Posted by & filed under business models, Cloud Computing, industry analysis, telecomunications.

Description:The data-center business has a number of models. Some companies own their own data centers, while others use third-party providers to house and maintain their operations.

Source: NYT.com

Date: Feb 8 , 2010

The data-center business has a number of models. Some companies own their own data centers, while others use third-party providers to house and maintain their operations. And to ensure redundancy, most companies have more than one data center, with the additional centers usually some distance from the primary center.

The providers include companies that own buildings but not the equipment inside of them, and vice versa. There are also companies that own buildings and the equipment.   Click here for rest of story

Questions for discussion:

  • What is the business model of data centers?
  • What is the potentioal growth of the data centre industry? What is driving this growth?
  • Why does existing real estarte work so well for this industry to locate in?

6 Responses to “Data Centers Offer Hope for St. Louis Office Market”

  1. Landon

    The potential growth for the data centre industry is huge. It is the way that the world is moving towards, no more paper files, invoices, and what not, to digital files. These digital files, just like their paper counterparts need a place to be stored. A safe place. The thing with data is that you need to have a backup for all the data, and it is these data centres that provide a safe secure location to store backup information. It is the move towards digital information and the need for somewhere to safely store that is driving the growth of data centres.

    The current real estate works so well for data centres for many reasons. The buildings there are older, and these buildings were used for industrial and manufacturing purposes, meaning they have a lot of square footage which data centres need. The buildings are well constructed and have high ceilings, and since most are abandoned they can be purchased for a lower cost and the cost savings can be used to retrofit the building to accommodate a data centre. The area is also located on an existing power grid, and since the area was used for industrial purposes that required a lot of power back in the day, this existing power grid has excess capacity. This excess capacity is perfect since data centres require a lot of power for the mainframes and cooling of them. The cost of power in this particular area is 41% cheaper than the average for the U.S., which results in lower costs for the data centres. Another reason this area is ideal for data centres is that they will have access to fiber optic networks.

  2. Rio P

    There is an amazing potential for growth in the data center industry. With companies and organizations expanding keeping paper files are no longer an option. Switching to storing things electronically is much more efficient however it requires that in case of a crash in the system, that there be backup files waiting. Therefore, having one or more extra data centers is becoming the norm of large corporations to ensure that they do not lose vital information.
    St. Louis attracts these data centers mainly because of cost. First, the cost of owning or renting the building is significantly lower than other parts of the country, as well as the source of electricity is there which is what data centers need in order to keep their equipment running and cool. To any business that is looking to housing another data center, St. Louis offers the opportunity to lower costs and keep their information safe in a very beautiful neighbourhood. Another benefit of housing a data center in St. Louis is the availability a fiber optic networks which allows for companies to access and download information quicker and safely.

  3. Brenda Bicharr

    “We’re projecting that we will grow by 65 percent in 2011,”..Projections are always good. It was also mentioned that there is a lot of potential in this location. The move from paper to databases and electronically storage is one which is apparent to all. However the world is not yet ready for a time without paper documents. In as much as files can be saved in back up, they cannot be totally protected from computer crashes. With this in mind, a company such as this has found a good niche market but i am not sure a full “closed-eye” huge amount of money should be invested directly.J8ust because the cost is low doesn’t mean that once in business the company will be able to sustain in the long run. Development is very fact is the world these days. A huge investment in an industry such as this should be based on diff R and D reasons other than fully based on low cost. All in my opinion

  4. prab22

    Data centres in downtown St Louis is a brilliant idea. “The vacancy rate of 22 percent,” that is plenty of room for computer software, data centers to set up shop within downtown St Louis. The downtown infrastructure is perfect for data companies; with plenty of commercial room and warehouse type buildings. I believe that this will help the city of St Louis establish a better economy and supply the local citizens with more jobs and opportunities. It is also good that the companies are making use of old buildings downtown; this will help with maintenance of these old structures. Costs to operate in St Louis are very cheap, according to the article; “electricity rates are 41 percent lower than the national average.” With lots of room to expand and low operating costs the growth potential should be very high. After reading this article, both St Louis and these data-centres viewpoints, I think it’s a win-win situation.

  5. Taofikat

    The current real estate works so well for data centres for many reasons. The buildings there are older, and these buildings were used for industrial and manufacturing purposes, meaning they have a lot of square footage which data centres need. The buildings are well constructed and have high ceilings, and since most are abandoned they can be purchased for a lower cost and the cost savings can be used to retrofit the building to accommodate a data centre.
    the data centres in downtown is also a very good idea beacuse it will creat lots of room for computer software.other benefit of housing a data center in St. Louis is the availability a fiber optic networks which allows for companies to access and download information quicker and safely.

  6. Ifeoma Moseri

    Fascinating article. For a while, I’ve read about the constructive reuse of the older buildings in Downtown for data centers, but it is the utilization of the pre-existing power grid, and the competitive advantages of them, that really gets me.

    Long-term, this could lead to an increased utilization of the oldest buildings in Downtown, fully positioning Saint Louis as a hub for this industry, which in fact is part of a powerful array of diverse industries. With the increased acquisition and transformation of the oldest building stock, we can see these data centers being great tenants in the buildings that developers have not sought out for residential or professional office space.

    Best-case scenario is that corporations begin to see St Louis as a developing cluster of IT companies and consider this for their future locations. Add-in the reuse of many buildings, and the stock of vacant buildings in Downtown decreases, if not with floors of people then with stacks of computers. Down the road, this decreased vacancy could lead to a series of new high-rise office construction, home to IT companies for more than just their servers. Best-case.

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