Data Center as a Platform example, Facebook and Zynga

October 11, 2010 Dave Ohara

Zynga is strategically placed for performance connecting to Facebook’s data centers. Facebook is a platform for developers and Newsweek covers some of the dynamics and Green (money) in data center ecosystems.

FarmVille Living

The tense ‘friendship’ between Facebook and its biggest game developer.

Photos: Facebook's Most Addictive Social Games

Facebook's Most Addictive Social Games

Part of the lore around Facebook is that Mark Zuckerberg, its 26-year-old founder, does not care about money. But for a guy who doesn’t care about money he is awfully good at squeezing it out of his business partners. Over the past two years, Facebook has evolved from a social-networking site into something much bigger: it has become a huge online arcade where each month more than 200 million people play videogames that run as applications on top of Facebook.

San Francisco–based Zynga, the biggest Facebook game developer, has become a software powerhouse in its own right, generating an estimated $500 million in revenue this year by selling virtual goods to people hooked on its games, which include FarmVille and Mafia Wars. (Zynga won’t comment on revenue projections.) There’s no cost to play the games, but if you want to jump ahead faster, you can spend real money on virtual goods.

Facebook is collecting green/revenue from Zynga via advertising.

As soon as Zynga began to boom, Facebook began to put on the squeeze. Earlier this year Facebook stopped letting apps makers like Zynga promote their games by sending notifications to users. The new policy was great for users, who were sick of being bombarded with promos about games. It was also great for Facebook, because by depriving game makers of their free promos, it pushed them to spend more on buying advertising space from Facebook.

and Facebook credits.

The next and bigger challenge came when Facebook introduced Facebook Credits and indicated it would eventually require all partners to use them. That move led to tension between Zynga and Facebook. But this past May, after some haggling, the two companies struck a five-year deal in which Zynga agreed to use Facebook Credits.

Facebook is a channel to end users. Amazon has their channel. Google has their channel. Monetizing access to users is a platform play. Microsoft’s Windows was one of the biggest platform plays. Doesn’t this sound like a description of the old Microsoft.

The fact is, Zynga had no choice. TechCrunch editor Michael Arrington claimed Facebook had developers in a “Darth Vader death grip,” and described the situation between Facebook and game makers this way: “Imagine a 400-pound bully strangling another kid while simultaneously rummaging through his pockets for lunch money. And he’s speaking quite calmly the whole time about what great friends they still are.”

IT Professionals predict Mobile and Cloud Technologies will dominate by 2015, but where will IT professionals be?

October 10, 2010 Dave Ohara

IBM has research that supports the view the future is Mobile and Cloud Computing.

IBM Survey: IT Professionals Predict Mobile and Cloud Technologies Will Dominate Enterprise Computing By 2015

Trends Signal Shift in Skills Necessary for Businesses to Drive Growth

ARMONK, N.Y. - 08 Oct 2010: Information technology professionals predict that mobile and cloud computing will emerge as the most in-demand platforms for software application development and IT delivery over the next five years, according to a new IBM (NYSE: IBM) survey released today.

The 2010 IBM Tech Trends Survey, conducted online by IBM developerWorks, provides insight into the most significant enterprise technology and industry trends based on responses from 2,000 IT developers and specialists across 87 countries.

According to the survey, more than half of all IT professionals – 55 percent -- expect mobile software application development for devices such as iPhone and Android, and even tablet PCs like iPad and PlayBook, will surpass application development on all other traditional computing platforms by 2015.

But with this paradigm comes an agile, competitive environment. Which for a risk adverse IT professional can be pretty scary.

How much of the cloud computing growth is fueled by those business units frustrated by internal IT departments?

How many users love the iPad, iPhone, Android phone because there is little IT involvement?

Blackberry's were top in popularity because IT departments can manage the devices. How many iPhone and and Android users wish they could go back to their Blackberry?

Those IT departments who stick to the past and slow down the enterprise will have direct affect on the competitiveness of a company.

The future will have by 2015 a major company that suffers a catastrophic data center/IT outage that will cripple its business and market cloud just like BP. The nimble companies like Facebook and Foursquare quickly address their outages and are transparent with fixes.

Foursquare and Facebook Experience Downtime. World Continues to Spin.

Foursquare? The world found out Monday when the location-based social network went down due to technical difficulties -- not atypical for fast-growing startups, but still concerning at a time when Facebook and other rivals would gladly take its place.
Total downtime was around 11 hours all told," reports TechCrunch. "That's not good."

...

What's more, "Foursqaure isn't the only one experiencing downtime lately," VentureBeat points out. "Facebook recently had its worst downtime in 4 years when the service was unavailable for 2.5 hours."

