profits, you are making obscene profits, which we're really happy about for you, but you really think it's cool that you shouldn't pay your fair share of business tax just like every other mom & pop store in the neighborhood...??

    Take note that despite the continual bloviation of business taxes being too high, US corporations pay, on average, a real tax WAY BELOW 10% while hiding their foreign profits behind zero-tax schemes and moving their HQ off-shore to some island nation...! This would be called theft and fraud.

    There's all sorts of other complicated discussions surrounding this issue, but the idea that billion-dollar companies should get tax-free incentives (ad infinitum) is BS. Nice free market, Adam Smith is rolling his eyes.

  18. Anonymous Coward
    Anonymous Coward

    Hang On

    Perhaps Microsoft needs to partner with someone who actually knows how to do this?

  19. Paul
    Boffin

    data centre revenue

    most data centres have relatively few staff for the size of the building compared to a large office block. they use a lot of power, some water, some fuel for generators, but once built they simply sit there!

    the revenue stream for local governments come during construction, so it's a very temporary boom

    one problem is that data centres get dated, so many DCs now which are over six years old aren't competitive in offering the higher power densities required. some go out of business, some get refurbed, so if local gov't are trying to milk it to get back their tax/land grants and back-handers they will discover it'll all get shut down and relocated to a new facility.

  20. Matt 32

    Hmmm...

    The fundamental solution is simple:

    Don't compete on the basis of tax discounts.

    It's obscene that some companies are offered "incentives" while local businessmen can't enjoy those same low tax rates. Fundamental fairness says the tax rate should be equitable across the board.

    One major retailer built a warehouse near me. Now the locations for a warehouse serving retail stores is relatively limited -- figure a four hour driving radius so your drivers can make the journey back and forth in a day. Yet in my case three states competed by offering tax discounts to the corporation -- despite the fact the corporation logically had to locate in one of those states.

    Part of the deal keeps the town from collecting full taxes on the facility for 20 years. Of course in 20 years that depreciation on the facility and especially the automated handling equipment inside will be substantial -- and the corporation will simply be shopping around for somewhere to build a new facility instead of dealing with the interruption of overhauling an existing plant while maintaining productivity there. Complete with new tax discounts, of course. The existing building, just as it gets to be taxed at full value will see the major corporation pull out and be replaced by a bunch of small businesses looking for low rent and having a fraction of the taxable assets that a corporation installing all new, highly automated machinery does.

    It's a completely crazy way to operate, soak the local businessmen with the highest taxes, and provide the national corporations who will come and go with the biggest discounts.

    ===========

    >if their pile of servers in California becomes a problem, whether due to taxes, energy costs or

    >just shifting user patterns, they can stick some or all of those containers on the back of trucks

    >and drive

    I'm not sure that's the really compelling cost argument for them.

    I think the advantage, really, is along the lines of pre-fab houses: It's far cheaper to build them in one central facility, then on site. You can have specialists at the "data center factory" who just specialize in assembling them, and then they're shipped to be assembled on site.

    With an obsolesence of what, 5 or 6 years, why bother moving existing containers as-is? Break down / ship / setup labor costs will exceed tax costs in most cases. Instead as modules reach their functional obsolence, pull it out, send to the factory for a refurb with new servers, ship the refurbed unit to the new location. Within a few years you've accomplished shutting down the old site without the headaches of coordinating one big move.

  21. Eddie Johnson
    Coat

    Like Phil said...

    Now Microshaft and the other Cloudware* providers can buy a bunch of Sun box-in-a-box datacenters, maybe just mount them on railroad cars, and keep them flowing around the country. Got a new tax you don't like? Take the datacenter on the lam to Canada or Mexico! That'll teach those greedy politicians.

    *Isn't it funny that Cloud is just another word for vapor? Any bets on whether cloud computing turns out to be the biggest vaporware project ever?

    Puttin' on my coat and exiting the country.

  22. amanfromMars 1 Silver badge
    Grenade

    Put your money where you mouth is .... for the Greatest Show on Earth .

