Data Centers: Apple, other tech giants, building data centers in small-town America

By Adam Satariano for BLOOMBERG NEWS

SAN FRANCISCO — Apple Inc. needed land owned by Donnie and Kathy Fulbright for a $1 billion data center in rural North Carolina. The couple showed no interest in moving out of their home of 34 years in the town of Maiden.

The Fulbrights say they spurned one offer, then a second. Finally, they agreed to sell for $1.7 million, county records show, opting to leave the single-story house on the less than one acre of land they purchased for $6,000.

“They told us to put a price on it, and we did,” said Kathy Fulbright, 62, seated on a brown leather sofa in the living room of the home she and her husband built with the proceeds. The 49-acre property has a 4,200-square-foot house with a Jacuzzi in the master bathroom, as well as a manmade pond stocked with bass and catfish.

Apple was willing to pay up to get the land in its drive to improve digital entertainment services that fuel demand for iPods, iPhones and iPads. The plot is adjacent to the site where Apple is building a 500,000-square-foot warehouselike structure that analysts say will brim with servers, generators and other gear that make it easier to deliver songs, TV episodes and movies via the iTunes online store.

“Apple’s growth has been pretty dramatic, and they have probably exceeded their capacity,” said David Cappuccio, chief of research at Gartner Inc., which advises companies on the use of data centers like the one Apple is building. “Between iTunes and the video store they are going to have, you’re talking about massive amounts of data and millions of people trying to access that at the same time.”

The center is due to be completed by year’s end. It will help Apple customers stream and store music and videos remotely, via the so-called cloud, rather than having to download files to a hard drive, said Gene Munster, an analyst with Piper Jaffray in Minneapolis. Apple announced plans for the facility in June 2009 and began construction in August.

Apple might also use the center to help stream video to a newly revamped Apple TV set-top box, said Richard Doherty, director of the consulting firm Envisioneering Group. Cappuccio of Gartner said Apple might use the Maiden facility for initiatives the company has yet to unveil or discuss in detail, including social networking and Web search.

Apple hasn’t disclosed its plans for the project, and a spokesman declined to comment.

Added jobs and tax income

The data center already is making a mark on Maiden, a town with a population of 3,200 located about 45 miles west of Charlotte.

In its pitch for approval and tax breaks, Apple said it could employ 50 people at the center and expects to generate 250 more jobs in areas such as maintenance and security, according to a state website and records compiled by the city and surrounding Catawba County. North Carolina projected the creation of an additional 3,000 jobs related to construction of the center.

Maiden and Catawba County could receive $9.3 million in taxes and other revenue over 10 years, according to the documents. That includes $5.1 million for Maiden, which has an annual budget of $13.1 million, and $4.2 million for Catawba, which has an annual budget of $202.2 million.

Locals hope for added payoff from “Project Dolphin,” as officials have dubbed the center: that Apple will lure other companies. Google Inc., owner of the world’s largest search engine, has a facility in a neighboring county.

“Names like Google and Apple indicate you’re in the 21st century and open for business, so we hope to propel this to something greater,” said Kitty Barnes, chairman of the Catawba County Board of Commissioners.

U.S. technology companies increasingly are setting up shop in small-town America. Microsoft Corp., Facebook Inc. and Twitter Inc. all are placing data centers in sparsely populated regions, drawn by tax incentives, inexpensive labor, cheap electricity and abundant space.

Microsoft weighs more than 35 different concerns when selecting a site, said Kevin Timmons, general manager of the company’s data center operations. The company plans to build a $500 million data facility in Virginia, Gov. Bob McDonnell’s office said in August.

“Topping the list were factors such as its close proximity to our customers, fiber-optic networks, a large pool of skilled labor and an affordable energy source,” Timmons said.

Data centers have helped bring 3,100 jobs and more than $3.6 billion in capital investments to Virginia since 2006, said Rob McClintock, director of research at the Virginia Economic Development Partnership.

[statesman.com]

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