Hostway Plans New Chicago Data Center

Hostway will build a new data center in Chicago to accommodate strong customer growth, the company said today. The new facility will be located in the Boeing building, along the west bank of the Chicago River, in a space originally built out by SBC at a cost of $200 million.

Hostway, a major web hosting provider, said it will invest $10 million in additional improvements to customize the property for its needs. Hostway said a significant portion of that investment will be used to upgrade the facility’s power and cooling plant to prepare for high density server installations. Hostway, which now has 14 data centers worldwide, will use 50,000 of data center space in the first phase of its build-out, with additional expansion to follow as demand warrants.

“Our Web hosting and managed services business for enterprise customers is growing rapidly and the cooling and power capacity requirements are rising faster than anything the industry predicted,” said Lucas Roh, CEO of Hostway. “The new datacenter will incorporate the latest design techniques and enable Hostway to continue to provide a fast, reliable and secure hosting environment for our customers.”

ACS Takes Itself Off The Market

Shares of Affiliated Computer Services Inc. (NYSE: ACS) slid today after ACS said it was unable to come to terms on a sale of the company to a group of private-equity investors. The company said it would take itself off the market, prompting shares of ACS to drop 7 percent, closing down $4.32 at $56 a share.

ACS had been rumored to be in talks with an investor group including Blackstone, Texas Pacific Group, Bain Capital and Silver Lake Partners. The Dallas-based firm has 55,000 employees and reported revenue of $4.35 billion in the fiscal year that ended June 30.

Data Centers Managing Rising Power Costs

Computerworld takes a look at trends in the cost of power, noting that rising energy prices “could be bad news for data centers.” Despite that gloomy lead, Patrick Thibodeau’s story reveals that data center operators aren’t panicking and there’s unlikely to be a wave of date center relocations driven by power prices. Chasing power costs is a short-term cost management strategy, and data centers are long-term investments. If you relocate because prices are cheaper in the next county over, what happens if that changes? Do you move again to someplace cheaper?

Several data center operators note that the price of power is usually less critical than the reliability of the local power grid. If you’re building a mission-critical facility, you’re placing a premium on uptime, and usually willing to pay extra for enhanced reliability -  and the same is usually true of your customers. Having said that, the current environment places a premium on power management strategies. Read the full story for more.

Microsoft Buys Land for Data Center

Microsoft has bought 75 acres  in Quincy, Wash. and plans to build a new data center at the site, according to local media reports. The software giant bought the land from the Part of Quincy, and has plans for two buildings, according to the Tri-County Herald. Microsoft becomes the second major technology company to express interest in locating a data center in Grant County in central Washington state. The land it has purchased  is not far from Moses Lake, where Yahoo may build a new data center. As was the case with Yahoo, existing infrastructure appears to have been a factor in Microsoft’s choice. “They were very keen on Quincy because of the electrical power and fiber options,” said Pat Boss, spokesman for the Port of Quincy, the industrial park where the site is located. “It was a major driver in their decision.”

Data Center Move Stalls World of Warcraft

Data center moves are making all the wrong kinds of news this month. The latest incident affected the European version of World of Warcraft, the world’s largest online virtual world, which had 30 game servers offline for  an extended period during a facility transfer. The WoW Insider blog describes the scene: “The forums are full of extremely angry users, tempers are running high, and the few people I did manage to speak to ingame were all creating new characters and furious that they couldn’t access their normal servers.”

While it might seem like a small matter for gamers to lose access to an online game for a day or so, the fact of the matter is that virtual worlds are becoming an important business, both in size and financial impact. World of Warcraft has more than 5 million paying members who pony up $12 to $15 a month to play. These games can require hundreds of servers (or “realms” in gamer speak), so there’s some pretty serious data center infrastructure supporting the operation. Everquest requires 1,500 servers, for example.

Virtual worlds are yet another fast-growing form of digital entertainment that will contribute to demand for data center infrastructure, and we’ll be tracking this sector’s growth and requirements going forward.

Colocation Price Hikes at Redbus

Since the bubble burst in 2000-2001, pricing for most hosting services has trended lower. That’s certainly true for shared hosting, where accounts with 5 gigs of web space and 250 gigs of monthly transfer are available for $4.95 from Go Daddy and 1&1, with Yahoo close behind. Discount dedicated servers have been the hosting growth area in recent years, with servers available now for $49 and lower.

Today there was an interesting piece of news at Web Host Industry Review, which noted that the UK’s Redbus has increased colocation prices in the wake of its merger with Telecity, apparently from 350 pounds a month to 550 (about $967 a month in US dollars). On one level, this seems to be a product of natural consolidation, since Telecity’s prices were higher than those at Redbus to begin with. But some analysts are reading more into this.

Digital Realty Acquires Five More Properties

Digital Realty Trust has bought five more technology properties, the company announced today, spending a total of $57.3 million to acquire 575,000 square feet of space in Virginia, New Jersey and Texas. The latest acquisitions include:

251 Exchange Place in Herndon, Virginia, a 71,000 square foot property near Dulles Airport. The building is fully leased on a long-term basis to a leading network provider that uses it as an Internet gateway facility, and was purchased for $12.9 million.

Two buildings at the Met Center Business Park in Austin, Texas near Austin-Bergstrom International Airport. The first building is approximately 45,000 square feet and is 100% leased to a single tenant that uses it primarily as a data center and NOC. The second building is 75,000 square feet and currently unoccupied. Digital realty said it will position the site for redevelopment for an enterpise client, saying it “expects robust demand for the building due to its ideal location for corporate disaster recovery as well as its excellent power and fiber infrastructure.” The purchase price for the two buildings was $13.5 million.

1,000 Members for DataCenter Talk Forum

The DataCenter Talk discussion forum, which was founded in the fall of 2004, recently gained its 1,000th member. The site is part of the Web World Network of sites focusing on the hosting and webmaster industry, and has grown to include more than 6,900 posts in 2,900 message threads. The site includes forums dedicated to telecom issues and marekting data center services and equipment. If you have a question or challenge related to data centers, DataCenter Talk is worth a visit.

Data Center Boom 2.0 and the Railroad Analogy

Over at Data Center Journal, facility designer Ron Hughes examines the growing demand for data center services in an article titled The Next Data Center Boom. He’s particularly upbeat about the colocation market, which just a couple years back was perceived by many (although not us, of course) as a low-margin, old-school product. “The market for data center services and particularly collocation data center services has changed dramatically in the last two years,” Hughes writes, and then goes on to offer a litany of trends that contributing to demand:

Recently however, the growth of wireless technology, Voice over IP services, video on demand, music download sites, on line auctions and simply the large increases in the number of broadband and DSL users has caused demand for these services to skyrocket. Financial institutions are trying to comply with Check 21 and are digitizing every check. Healthcare providers are digitizing patient information and creating the virtual hospital. Everybody wants to be connected and everybody wants it to be high speed. Broadband connectivity in the US for example has increased from 5.3 million households in 2000 to 42.8 million in 2005. Online sales have increased from 11 Billion is 2001 to an estimated 80 billion in 2005. The content the dot com data centers were hoping for in 1999 is now a reality.

I’m reminded of the railroad analogy. In the darkest depths of the data center meltdown, a number of buy-and-hold players noted similarities to the early days of the U.S. railroad industry, in which the early market entrants went broke building the infrastructure, only to have second-generation companies come along, buy the distressed assets cheap, and reap the financial dividends. Were they right?