    "*Isn't it funny that Cloud is just another word for vapor? Any bets on whether cloud computing turns out to be the biggest vaporware project ever?" ..... By Eddie Johnson Posted Sunday 9th August 2009 00:51 GMT

    Err.... I'll take all of those bets against Cloud being a Substantive Real Force which you have no Viable Defence against and therefore is one XXXXtraordinarily Rendered as a Captured Pathetic Puppet to ITs Greater Wishes, Eddie.

    Although that is Nothing New to the Great Unwashed and UnderEducated is it, being their Default Inherent Systemic Failing Guaranteeing their own Assault from Peers.

  23. Stuart Halliday
    Megaphone

    Gee get real people

    If I was to invest £100M in a data centre, I'd ensure that I'd get written in stone from the local government that I would be exempt from any future new taxes for 10 years.

    Plenty of local or over-sea governments dying to get your business.

  24. Destroy All Monsters Silver badge
    Pirate

    The Vampire Economy

    >>It's obscene that some companies are offered "incentives" while local businessmen can't enjoy those same low tax rates. Fundamental fairness says the tax rate should be equitable across the board.

    Not to mention that LOWER taxes for company A of course mean HIGHER taxes for company B in the long run.

  25. Mark Lockett
    FAIL

    Margins must be tight in cloud computing

    Wow, margins must be tight in cloud computing if a tax rate of less than 10% is enough to close down a facility.

    In computing, (what with Moore's law and rapidly changing technology), all the successful companies (Microsoft, Oracle, Sun) used to boast to their customers that if we implemented their latest release, whatever it was, it would have a payback of several months or less.

    Don't Microsoft believe their own publicity any more? A few percent tax should not be enough to kill a good idea, if it is that good an idea .

  26. Lou 2
    Coffee/keyboard

    Off shoring the cloud ….

    This is where the cloud becomes scary - India, China or any other country with lots of spare space, good enough Net infrastructure and plenty of spare electricity will be now waking up to the fact that the US states will be pricing themselves out of the Infrastructure Housing Market.

    My bet is on the Middle East - lots of desert, enough gas to be able to produce power and cooling and they will be able to ratchet their profiles up a few notches. Even Oh Canada - got some spare space??

    Off shoring the cloud …. it can go where the costs are lowest and return on investment the highest ... you read it here first. It is a cloud after all.

  27. Anonymous Coward
    Terminator

    What to do?

    Most of these Mega centers has finely tuned financial return models - and most of the server and network components used have a very shortlifecycle anyway.

    So what do you do - build a mega data center cheaply, use it for three years, flick the application to switch to its new destination, move the air conditioning equipment and data storage to the new center (put it into containers for ease of movement) , and change the old center into a landfill for used computer equipment. (or just pour full off concrete and create a skate park)

    This is the age of the throw away applicance. Next step throw away data center.

  28. ChrisInAStrangeLand

    re: zero sum thinking

    Wrong, lower taxes for company A means employees for company A that pay income taxes. These employees also pay sales taxes on items purchased with their wages. The industrial base of employees created by Company A then enables Company B to set up shop at substantially reduced cost. This leads to Company C, D, E, etc until your tiny little strip of what was once farmland (say south of San Fransisco) is so valuable that it pulls in 100k per hectare in property taxes and houses hundreds of thousands of high income residents.

    There's a strip in New York state that's currently doing this with semiconductor fabrication. Soon enough you have six fabs so your supply vendors move into the same area to share the talent.

  29. Anonymous Coward
    Anonymous Coward

    New investment opportunity!

    I guess it's time to set up a company that specialises in shipping IT to tax havens ..

    Actually, I already did that - I move hedge funds, but they have less data :-)

  30. zenkaon
    Linux

    @ Eddie Johnson

    Any bets on whether cloud computing turns out to be the biggest vaporware project ever?

    - I take it you have never used cloud computing then. I submitted 1350 jobs on Wednesday afternoon and had them all back on Thursday morning. Each job took around 8 CPU hours. No CPU was "local" or under my direct control.

    Sure clouds are useless if you can't think what to do with that much compute time....but I can.

