14 DAY TRIAL // Using the global economic downturn as argument, Microsoft revealed that it had interrupted the construction of new data centers, even though the company needed to evolve its infrastructure in order to be on par with its Cloud vision. One of the projects that was postponed indefinitely was the $500 million data center in West Des Moines, Iowa, which was announced at the end of the past year. The software giant revealed that its focus would move in the direction of doing more with less resources, rather than pour money into additional infrastructure.
Arne Josefsberg, general manager of infrastructure services, Global Foundation Services, and Michael Manos, general manager of data centers, Global Foundation Services, explained that the company's pour financial results in the second fiscal quarter of 2009 were the reason for cutting back investments in data centers. Josefsberg and Manos explained that increasing power optimization, server utilization, and efficiencies would compensate for the data centers whose construction had been put on hold.
Thanks to the growing efficiencies associated with its existing data centers the company “will be able to delay the construction and opening of some of our facilities, which will save Microsoft and its shareholders significant operating expenses, going a long way towards meeting the goals that Microsoft announced this week. For instance, we’re postponing construction of the data center in Iowa that we recently purchased land for. We are still continuing construction of our facilities in Chicago and Dublin, and are planning to open them as customer demand warrants. But given the current economic climate, we’re going to do the right thing for our business and shareholders and revisit our plans on a quarter-by-quarter basis,” Josefsberg and Manos stated.
Plans for the Iowa data center were unveiled in August 2008, a quarter when Microsoft's financial results were still strong. The same cannot be said for Q2 2009, when the company missed estimates by $900 million, and posted minuscule growth over Q2 2008. As a result, Microsoft debuted strong cost management initiatives, indicating that the data centers would be hit with a reduction of projected capital expenditures by $300 million.
“We measure everything in our data center operations to the point of obsession, and continually analyze our measurements to identify areas where we can improve efficiency and increase ROI. Of course, we’re doubling down on those efforts in light of the new budgets constraints, but we’ve already been moving in that direction for quite some time. A big part of our efficiency efforts involve increasing the utilization of our servers—an area where our industry is now beginning to raise the bar. We’re working on a multitude of fronts in this area and we are making real progress,” Josefsberg and Manos added.
In all fairness, Josefsberg and Manos welcomed the cutback as an opportunity to drive innovation with limited resources. However, the data centers have to support over 400 million Hotmail users, deliver over a billion searches per day via Live Search, drive more than 250 Microsoft online services, and also be capable of handling the Windows Azure Cloud operating system.