In New Jersey, Modules Bloom Along the Turnpike

One year after opening the world's largest modular data center in a massive printing plant, IO held an open house this week to show off its progress. In a large hall filled with data center modules housing customer servers, IO executives said the IO New Jersey facility is the first step in a global expansion of the company's vision for a new way to deploy data center space.

Rich Miller

July 27, 2012

4 Min Read
In New Jersey, Modules Bloom Along the Turnpike

io-nj-modules

io-nj-modules

A long row of IO Anywhere data center modules inside the IO New Jersey data center in Edison. (Photo: Rich Miller)

EDISON, N.J. - One year after opening the world's largest modular data center in a massive printing plant, IO held an open house this week to show off its progress. In a large hall filled with data center modules housing customer servers, IO executives said the New Jersey facility is the first step in a global expansion of the company's vision for a new way to deploy data center space.

The 800,000 square foot building overlooking the New Jersey Turnpike, which once housed printing presses for The New York Times, is a reflection of the company's progress as well as its ambitions. The initial data hall is filled with IO Anywhere modules that each provide 200 to 300 kilowatts of IT capacity, totaling about 4 megawatts of customer load.

Those data center modules represent hard-won business for a new product in a competitive market. IO is the dominant data center provider in its home market of Phoenix. But here in New Jersey, the company goes head to head with the industry's major players - including Equinix, Digital Realty and DuPont Fabros Technology - in a pitched battle for enterprise customers.

The first modular data hall occupies just a fraction of the space available within the cavernous structure in Edison, N.J. This huge space signals IO's confidence that customers will embrace its "Data Center 2.0" strategy in a big way. It's also a bet that the company's belief that the economics of the data center industry must change.

Focus on Data Center Economics

IO President Tony Wanger says the company's modular approach provides it with a cost advantage in deploying IT gear for its customers. Although cash-rich companies like Google, Apple and Facebook can afford to build "zillion dollar data centers," Wanger said, that model doesn't work for enterprises where IT departments are under pressure to control costs.

Data centers are becoming too expensive to build, Wanger said, requiring an initial investment of tens of millions of dollars. Fewer corporations are eager to dedicate that much capital to a new data center, which has boosted interest in outsourcing.

This has been good news for companies offering colocation services and leasing pre-built "wholesale" data center space. And then there's IO, which offers "data center as a service" in which it houses customer gear inside modular data centers. Wanger says IO's approach is a reflection of the need to industrialize the data center business, slashing costs through standardization and mass production of repeatable designs.

'The Same Module, Over and Over Again'

"Virtually every one of these modules is used slightly differently by the customer," he said. "But we're building the same module, over and over again."

IO and other modular data center providers say this model allows them to deploy data center space cheaper and faster than their "brick and mortar" competitors. The competitive economics of modular data centers have been a topic of  hot debate in recent months. 451 Research studied the economics of modular designs and concluded that modular data centers are usually cheaper to deploy than traditional raised-floor data center space, but not in all scenarios.

The economics of outsourcing are important in a market like New Jersey, which abounds in options for colocation and wholesale space. Some attendees at Wednesday's open house were veterans of raised-floor environments, but were seeing a modular colo facility for the first time. Education is a key component of the modular sales cycles, as many prospects need to attain a comfort level with the form factor.

Technology vs. Real Estate

Wanger says IO believes that the data center industry is now defined by technology, rather than real estate. In a real estate model, he noted, some companies depreciate their data center facilities over a 30-year period, even though most data centers have about 10 years of useful life.

"If there's anyone with a data center that's 30 years old and it's still working for them, I'd be surprised to hear it," says Wanger. "Our customers tell us they have 12-year-old data centers that don't work for them."

A key challenge in older buildings is cooling large numbers of servers. As new technologies pack more computing power into each rack of servers, the environment becomes more difficult to cool. Modular data centers address this challenge with a contained design that brings the cool air closer to the servers, reducing the amount of energy dedicated to moving air to the servers. Although IO has 800,000 square feet of space in Edison, it only has to address the environment inside the modules.

"We don't have to cool a gigantic box," said Wanger. "As an industry, what we do now is we take a cold beer, and put it on a table in our house. To keep that beer cold, we then cool the entire house to 37 degrees."

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