Apple Planning New Server Farm in North Carolina

[MacRumors]

The Charlotte Observer reports that North Carolina lawmakers are working on special legislation to give Apple, Inc a multi-million dollar tax break in order to entice the company to build an East Coast server farm to the state.

The tax breaks could be worth about $46 million in the next decade, assuming the company reaches its $1 billion investment target within nine years of starting, according to a memo by legislative fiscal staffers that does not identify the company. The memo said no current company meets the criteria to receive the tax break and the Commerce Department knows of just one with the potential to qualify.

Apple is identified as the company in question by a state official with knowledge of the recruitment efforts. The plan would target $1 billion in investments over the next 9 years which could be easily covered by Apple's nearly $29 billion in cash reserves.

While Apple makes the bulk of its income through hardware sales, the company has increasingly been positioning itself as a services company that require large server farms to support. Apple's iTunes service, of course, is likely the most demanding, but Apple has also worked to expand their MobileMe web services over this past year. The MobileMe launch was marred by outages and poor performance during the initial launch demonstrating the importance of the underlying infrastructure.

There have been reports that Apple may further expand their online services in the future with the possibility of web versions of some of their existing applications.


Article Link: Apple Planning New Server Farm in North Carolina

[InTheUnion]

So how many farms does Apple have now? and how does the size of this farm compare to the size of their current farm(s)?

could mean an entirely new service.

[yizzle0912]

$1 billion usd in servers? Wonder what sort of capacity you can get for that amount of cash...

[AidenShaw]

Originally Posted by yizzle0912

$1 billion usd in servers? Wonder what sort of capacity you can get for that amount of cash...

A lot, unless you buy the servers from Apple...

[bigcat318]

Majority of the money would be covering the cost of actually running the data center. They inhale electricity.

[MikeTheC]

The first thought to came to my mind in reading this thread title was "What kind of fertilizer do you use on a server farm?"

Actually, in all seriousness, I'm wondering if Apple is starting to see the wisdom in diversifying the geographical locations of its servers. What with that little earthquake that Southern Colli-for-nee-ah got the other day, it puts one in mind of the degree of potential physical jeopardy that Silicon Valley is in.

Originally Posted by AidenShaw

A lot, unless you buy the servers from Apple...

I wonder if Apple uses Apple servers...

[AtlasBoy]

Originally Posted by MikeTheC

Actually, in all seriousness, I'm wondering if Apple is starting to see the wisdom in diversifying the geographical locations of its servers. What with that little earthquake that Southern Colli-for-nee-ah got the other day, it puts one in mind of the degree of potential physical jeopardy that Silicon Valley is in.

Apple has other server farms and a comprehensive business continuity plan (disaster recovery). If they loose a data center, they can pick up the slack in other centers until they can get it sorted out. Users might experience some slowness, but should not loose service. Your right that Silicon Valley is a time-bomb. I've worked in the valley for 20 years, and can tell you that any major / respectable company that has data centers there has a backup plan in place to shift processing to centers outside the state. It is however very expensive to have the infrastructure in place to achieve this. You need plans in place for all centers though because they can all be interrupted by things like fire, flooding, extended power outages, etc.

[Apple Corps]

As to the topic - we read about Apples massive market share growth in higher education. My guess is that they are simply bringing their system bandwidth more in line with the growth they are experiencing and projecting.

HD video, more Apple users, cloud computing, and....

[winmacguy]

Originally Posted by MikeTheC

I wonder if Apple uses Apple servers...

iTunes uses an Oracle back end and for the rest of Apples business stuff they use SAP, so no they wouldn't be using Xserves. Apples Oracle set up for iTunes is the biggest of its kind in the world.

[GedBlue]

I can't wait to see what they do with this!
We're definitely overdue a big surprise form Apple - anyone agree?

[stridemat]

Hopefully what ever they are planning to do with this, it will be good. Wonder how big it will be???

[themacintoshman]

hopefully this will improve speed of itunes store and the apple online store

[Saladinos]

Moot. Apple isn't really a services company, and one of the great things about the company is that it knows what its market is.

Microsoft, for example, thought the internet wouldn't amount to anything and were caught on the back foot when it took off, so they went overboard on their internet services - introducing services such as MSN that really don't feed in to their core market of operating systems. MSN has gone through numerous organisational upheavals as it haemorrhages cash. Microsoft still don't understand their core market, and through "Windows Live", have still been trying desperately to make internet services a part of their market.

Windows Live started off sounding great, and it reached its peak when we got the first working demos of Photosynth. Since then, it's been diluted and gone through yet more organisational shifts and Microsoft simply fails to accept the idea that they are not an internet services company and it has nothing to do with their market.

Apple haven't fallen in to the same trap. They have the iTunes store, which has been positioned as a key part of the iPod/iPhone product. In that case, the internet service is treated as a tool (i.e. it's only available inside the iTunes application. The web aspect of it is hidden), and it's a direct part of Apple's market. .Mac didn't take off because it was a world away from Apple's market. They brought it closer in line with MobileMe, but it's still weak when you consider how it ties in to the Mac market.