    Back to the story...whatever reason MS and/or others give for taking their cloud offline is just bitching as far as I am concerned, I don't care about their reasons. An outage like this screams "unreliable partner" to me.

    As for MS Azure, sorry lads your about 5 years too late on this one. Everyones using Red Hat.

  31. scrubber
    FAIL

    Lawmakers and technology do not mix.

    "Its [sic] no secret that technology is advancing faster than our society can gauge its overall impact or its potential effects and the cloud is no different."

    It has ever been thus, from the printing press to the internet society's laws have been generations behind the technology. Or worse, when they try to look ahead and pre-empt the technology they are always woefully off the mark.

  32. boltar Silver badge
    Flame

    Ah the irony

    Marketdroids came up with the term "cloud" to imply some nebulous exist-anywhere remote access servers. Ironic how reality has this nasty habit of impinging on this naive cosy little world.

    I wonder how many people are actually so stupid that they think "the cloud" is actually something fundamentally different in computer networks and servers as opposed to being just another silly buzzword for adolescent technogeeks and marketing types to chuck around in a laughable attempt to sound like one of the cognescenti.

  33. TeeCee Gold badge

    Re: bait & switch

    Too true. The problem here though is that as long as *somewhere* is prepared to offer a bung, *everywhere* has to to stay in the game (the game in this case being to get something worth taxing in the first place - those "mom and pop" businesses exist for a reason and that reason is servicing the needs of those who work for someone else).

    When on your high horse, remember that there are places in the world over which you have no jurisdiction (a difficult concept for many Americans to embrace, yet true all the same). A Federal ban on tempting businesses to locate with tax incentives would result only in a massive offshoring exercise as more businesses than ever found that the benefits of doing so now outweighed the disadvantages.

    It's the same in the arms trade. Preventing Tornado aircraft from coming with a sizable backhander doesn't stop backhanders. It does sell a lot of Dassaults and MIGs though.

  34. Anonymous Coward
    Alien

    Moonbase

    I think that Microsoft and Google should take their billions, and build a Moonbase datacentre.

    Run it by solar power, and I hear it's pretty cold up there, which should help with the cooling, then stick up a massive parabolic antenna that can be seen from the Earth for all that bandwidth.

    Unless the American flag up there means they can now charge tax to anybody else who lands up there?

  35. Michael C

    not about the location or the business model

    The problem with this is NOT that planning large datacenters is a problem, it;s that they planned around TAX LOOPHOLES.

    ANY business plan that counts of skirting the tax system is a BAD plan. Eventually the local or state system will catch up and change a law to get what they're do.

    I don't mind so much tax breaks on temporary basis for businesses who move a large facility into an area with large unemployment, so long as the tax break is 10 years or less and the contract for minimum employment levels at minimum pay grades is for 2-3 times longer than the break lasts. However, placing a facility somewhere because a certain thing is simply not taxed where it is almost everywhere else is insanity. As soon as they figure out they're missing out on what everyone else tatxes you for, they will too...

    Taxes should be a fact. A base rate across the board on all systems and services. Companies choosing where to locate because it costs less to run a certain business one place vs another because of proximity to a resource i understand, or for logistics reasons, but when it extends to looking at local laws to determine profitablity based on regional variations in tax code, they're only setting themselves up to fail.

  36. Anonymous Coward
    Big Brother

    @BOINC for commercial use?

    So which will be the first company to put client-sensitive data on Public Domain computers just because it is cheaper?

    Gordon Clown's Zanu Labour government does not count because "accidentaly misplacing" CDs (with data that should never have been put on CD in the first place) or "Top secret" laptops and hardcopy files has been done already...

  37. Rex Alfie Lee
    Thumb Down

    Forgotten By Some

    I don't know if this writer has actually thought about the article but I do believe Google to be running in the cloud already & well before M$. What do you call Google Apps if that isn't "cloudy" not to mention Gmail which is equivalent to Hotmail in that respect. The problem here is that Gmail has connected their mail service to all things Google whereas M$ has... well... er...Hotmail.

