Davos WEF, what are we missing?

January 25, 2011 Dave Ohara

I don't know anyone in the data center crowd who makes the list of people who attend the World Economic Forum in Davos. 10 years ago I went with my team for a technical presentation at a computer conference in Davos. It was surrealistic in that a month later the place would have some of the top world power players in one place for WEF. Yet here we were wandering around in the small town of Davos, Switzerland.

What is WEF?

The World Economic Forum encourages businesses, governments and civil society to commit together to improving the state of the world. Our Strategic and Industry Partners are instrumental in helping stakeholders meet key challenges such as building sustained economic growth, mitigating global risks, promoting health for all, improving social welfare and fostering

Sounds really important and prestigious. What does it take to go? Well as the NYTimes reports, one is a lot of money.

A Hefty Price for Entry to Davos
BY ANDREW ROSS SORKIN
Andrew Harrer/Bloomberg NewsThe town of Davos, Switzerland, an expensive place to go.

What’s the price tag to be a Davos Man?

Chief executives, government leaders and academics around the world are headed to Davos, Switzerland, for the World Economic Forum’s annual meeting this week — a heady power gathering that mixes business, politics and Champagne in the Swiss Alps. It is an event that draws a wide range of decision makers, from Jamie Dimon, the chief executive of JPMorgan Chase to Prime MinisterGeorge A. Papandreou of Greece to U2’s Bono, ostensibly to contemplate how to solve the world’s problems.

How much money?

And if you want to take an entourage, say, five people? Now you’re talking about the “Strategic Partner” level. The price tag: $527,000. (That’s just the annual membership entitling you to as many as five invitations. Each invitation is still $19,000 each, so if five people come, that’s $95,000, making the total $622,000.) This year, all “Strategic Partners” are required to invite at least one woman along as part of an effort to diversify the attendee list.

Why would you go? Networking.

Of course, much of the week is really about one thing: networking. As the “Black Swan” author Nassim N. Taleb described it to Tom Keene of Bloomberg Television, the event is “chasing successful people who want to be seen with other successful people. That’s the game.”

But is this really good networking or a bunch of egos?

DAVID ROTHKOPF

Visiting scholar at the Carnegie Endowment for International Peace; author of "Superclass: The Global Power Elite and the World They Are Making"

To truly understand the enduring (if fading) appeal of the World Economic Forum, you have to go back to high school. One thing we learn in high school is that human beings, like wolves and fish and most other lower life forms, travel in packs. We also learn that there is a pecking order to those packs. And in every high school there is a group of cool kids who enhance their status simply by hanging out with one another. In my school, we hung out each morning along a certain wall in the front hall. (Yes, I was a cool kid in high school. Of a sort. The nerdy, artsy sort with an Isro.)

And if you think Davos is about anything other than status-seeking-behavior, then you have read too many of the press releases of the overly-earnest Swiss gnomes who put the meeting together. They describe themselves as being "committed to improving the state of the world." They do have a variety of bloviatapaloozas during the course of the event at which the improvement of the globe is debated. But, of course, most of the people there share a common background -- the emerging world, women and poor people are hugely under-represented. So you have to conclude that what they really mean is that they are committed to improving the state of those aspects of the world that are important to CEOs and politicians and the journalists who share the appetizers with them at the receptions in the Belvedere Hotel -- where the real work gets done in the small Alpine village that for a few days each year is the center of the trans-Atlantic establishment.

But watch the people at Davos and you see what's really up. It's not deal-making. That almost never happens there. It's networking, which is the professional way of saying: connecting with the kids who have it going on. The appeal, however, of the entire endeavor is fading for several reasons, all associated with the inadequacy of Davos as a networking forum. First, it's pretty uncool to hop on the corporate jet just to schmooze on a piste. Second, the cool kids of the 21st Century -- such as the Chinese -- are in short-supply (although the organizers are working like crazy to fix that). Finally, the event has grown so big, even the cool kids can't find each other in the mix. As Steve Case, founder of AOL, once told me while standing at the bar in the middle of the hubbub of the main conference center: "You always feel like you are in the wrong place in Davos, like there is some better meeting going on somewhere in one of the hotels that you really ought to be at. Like the real Davos is happening in secret somewhere."

Now doesn't that pretty much capture the way you felt in high school? Or is it just me? (I realize in retrospect that the haircut wasn't such a great idea.)

There are over a 1,000 private jets for the event. A record, and maybe the prestige is fading as things aren't working.

But all this spending may soon be going out of vogue. As one attendee, the author David Rothkopf, recently wrote on his blog, “The entire endeavor is fading for several reasons, all associated with the inadequacy of Davos as a networking forum.”

He explained, “As Steve Case, founder of AOL, once told me while standing at the bar in the middle of the hubbub of the main conference center: ‘You always feel like you are in the wrong place in Davos, like there is some better meeting going on somewhere in one of the hotels that you really ought to be at. Like the real Davos is happening in secret somewhere.’”

Could you imagine the carbon footprint of this event? WEF is a big business. $185 million in annual revenue.

All these embedded costs have helped make the World Economic Forum a big business — perhaps the biggest conference organizer in the world. According to its annual report, it brings in about $185 million in revenue and spends nearly all of it, with almost half of its costs going toward events and the other half on personnel.

Would you go to the WEF Davos event if you were invited? Could you justify the expense report?

As I told one technical friend who was contemplating the logic of buying a Porsche Turbo. You are looking at this all wrong. It is not about the cost benefit analysis - insurance, maintenance. There is a very simple question you need to ask. Does your ego fit the car? Is it too small? Or maybe too big. If your ego comfortably fits in the car you can justify the costs.

