Microsoft Buys Two Data Centers For $200 Million - InformationWeek

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7/2/2007
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Microsoft Buys Two Data Centers For $200 Million

Microsoft last week bought two Santa Clara, Calif., data centers from Savvis for a staggering $200 million, more than Microsoft often pays to acquire another company.

You can't be too rich, too thin, or have too much computing power -- even if you're Microsoft. Last Friday, IT infrastructure services company Savvis Inc. announced that Microsoft had bought two Santa Clara, Calif., data centers totaling 250,000 square feet of space for a staggering $200 million, more than Microsoft often pays to acquire another company.

It's no secret that Microsoft has been spending gobs of money for to build massive data centers in order to scale its online properties like MSN, Live services, and Windows Update. The company recently opened a data center in Quincy, Wash., is spending upwards of $550 million on one in San Antonio, and has others scattered around the world.

However, this purchase is different, a variation on the build-versus-buy theme. Instead of buying a tract of land that fit with the 31-factor checklist Microsoft has for figuring out where to place its data centers, the software company simply snatched up a data center it was already using, being the only customer at both Savvis sites. The space-rental deal had generated $16.5 million for Savvis in the first six months of 2007 alone, and was set to run until 2010.

Whether the decision is to build or buy, Microsoft will remain on a data center buying spree. "The acquisition of these assets is an important part of our vision for a globally scaled data center infrastructure that will keep pace with user demand for innovative online services," Arne Josefsberg, Microsoft's general manager for infrastructure services, said in a statement.

These types of deals could eventually prove to become a lucrative business for IT hosting and services firms, as Microsoft is but one of several companies looking to build more massive data centers. For example, two weeks ago, Google announced it would be spending $600 million to build a data center in western Iowa, following up on other recent announcements of construction in places like South Carolina.

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