Why Edge Data Centers Play Increased Role in Global Connectivity

Data centers that house the cloud systems that serve up the apps used on connected devices are popping up all over the globe, and often in cities away from the traditional core markets.

Edge data centers are effectively bringing top-notch Internet connectivity to Tier 2 media regions, such as St. Louis, Orlando and Milwaukee. Disagreements sometimes exist over what constitutes an edge versus a co-location facility, but if you’re able to cache about 80 percent of the Internet (which means Netflix, YouTube, Akamai, etc.) for the majority of broadband subscribers in an area, you’ve extended the edge of the Internet.

EdgeConneX, a large edge data center builder/owner, was just an idea three years ago; by the end of this year it will have 30 data centers. vXchnge bought eight facilities from SunGuard in May to expand its footprint to 15 cities. Other builders are now getting into the action in other regions around the world.

A big driver of the edge movement was Psy, the South Korean who’s “Gangnam Style” hit broke streaming records a few years ago. For example, every time someone in Phoenix wanted to watch the video, they were retrieving it from Los Angeles, incurring transport fees for the Internet service provider. This will be happening less often in the future with the advent of more edge data centers.

At the other end of the spectrum, hyperscale data centers are getting larger and taking up more real estate. In China, the Range International Information Hub, opening later this year, will cover 6.3 million square feet, slightly smaller than the Pentagon. SuperNap, meanwhile, will build a collection of data center buildings in Reno, Nev., covering 6.5 million square feet.

Here’s a glimpse of the world’s most hyperactive hyperscaler: Amazon manages a whopping 1.5 million to 2 million servers in 28 “sets” (primary and redundant) of data centers around the world. The world’s largest Web services provider divides the world into 11 cloud regions. The Next Generation Data Europe Data Center in Wales, meanwhile, was retrofitted from an LG Semiconductor plant; it now holds 19,000 racks. Each rack may hold anywhere from two to eight servers; that’s a lot of servers.

Twenty-three states offer tax incentives and other stimuli to data center builders, and 16 others have offered ad-hoc incentives, bringing the total to 49 states offering $1.5 billion in tax breaks.

In Minnesota, data centers that sport 25,000 square feet and cost $30 million can obtain a 20-year sales tax exemption on equipment and energy and a permanent property tax exemption on equipment. Ten facilities have qualified. Nevada awarded $229 million in incentives to SuperNap for building $3 billion in facilities and $55 million to Apple for its $400 million data center. Iowa is home to facilities for Microsoft, Google and Facebook and gives incentives for investments as low as $1 million.

Data center construction will grow 21 percent per year through 2018. Computing assets, however, are going to waste. The Antithesis Group and Stanford University’s Jonathan Koomey, extrapolating from their own work and other studies, estimated that 30 percent of servers in the U.S. were comatose, meaning that they have not performed valuable computing work or delivered data in the past six months. Worldwide, they estimate the total comes to 10 million servers and close to $30 million in idle capital.

In 2013, Lawrence Berkeley National Labs conducted a thought experiment to see how much energy could be saved if everyone in the U.S. shifted email, CRM and other common productivity apps to the cloud. The lab estimated that it could cut energy used to run these apps by 87 percent—enough to power Los Angeles on a daily basis.