Hopefully this isn't a sign that they're going to launch new services further from their market.

Remember the four M's: Market, Market, Market, Market.

[simon-says]

Isn't North Carolina always in the path of a hurricane or tropical storm yearly? Is it the wisest choice for a server farm location?

[Treq]

Ahha... Apple servers, home grown right here in the good old USA...

[organerito]

Originally Posted by Saladinos

Moot. Apple isn't really a services company, and one of the great things about the company is that it knows what its market is.

Microsoft, for example, thought the internet wouldn't amount to anything and were caught on the back foot when it took off, so they went overboard on their internet services - introducing services such as MSN that really don't feed in to their core market of operating systems. MSN has gone through numerous organisational upheavals as it haemorrhages cash. Microsoft still don't understand their core market, and through "Windows Live", have still been trying desperately to make internet services a part of their market.

Windows Live started off sounding great, and it reached its peak when we got the first working demos of Photosynth. Since then, it's been diluted and gone through yet more organisational shifts and Microsoft simply fails to accept the idea that they are not an internet services company and it has nothing to do with their market.

Apple haven't fallen in to the same trap. They have the iTunes store, which has been positioned as a key part of the iPod/iPhone product. In that case, the internet service is treated as a tool (i.e. it's only available inside the iTunes application. The web aspect of it is hidden), and it's a direct part of Apple's market. .Mac didn't take off because it was a world away from Apple's market. They brought it closer in line with MobileMe, but it's still weak when you consider how it ties in to the Mac market.

Hopefully this isn't a sign that they're going to launch new services further from their market.

Remember the four M's: Market, Market, Market, Market.

They have done some stuff right. Skydrive is great. They give you 25Gb and it actually works great. Live sync is not that bad. Isn't hotmail the biggest email provider?

[nitramwin]

Originally Posted by themacintoshman

hopefully this will improve speed of itunes store and the apple online store

arent the itunes store and the apple website hosted exclusively by akamai?

[rockosmodurnlif]

Would you look at that? Tax breaks to incentivize business. I wonder if that kind of thinking applied to oh, your regular ordinary citizen taxpayer would work too?

[alphaod]

Originally Posted by nitramwin

arent the itunes store and the apple website hosted exclusively by akamai?

No Akamai only handles digital asset management for Apple; I think Apple still are the ones who host the information.

[Pugpuppydude]

Looks like apple could one day be a giant, like google.

[iGarth]

Originally Posted by Pugpuppydude

Looks like apple could one day be a giant, like google.

Why do people consider Google a giant relative to Apple? It's a rhetorical question, I know why, it's because people haven't adjusted to the fact Apple is no longer struggling and is extremely successful...

Just to prove the point, relative Market Caps:
Apple = $109Bn
Google = $124Bn
Microsoft = $175Bn

[ForceQuit]

Originally Posted by iGarth

Why do people consider Google a giant relative to Apple? It's a rhetorical question, I know why, it's because people haven't adjusted to the fact Apple is no longer struggling and is extremely successful...

Just to prove the point, relative Market Caps:
Apple = $109Bn
Google = $124Bn
Microsoft = $175Bn

And about the same revenue, and larger asset base.

[dolphin842]

Not long ago, North Carolina gave a similar tax break package to Dell to locate a plant in the state, but last month Dell eliminated quite a few of those prized jobs. The price/job ratio always seems out of whack with these tax break, but the local politicians are always looking for ways to say they brought jobs to the area.

Instead of giving big tax breaks to big companies for a few jobs, why not invest funds in something like internet infrastructure? Most of NC still limps along with DOCSIS 1.1 cable internet (I'm lucky if I can get 7 Mbps for $40/month, a friend in Korea gets over 55 Mbps for the same price!). Imagine how many jobs and small businesses a modern IT infrastructure would attract to the state!

Back on topic, I find it interesting how Apple intends to build out their own server resources. I seem to recall they outsource a lot of stuff to third parties such as Akamai.

[Bemopti123]

Originally Posted by iGarth

Why do people consider Google a giant relative to Apple? It's a rhetorical question, I know why, it's because people haven't adjusted to the fact Apple is no longer struggling and is extremely successful...

Just to prove the point, relative Market Caps:
Apple = $109Bn
Google = $124Bn
Microsoft = $175Bn

Where is Michael Dell's Dell mkt cap? Anyone else who is a Windows user and bashes the Apple fanboys, better check above numbers and see what is considered a successful company. I would not be surprised that Microsofts number will only go down hill some more.

[iGarth]

Originally Posted by Bemopti123

Where is Michael Dell's Dell mkt cap? Anyone else who is a Windows user and bashes the Apple fanboys, better check above numbers and see what is considered a successful company. I would not be surprised that Microsofts number will only go down hill some more.

Yeah at $20Bn Dell is immaterial