I think the dominant technologies by 2015 are those who can survive outages. 24X7 is much harder in a cloud computing mobile world as people are connecting more than ever.

One More Data Center Conference, 2010 Data Center Energy Efficiency Summit

October 10, 2010 Dave Ohara

In the past two weeks I have gone to Schneider Electric's media event, Data Center Dynamics Chicago, and AFCOM Data Center World in LV. On Thurs, Oct 14 is SVLG 2010 Data Center Energy Efficiency Summit in San Jose is next. Given my focus on Green Data Centers, the topic is right on the mark to cover.

2010 Data Center Energy Efficiency Summit

October 14, 2010 | Host: Brocade
View the Agenda Here
Registration is now open for the Silicon Valley Leadership Group's 2010 Data Efficiency Summit on Thursday, October 14.

The Data Center Summit is a partnership between the Silicon Valley Leadership Group, the California Energy Commission and the Lawrence Berkeley National Lab.

The Data Center Efficiency Summit is a one day forum that focuses on best practices and emerging technologies/applications that reduce data center costs and significantly increase efficiencies for both legacy and new construction.

I am sure I'll have much to discuss and meet many friends who focus on Green and energy efficiency.

Amazon's James Hamliton shares Overall Data Center Costs, except taxes

October 10, 2010 Dave Ohara

James Hamilton has a nice post on the Overall Data Center Costs

Overall Data Center Costs

A couple of years ago, I did a detailed look at where the costs are in a modern , high-scale data center. The primary motivation behind bringing all the costs together was to understand where the problems are and find those easiest to address. Predictably, when I first brought these numbers together, a few data points just leapt off the page: 1) at scale, servers dominate overall costs, and 2) mechanical system cost and power consumption seems unreasonably high. Both of these areas have proven to be important technology areas to focus upon and there has been considerable industry-wide innovation particularly in cooling efficiency over the last couple of years.

I posted the original model at the Cost of Power in Large-Scale Data Centers. One of the reasons I posted it was to debunk the often repeated phrase “power is the dominate cost in a large-scale data center”. Servers dominate with mechanical systems and power distribution close behind. It turns out that power is incredibly important but it’s not the utility kWh charge that makes power important. It’s the cost of the power distribution equipment required to consume power and the cost of the mechanical systems that take the heat away once the power is consumed. I referred to this as fully burdened power.

This post supports one of the ideas I threw out there on Amazon's financial discipline.

At many companies the rigors of getting approval a data center construction project approved are from the business units, technical people, and the CFO. I would expect at Amazon.com, everyone wants to see the numbers, and they spend much more time on financial modeling.

Should we lease or build?

What is the best use of Amazon's capital and cash?

What is the overall operating expense of a leased vs. owned facility?

Latest decision in the East Coast. Lease.

The one variable that is difficult to put into an excel document is the taxes you pay. Believe it or not the tax incentives are one of the biggest things that gets the big builders to be in one state vs. another.

James's data is a good starting point, but don't forget to get your tax department involved in the data center project.

Studying Tenants in a Colocation Data Center space, what is in Digital Realty Trust

October 10, 2010 Dave Ohara

Digital Realty Trust has in its 2009 10-K statement on page 35 a list of its top 20 tenants.

I've been staring at this table for a while, seeing what could be learned from this public disclosure.

Top 3 tenants are resellers of space - Savvis, Equinix and Qwest comprise 24.8% of the sq ft, but are only 18.9% of the rent.

The 3 financials - JPMorgan Chase, Morgan Stanley, and HSBC are 2.8% of the sq ft and 7.1% of the revenue which can be explained by the high availability requirements for their space and requirements to support financial transactions.

Google is not in the Top 20 listed. But, Microsoft, Yahoo! and Facebook are. Microsoft has the most amount of space of these 3 with 2.5% of the space and 1.6% of revenue. Yahoo! has 0.9% of the sq ft and 1.9% of the revenue. With Facebook at #4 in revenue with 3.6%, they have only 1.1% of the space in Digital's data centers. Facebook being a young company could be in high density space, so judging just by sq ft and not knowing power leaves more questions.

Comverse Technology looks like they have the most amount of space in one location 2.9% of the sq ft and only 1.4% of the revenue. But, all spaces are not created equal and it would seem the space Comverse got into had little demand from others which may explain why there is so much space.

Why are these numbers important? As companies decide to build data centers, they use their colocation costs as part of the business justification. But, how many look at the costs others are paying for colocation space to judge the ROI of a data center?