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Microsoft and Google controlling cloud computing through power?

Cloud computing... just another buzz word?  Or is it one of the next big things in IT?  Cloud computing infrastructures typically consists of reliable services delivered through next-generation data centers that are built on compute and storage virtualization technologies.  These services are then made accessible to people anywhere in the world.  Something that seems to go hand in hand with commercial cloud computing services is a service level agreement (SLA) that meets the quality of service requirements expected by consumers.  Again, this typically requires large, next generation type data centers.  Companies that are making use of these types of data centers are organizations like Google, Microsoft, Amazon, and Salesforce.

In a recent magazine article on Virtual Strategy Magazine, Steve Denegri floats the idea that Google and Microsoft are building just that type of data center.  More to the point, the article reads that Google and Microsoft could be sucking up excess amounts of power in order to monopolize the future of cloud computing.  How?  Denegri says that companies like Microsoft and Google "are constructing enormous data centers of their own, and their goal is to sell data services to the many companies who have been their customers.  These vendors aim to centralize the vast majority of IT resources, both product and personnel, by raising the competitive bar to such a degree that companies have no choice but to purchase their data service needs rather than support them, internally." 

The two companies are building massive data centers in municipal areas where power is cheap.  And the companies are getting this renewable power cheap because states and local governments are providing them with huge tax incentives.  They are also getting incredibly low and favorable power rates from local utility companies, further reducing their ongoing costs and widening the barriers to compete in the data services segment of the computing industry.   

Read the entire report as Denegri offers quite a bit of evidence to support his idea that long-term access to renewable energy has the potential to create monopolies within the data center services industry.  Denegri states, "The end goal that Microsoft and Google are aiming to achieve seems to be to "get off the grid," meaning that they desire for their data centers to have their own dedicated supply of energy rather than connect to the public power grid.  In fact, this report hypothesizes that data center computing is likely to become controlled at the local level, whereby data services become another product offered by the local power company."

"While Microsoft is concentrating its data center strategy upon larger cities, Google is targeting in smaller towns.  In fact, given the exorbitant amount of acreage that Google purchases, far beyond its data center need, it is apparent that it plans to use this excess space to generate its own renewable energy supply to power its compute infrastructure.  Combined, the two companies appear to be on a mission to leverage their size and influence to become the lowest cost suppliers of data services to commercial businesses, with specific plans still having not been revealed to the public.  For those readers who rely upon their corporate data center, listen up:  your world is about to change."

So does Google and Microsoft have an unfair advantage here?  What exactly are they up to this time?  Read the article and formulate your own opinion.

Microsoft & Google: Cloud Computing Dominance Through Renewable Energy

You will need to login with your account on VSM in order to read the full article.

Published Tuesday, November 04, 2008 6:15 PM by David Marshall
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