Tech giants like Google and Microsoft don’t like to talk about their data centres, which house the computers that run their web-based operations, but they do like to locate them in Ireland
AS THE LIGHTS flickered around west Dublin last Sunday night, digital fireworks exploded on computer screens in darkened control rooms in offices at the Citywest business park.
Among the offices on the outskirts of Dublin city are some of the most valuable pieces of virtual real estate in the country, if not in Europe. They are the nondescript data centres, home to vast racks of high-powered computer servers that run the web operations of some of the biggest technology brands in the world.
The failure of a 110kV electricity substation in Citywest was initially believed to have been caused by a lightning strike, which the ESB has since ruled out. Whatever the cause, it knocked out the operations of Amazon and Microsoft. Despite having state-of-the-art generators, which are supposed to kick in immediately if a failure occurs, it took hours for service to be restored. Web services around the world stopped working, while thousands of users of the online version of Microsoft Office in Europe and further afield were unable to connect.
The following day a little-known Irish company, Data Electronics Group, which operates two data centres in the Dublin area, was sold for €100 million.
That Ireland is a popular location for US technology companies to plant their flag in Europe is well documented. What is less well known is that despite our constant self-criticism about the country’s lack of infrastructure, these companies also choose Ireland as the location for the computers that run their increasingly web-based operations.
So what is a data centre and why have they become such big business here? Data centres are effectively where the internet lives. Think of them as digital bank vaults which come with all the same, and often even more, security features as financial institutions.
Ireland, and Dublin in particular, is home to some of the biggest and most important data centres in Europe, as demonstrated by the international disruption caused by last weekend's power outage. Microsoft's facility in Grange Castle, near Clondalkin, opened in 2009 and cost half a billion dollars to develop. It is the sixth largest data centre in the world, according to the trade publication Data Center Knowledge.
But the tech giants don’t like to talk about their data centres. Microsoft and Google, both of which invest significant sums in courting the Irish media, declined to comment for this article. It is widely known in the sector that Google acquired a major data centre just off the Naas Road when it established its European operations centre in Dublin, in 2004. But queries about it this week were met with the curt response that “Google does not comment on the location of its data centres”.
The same discretion extends to the squat grey buildings that house the vast amounts of computing power. There are never any signs announcing who owns them or what their function is. Large fences surround the sites with CCTV and security guards patrolling the perimeter. Once inside the front door, visitors, who have usually provided a copy of their passports and other personal details in advance of their arrival, are required to sign a variety of intimidating legal documents before gaining access to the inner sanctum.
By packing so many computers into one space, efficiencies of scale make them cheaper to manage than if they were widely dispersed. This is one of the central tenets of cloud computing, the new model of delivering technology that is so beloved of government ministers and internet executives.
But with concentration of resources come other challenges, predominantly around electricity, cooling and telecoms connections. Ireland had an issue with the cost and availability of power in recent years – a large data centre can consume the same amount of electricity as a provincial town – but this has largely been solved, according to Tanya Duncan, the managing director of Interxion Ireland, a Dutch firm which has two major centres here.
“The ESB have made great strides in bringing down the price of power, but it was a stumbling block in the past,” says Duncan. And while Ireland’s woeful broadband infrastructure has been a national issue, Duncan says 25 telecoms companies connect to Interxion in Dublin, and the company has built three extensions to data centres in the past 18 months.
Around the turn of the century, on the back of the original dotcom bubble, there was something of a gold rush to build data centres. The US firms that had raised millions from the stock exchange to build these facilities reasoned that their customers, the dotcoms, would be expanding into Europe, so it made sense to get in ahead of them. Ireland, or more specifically Dublin, and the Netherlands were the locations of choice.
“We had a strong base of foreign direct investment – we had the Intels and the HPs – and these guys were postulating [that the multinationals] would have to go into the dotcom game,” says the managing director of Network Recovery, Paul Lynch, who has been both a customer and operator of data centres during his career. “At that time we were cost effective for salaries and had very good IT education.”
The ergonomic Aeron chairs had just been delivered and the paint was barely dry when the bubble exploded. The data-centre operators retreated to the US. Suddenly state-of-the-art facilities that had barely been used were on the market for a fraction of what they cost to build. The tech industry was abuzz with rumours that data centres built for €100 million were sold for just €2.5 million less than a year later.
With the global technology sector in the doldrums in 2001/2002, raising finance for those deals was practically impossible. Those who got the assets on the cheap, including Digital Electronics Group, which was sold this week, profited handsomely. If Irish banks had been more willing to back virtual real estate than bricks-and-mortar projects of questionable value, our economy would be in a lot better shape.
Who's who . . . and where?
MicrosoftThe world's largest software company is moving to the delivery of services over the internet. It invested $500 million in a data centre in Dublin to support the strategy, but last Sunday night it was offline for several hours.
GoogleWhen you use a Google service, from search to Gmail, the software and data can be sitting in several Google centres around the globe. One of those is in Dublin, but don't tell Google we told you.
TelecityThe British data-centre operator, which has locations in 26 European cities, made a big bet on Ireland this week with the €100 million acquisition of Data Electronics Group.
AmazonIt's best known as an online retailer of everything from books to lawn mowers, but Amazon has developed a profitable sideline renting out the same type of computer systems it uses to run its own business to anyone with a credit card. It recently acquired a 22,500sq m warehouse in Dublin to build a third data centre in the city.
Digital Realty TrustThis US firm is an estate agent for data centres. It has built facilities around the world which it then leases to technology and telecoms firms. It has made several significant investments in Dublin, including the development of a €100 million facility in Clonshaugh which was immediately leased to Eircom.
