Advanced Data Centers, Inc. 50 Megawatt Sacramento Project

For those of you that have a blog or maintain a website you probably are familiar with web analytics. I was first introduced to web analytics in my days at Equinix where I managed the Omniture relationship. When I first began working with Omniture they had a couple racks of servers. By the time I left Equinix, Omniture was close to 1000 racks of equipment spread across the globe. This happened over the course of a couple years. It didn't take a dummy to figure out they were onto something. A couple months after I left Equinix I started blogging and was introduced to web analytics from the point of a customer/user. I believe analytics is one of the most powerful elements of online behavior. Since the internet is subsidized by advertising dollars analytics plays a huge role. But this post isn't about analytics, it's about, as the title suggests a new 50MW data center project underway in Sacramento, CA. 50 Megawatts is the most power at any data center site that I have ever come across. This project has been and will continue to be the recipient of a good portion of my attention for quite some time....or until we are out of space and power.

After spending 7 years at Equinix I thought I was done with data centers. So much so that it made my head spin even thinking about them. Shortly after leaving, it dawned on me that the data center market is unique in that there are natural barriers to entry in the form of extremely high cost of admission. Some people claim that data centers are being commoditized and with all the new construction taking place this line of thought is getting more attention. For those of us building data centers this is exactly what we want....that is of course as long as it's not the attitude of an investor or banker.

It's positive for us in that by virtue of it's negative connotation, it naturally scares new entrants away, creating additional strains on supply. It's also good because it makes it very difficult, if not impossible, for a new entrant to raise the necessary capital to build out a large scale data center due to construction costs of approximately $1500 per square foot. That cost is enough to scare most people away alone. There are quite a few instances of major corporations in the US forgoing the outsourcing model of colocation and becoming site operators themselves. Without huge augmentation, very few companies have the scale and resources to make this work over an extended period of time. Not impossible by any stretch but certainly challenging. Probably the most challenging element in getting total executive buy-in/support takes place when the CIO meets with the CFO, telling him that he needs $250MM to build a new data center that will support their IT requirements for the next ten years. More often than not, the CFO recalls a similar discussion 18 months ago in which this same CIO was asking for budget to outsource the same type of requirements, albeit less capacity, to a colo supplier. Once the CFO realizes this isn't a prank and that this guy is serious he collects himself and pours a stiff drink(it's a late night at the office in this example so its all good.)

When we embarked on our new venture, we had these types of discussions in mind and saw an opportunity to provide a service which would give the CIO the resources to support their IT customers and, at the same time, give the CFO a heart attack at every budget meeting.

I'm getting sidetracked so I'm going to get back to the analytics component. I find it very interesting to take a close look at how people get to this blog. Some get here by entering terms on the various search engines while some get here by clicking on links on other blogs or news sites that reference this one. And for some, I have no idea how they wound up here. It has been enlightening to see what people search for when they go to google, yahoo, or whatever search engine they use. I've found that a good portion of the folks who wind up here search for common terms that we throw around every day in the data center world...things like: watts per sq foot, kva to kw conversion, 60amp 208v circuit, Equinix rack price, Savvis data centers, 365main outage, etc. You get the point. The analytics service I use allows for me to see the address and domain of these readers network and has given me some insight to what IT people within these organizations have on their plate...or what keeps them up at night. Then again, I could be so wrong and off base I may as well be fire on an frozen pond. Either way, people who wind up here on my blog appear to be in the process of determining how to address their data center requirements.

Without overstepping the boundary of turning this blog into a sales pitch, I really believed the company behind the aforementioned data center project, Advanced Data Centers(ADC), may be a valuable partner to those folks in need of capacity for their IT gear. As such, what better way to reach them than to discuss it here.

If you're one of those folks or think you will be soon, I invite you to visit the ADC website to see what we're up to and if it looks intriguing drop me a note either on this blog or via the form on the contact page of the website.

The Datacenter Cheat Sheet: One size doesn't fit all

Choosing a datacenter is no trivial task. For the majority of sophisticated companies, the days of the one stop shop are history. This wasn't the case seven years ago when you weren't fired for choosing Exodus as your provider of datacenter services. It wasn't uncommon to add redundancy to your colo'd environment by installing gear in multiple Exodus facilities. Maybe one on the West coast and one on the East and you were a hero. Today Exodus is no more albeit some of their remnants remain with Savvis and Digital Realty Trust and a fresh crew of cautious datacenter providers have stepped up to the plate, each with a focus on fulfilling some market need. What could have possibly changed in the market to have such dramatic implications in such a short period of time? Networks(backbones, last mile options, overlay). Hardware got smaller but more dense. Software as a service is real. Ubiquity in access speeds and availability. Efficiency enablement...if there is such a phrase. Increase in demand for electicity. Access to capital. While all those don't need to be crossed off on everyones check list for most companies embarking on the discovery process of finding the right colo vendor, the bricks of the road for which we traveled.

The past two years have brought a change in the way datacenter vendors charge for the services they provide to customers. There was a time when you could compare the costs of doing business with one vendor to the other by their cost per rack or cabinet. If you're doing that today you could be in for a big surprise. In fact, if the first question your prospective vendor asks you is, 'how much space do you need?', you should consider making a bee line for the closest exit because the vendor should be telling you how much space you need based on your power requirement.

