Venyu Blog

By Jason Schafer (Twitter @mrdatacenter)

President Obama addressed the nation on Wednesday, January 25, with his State of the Union address. There were several key points such as education, health care and government reform, but there were two topics that were particularly resounding with respect to the datacenter industry – the continued focus (and, some would argue, with renewed vigor) on reducing dependence on oil and fossil fuels as well as the improvement of national infrastructure (including roads, high-speed rails and most applicable to this industry: high-speed Internet).

Energy independence and renewable resources

This particular subject isn’t anything new, but that it was included as a talking point for the State of the Union speech underscores its importance to this particular administration and is somewhat of a (re)call to arms to those who will make it happen. The goal, as stated by President Obama, is that at least 80% of America’s energy be derived from clean energy sources (e.g., wind, solar, nuclear, clean coal and natural gas) by 2035. This is obviously not an all-inclusive list (biomass, for instance), but the implications are fairly clear.

So what does this mean for the datacenter industry? Probably not much right now from the federal level, but the real movement will be seen at the state level. There will likely be more government incentives to promote renewable energy use as well as stimuli for research and development on various technologies; there will also likely be incentives (or disincentives) to motivate the use of these clean energy resources for which taxes or fees can be fed back into the system to continue to fund innovation. A good example is the recent passing of a cap-and-trade initiative in California (*link* to T1R report for subscribers). In summary, California’s recent A.B. 32 cap-and-trade policy will translate to increasingly higher power costs for datacenter providers; however, they will not be targeted by the policy directly, as energy providers are. As energy prices rise, however, datacenter providers that use cleaner energy will be rewarded.

Another trend that may rise due to the implementation of cap and trade is the use of on-site power generation in efforts to avoid inflated energy costs; however, there are many bureaucratic hurdles that providers have to overcome in order to generate their own energy. These are important points since as this initiative continues to mature, fuel source and make-up will be points of consideration for Multi-Tenant Datacenter (MTDC) customers and conversely, MTDC providers (as well as cloud and hosting companies) will use this is another point of differentiation. We have already seen this happen in many site selection criteria for larger datacenter builders. It is only a matter of time before this is commonplace for the rest of the datacenter industry.

Infrastructure improvements and the digital age

Another key point that the President made was that of general infrastructure improvements in the US. He stated a goal of 80% of Americans having access to high-speed rail within 25 years, but also went on to talk about access to high-speed Internet and the next generation of high-speed wireless for 98% of all Americans. Obama stated, “It’s not about faster Internet or fewer dropped calls. It’s about connecting every American to the digital age.” This is simply stated but not so easily achieved (just ask AT&T). The implications of this are tremendous. This isn’t just about being able to stream the latest video meme from YouTube without stutters (although that is, of course, critically important) – it’s about (as the President put it) giving firefighters the ability to pull up digital engineering drawings of buildings they will be going into and patients the ability to videoconference with their doctor. These are cool ideas, sure, but they’re also about improving the well-being of Americans – and that was the underlying motivator for the improvement of the country’s digital infrastructure.

These examples (and many others) come down to continued digital mobility and the untethering of companies and consumers from physical wireline networks (both in the home and in the workplace). This will continue to push cloud-type services and functionality forward to where the devices are mere portals to users’ content. Where will all of this content reside? You guessed it – the datacenter. So for those ‘Jim Cramers’ out there who don’t know where the demand for datacenter capacity is going to come from to cause a staggering growth rate, take a look at the device on which you’re reading this. It is a glimpse into the future; and the US administration is determined to get us there.

Reproduced with kind permission of the http://www.the451group.com/ The 451 Group is an independent technology-industry analyst company focused on the business of enterprise IT innovation. The company’s analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments.