Jim Cramer’s “Death of the Data Center”
Jim Cramer’s “Mad Money” featured an interesting segment yesterday, titled “Sell Block: The Death of the Data Center?”
Basically, the premise of the segment is that Intel’s Nehalem DP processors will allow businessses to shrink their data center footprint, and thus businesses won’t need as much data center space, commercial data centers will empty out, and businesses might even bring previously colocated gear back into in-house data centers. He claims, somewhat weirdly, that because the Wall Street analysts who cover this space are primarily telco analysts, they’re not thinking about the impact of compute density on the growth of data center space.
I started to write a “Jim Cramer has no idea what he’s talking about” post, but I saw that Rich Miller over at Data Center Knowledge beat me to it.
Processing power has been increasing exponentially forever, but data center needs have grown even more quickly — certainly in the exponential-growth dot-com world, but even in the enterprise. There’s no reason to believe that this next generation of chips changes that at all, and it’s certainly not backed up by survey data from enterprise buyers, much less rapidly-growing dot-coms.
Cramer also seems to fail to understand the fundamental value proposition of Equinix in particular. It’s not about providing the space more cheaply; it’s about the ability to interconnect to lots of networks. That’s why companies like Google, Microsoft, etc. have built their own data centers in places where there’s cheap power — but continued to leave edge footprints and interconnect within Equinix and other high-network-density facilities.
Posted on October 23, 2009, in Industry and tagged colocation, EQIX. Bookmark the permalink. 4 Comments.
The comments on the post featuring Cramer’s speculation are pretty interesting as well.
The processors will be faster and more powerful tomorrow than they are today in the same way that processors today are faster and more powerful than they were last year (Moore’s Law) … It doesn’t change the fact that they need power, cooling, network and maintenance.
If data centers go Cramer’s route and replace their entire fleets with the newest technology in 1/8 the space (nevermind that the 8 different customers on the 8 legacy servers all wanted their own server), they’ll see higher average revenue per unit, won’t have to spend capital on new facilities as quickly and will be able to streamline the management of those servers.
You have to say one thing for him, though: He knows how to get people talking.
He is a TV guy, what do you expect?
When you want solid information on a subject you go to the experts not the guy trying to sell ad time.
@Casey, you appear to know what you’re talking about. Do you mind shooting me your email? I would like to chat more with you.
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