For most providers, a rack takes up 25 square feet of datacenter floor space. The issue is that floor space isn't all created equally. The 'players' today have varying power densities ranging from 60 watts a foot to 200 watts a foot. Thus, the rack in the 60 watts a foot facility provides less than 1/3 of the utility(in an economic sense) as the rack in the 200 watts a foot facility. I'm getting sidetracked but felt those were important points to make considering the newness of the industry in general and the lack of a standard unit of measure amongst vendors. I will dive deeper into the power issue and how to really compare one vendor vs another in my next post of power. And it may shock you. Sorry, couldn't resist :)

For simplicity, I will break down the buy side market and evaluate each section the way the supplier, not the buyer, would. We'll go generic and call the three sections:


Small(up to 100kw) - both in footprint(space) and power consumption(<3kw per rack)
- Customers in this category may have a requirement for a rack or two, perhaps up to ten. Power required for each rack is a single 20amp circuit and perhaps a redundant circuit as backup to the single 20amp. At 25 feet a rack and ten racks, this customer has a requirement of 250 sq ft and approx 30kw of power. This customer likely isn't as concerned with the cost of power as they are with the proximity of the datacenter to their office. The exception to that last statement would be with carriers and isp's who colo in carrier neutral sites as they tend to have relatively low power requirements and do most of their management via remote login.


Medium(between 100kw and 500kw) - in this category the vendor is most likely telling the customer how much space they'll need. Reason being, not all sites are equal. Example, a customer could go to Equinix whose pre 2007 sites are built to around 120 watts a foot and be told they need to purchase 125 cabinets worth of floor space in order to support their power requirement. In this example the customer may only need 50 cabinets with 10kw in each one. That is only two 208v 30amp power circuits per cabinet, or 100 power circuits total but the capacity on those circuits are 5kw each(actually 4.9kw at 80% of their gross capacity). This is a standard, run of the mill setup for companies like eBay, Amazon, Google(albeit different circuit types but roughly the same total kw per rack), Salesforce, Youtube, etc.


Large customers (greater than 500kw) - In addition to the customers mentioned above, this category includes most of the top 50 internet companies as well as many enterprises that may never colo their gear. The majority of users from this category are not colo'd in third party sites, they build and operate their own datacenters. While there are a handful that overlap(Yahoo, Facebook, Google, eBay, Internap, etc)those tend to be the internet related companies, not the traditional enterprise. I believe this is due to the nature of their growth and the fact that they had to start somewhere which likely was in a colo datacenter such as Exodus, Equinix, AT&T,e tc. Overtime, these types of companies built up their internal expertise in operating the physical components of a datacenter. This provided them them with the skill set to operate their own sites their growing demands for and expenses of outsourced datacenter space made investigating the possibility of building and operating their own sites a no brainer. Since running a datacenter is nothing new and not limited to internet companies, there is an established ecosystem of companies providing services and products to the operators of datacenters. As such, there are companies whose business it is to manage the day to day operations of any datacenter but the one with the asset on the book or the livelihood on the line, still have inhouse expertise in all the areas of design, operations, maintenance, etc. It's way too large of an investment and all too important to the day to day operations of the businesses in general to not have an inhouse staff of engineers and operations experts.

Along with the growth in demand for computing space came the revenue being generated from the services being delivered by the assets in these datacenters. More revenue = More access to capital + greater borrowing power + more flexibility in provisioning + less emphasis on planning + operational transparency to internal customers + increased costs controls + increasing costs of outsourcing = Decision to build, buy or lease and operate datacenter assets.

Before we get into who fits where, it may be useful to first go over why all vendors aren't going after the large customer and why if they do they limit the number of that type of customer to one per datacenter. Vendors want to fill their sites up and just like the buyers, they want to get the most bang for their buck. The difference is the vendors buck is already spent so they must get the most return on that buck. As with most markets, pricing is somewhat volume driven so the more you buy the cheaper it is. There really is no logic to that other than at some point the large customer would be spending enough if he was paying small customer pricing to put that spend towards building his own site and not outsourcing at all. For right or wrong that dynamic just is what it is.

At any rate, lets use an example using a ficticious vendor named XXX, inc. who just opened a 100k sq foot datacenter with 15MW of sellable power. XXX could fit 5000 cabinets in this space and deliver 150 watts a foot. XXX has a good sales team who uncovers two opportunities with prospective customers who have a requirement of 5MW each. In order to get these deals they will need to get real competitive on the pricing structure for the space for these customers, well below their retail rates. Often colo vendors are lured by landing the big name customer and the oomph such an incident would add to effort selling out a site quickly which pleases investors who are more likely to make additional if they can see success on the initial ones. Today, most of the big guys in the market have learned that giving all or most of the buildings resources to a single user are wise to the pitfalls wh customers is that they don't want to buy a bunch of additional services from along with such an arrangement.

The issue is that the you can't mix a large companys requirements with the colo vendors abilities and get a happy outcome because success to one may likely mean failure to another. It isn't so much that the low price hurts the vendors as it is the lack of operational flexibility the customers experience with vendors hurts the customers experience. In doing so, increasing the attractiveness of insourcing. For A perfect storm was in the brewing for a flood of investments being made in ensuring the ability to grow, and grow on your own terms, drive TCO down, less dependency on outside personnel and a bunch more factors, features and functions of running your own datacenter compared to colo'ing in a third party site.

This dynamic doesn't impact the vendors we know and love today as the opportunity cost of servicing a 5000 sq ft customer compared to selling that 5k sq ft to 200 different customers is far too great to not take notice. Assumptions for example: cab = 20sq ft, pricing excludes power, large deal would get 30% discount off retail, a cross connect costs $200 per month, big customers buy 10 cc's and small customers buy three.

Example of revenue generated by single customer in 5k sq ft:

250 cabs X ($560 discounted rate + $2000 for ten cross connects) = $142k
$142K divided by 5000 sq ft = $22.72 in revenue per sq ft


Example of selling the 250 cabs to individual customers:


250 cabs X ($800 per cab + 600 for cross connects)= $280K
$280k divided by 5000 sq ft = $56 in revenue per sq ft

Ahh, the reason it really isn't that good of a deal for a retail vendor to take too many anchor deals, the opportunity cost is huge!