    If you don't believe me look at igoogle, maps, docs & all those variations that use the ID from Gmail. What's the point? Google is already succeeding where M$ is just ... well... er... sucking!

  38. Anonymous Coward
    Anonymous Coward

    I fought the Law, and The Law lost

    Technology may be advancing faster than society can gauge it's impact, but why leap from that to the conclusion that society has to give way to the requirements of business - well, other than the fact that of course every business wants zero corporate tax.

    (Ever wonder why the burden of personal and local taxation keeps rising? You don't want to live in a completely scummy area, and your employer accepts that, but they certainly don't want to pay directly for it. Although ironically the will pay for it through higher salaries).

    What's hilarious is when the same businesses have a 'Corporate Responsibility' unit, while they have other arms obviously dedicated to 'Avoiding Responsibility'.

    And personally I think governments and law-makers have actually erred very much on the side of caution when it came to regulating the internet (I would wager that a significant reason for this is that America - correctly - identified it as a means of expanding American business and political interests globally).

    It's only now that we're seeing the actual social and political consequences of the Internet, that we're seeing the first serious attempts to regulate it - which of course are being resisted by technological types who want a permanent Wild West.

  39. Andrew Culpeck
    Boffin

    Airbourn Dater Centers

    So what if the data center is airbourn say an airship? Commuting may be a bit intresting but planed in advance no more of a problem than commuting to an oil rig. If the Airship was off shore abouve most of the cloud and solor powerd it could sit in international waters and beam data back ond forth.

  40. JRallo
    Flame

    Greed

    That's all. M$ would have to pay pennies on the dollar.. and they would lose those pennies.

    Goes well with this story:

    http://www.theregister.co.uk/2009/08/10/offcie_live_domains_small_biz_charge/

    I'll keep my cloud bottled in the closet here.

  41. Eddie Johnson
    Badgers

    @zenkaon

    "I take it you have never used cloud computing then. I submitted 1350 jobs on Wednesday afternoon and had them all back on Thursday morning. Each job took around 8 CPU hours. No CPU was "local" or under my direct control."

    Welcome to the 70's. Its called batch computing. Every branch office didn't have powerful computers so they submitted their jobs (aka punchcards) to the home office. What you are now doing is renting instead of owning. Generally that means you are overpaying for what you are renting while you make the landlord (datacenter) rich.

    Nothing new to see here.

  42. Anonymous Coward
    Flame

    Just pay your damn taxes and shut up!

    Bloody corporations.

  43. sun_god
    Gates Halo

    MSFT shoud bailout Washington state government

    I have a kooky idea - if MSFT just paid off the State of Washington's $5 billion budget deficit in cash, maybe the state would rescind its 7.9% tax on MSFT? Sounds like a fair trade to me.

  44. Anonymous Coward
    Paris Hilton

    I've just patented data*star*ships!

    Floating data centres will never happen... unless they're floating in space!

    Anyone who thinks know probably has never worked in the maritime industry.

    An unregistered container vessel loaded with about 10,000 Sun container servers, staffed with corporate mercenaries would be fair game for an nation's navy under international maritime law - not to mention fleets of third-world pirates (all the rage now - even in frosty foggy seas... s'pose they must've bin overdosing on Capt. Jack Sparrow).

    ...either way you have to pay someone to protect your goods ...I suppose they could always develop a Google Navy... and issue passports to citizens of Googlestan to ensure "patriotism"!

    On an perpetual motion (sorry, environmentalist) angle, littoral and riparian (I love those words!) datacentres are a decent idea, especially for providing employment to indigenous peoples in the remote northern wastes of Boreal nations like Greenland, Canada, Scandinavia, Russia, Scotland.

    Dropping automated datacentres to the bottom of shallow lakes and seas might be a way of recycling spent oil rigs (setting aside the significant civil engineering, legal, and staff costs); but,

    ...yer best bet for James Bond villain megacorp style tax free and lawless hosting would be dropping your floating data base (pun alert) in a Lagrangian orbit ...that'll keep the CIA/Mossad/MI6/GuoAnBu/KemPeiTei etc from raiding your posterior with flying saucers.

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