WEF works if it fits your ego.

IBM partners in China for One of the Largest Data Center WW

January 24, 2011 Dave Ohara

CRN has an article on IBM's partnering with Range Technology group.

IBM (NYSE:IBM) and a Chinese company have signed a memorandum of understanding to collaborate on the building of Asia's largest data center just outside Beijing.

Executives of IBM and China-based Range Technology Development signed the deal on Friday during Chinese President Hu Jintao's state visit last week to the U.S.

The deal calls for IBM to help Range build a new data center stretching across 150 acres in a newly developed economic zone about 30 miles outside Beijing, said Steven Sams, vice president of IBM site and facilities services.

"We're helping open one of the largest data centers in the world," Sams said.

Data centers of this size cost hundreds of millions or billions of dollars to build, Sams said. "They're building a whole city around it to support its operation," he said.

It's interesting how much business IBM is winning in China, meanwhile in the US, the top data centers are being built by Google, QTS, and a bunch of others. The nice thing is the design is a green data center design.

IBM is helping design and construct the data center, offering the same services it offers all its data center partners, Sams said. Scheduled to open in 2016, it will be built to IBM specifications and international green standards, Sams said.

IBM has been helping design and construct data centers in China since 1997, and counts among its customers the country's five largest banks and other enterprises, Sams said.

I wonder when the Chinese will figure out who designs the state of the art data centers in the USA.

Or maybe the Chinese want to own the IP, and IBM is willing to sell.

Intellectual property rights related to its data center design and construction business are not an issue for IBM, Sams said.

"The designs for Range are unique for them," he said. "They'll own the design. We'll add technology to make it the best, most efficient data center in the world, like we do for any customer. They'll buy it and own it."

Gaming + Advertising, Zynga's opportunity to be one of the fastest

January 24, 2011 Dave Ohara

Zynga has made changes in their data center networks with solutions like peering in Equinix facilities with Facebook's equinix presence. Low latency networks have three big markets - securities trading, gaming, and advertising. Zynga plays in gaming and will in advertising.

Zynga just hired a Facebook advertising executive to head up Zynga's advertising strategy.

Mike Murphy Takes Senior Advisor Role at Zynga

by Kara Swisher
Posted on January 23, 2011 at 7:02 PM PT

Mike Murphy–Facebook’s first head of advertising sales, who left the social networking giant in October to take some personal time off–seems done with relaxing.

He is now taking a part-time, but significant, role at online gaming phenom Zynga to help formulate its advertising strategy.

In addition, Murphy is also close to formalizing a consulting relationship with Facebook.

Given there has been strong interest from more obvious Facebook competitors in retaining Murphy–including Google and Twitter–his move to Zynga is probably the best outcome for it.

Facebook and Zynga have an interesting relationship.

Although the relationship has been tense at times, Zynga remains one of Facebook’s major strategic partners.

Here is some news that discusses the relationship in more details.

Zynga has been a high-profile user of cloud computing services, using tools fromRightScale and NorthScale to run its gaming infrastructure on Amazon EC2. It’s not immediately clear how Zynga’s data center space will fit into its infrastructure or its growth plans.

The reports of the data center lease come amid rampant speculation of tensions between Zynga and Facebook, which could prompt Zynga to launch a stand-alone social gaming network. Even if Zynga and Facebook grow apart, their infrastructure would remain close. Facebook is a major tenant at ACC5, and will have thousands of servers in the same location as Zynga’s reported new data center space.

Speed is where margins increase in Data Center Solutions

January 24, 2011 Dave Ohara

Rich Miller at Data Center Knowledge has a good post on the value of a millisecond for competitive carriers.

More Speed, at $80,000 a Millisecond
January 24th, 2011 : Rich Miller
A panel at last week’s PTC ’11 conference in Honolulu provided a glimpse at the startling economics on the shifting frontier of low-latency trading. The difference in pricing between the fastest route and runners-up can be dramatic, according to Will Hughs, president and CEO of Telstra Americas.

“On the Chicago to New York route in the US, three milliseconds can mean the difference between US$2,000 a month and US$250,000 a month,” Hughs said. “The financial traders will pay a premium.”

This data fits well with what I have been telling some clients that speed is where margins increase. Federal Express expanded its capacity by buying a bunch of 727 from United Airlines cargo operations. In the conversation with a United executive and FedEx executive, the United person was so glad to get out of the cargo business. FedEx was charging $3.60 a pound, United $0.20 a pound. A big difference if you sell next day delivery (speed vs. capacity).

Note most are focusing on low latency financial trading.

That premium illustrates the value proposition for the network operators who can provide those extra milliseconds and microseconds. That’s why we’ve seen new fiber builds like Spread Networks’ recent trenching of a route connecting key trading hubs in Carteret and Secaucus, which could also provide some customers in an Equinix data center in Secaucus with faster routes to exchanges in Chicago. Meanwhile, Hibernia Atlantic has announced plans to build a trans-Atlantic submarine fiber optic cable that will provide faster connections between New York and London than any available today. These illustrate how capacity isn’t the only metric driving fiber economics.

But, you know where else the money is? Gaming.

However, online gaming demands low latency so as not to disadvantage players with low latencies due to highly varied ping times among fellow players - for this reason, game server applications generally favor players with lower latencies by determining the data relating to a player as known to the server, and allowing players to act on that, not the data as known by the fellow player's client.

Low latency is currently a hot topic in the capital markets, particularly where trading based on algorithms (Algorithmic Trading) is used to process market updates and turn around orders within milliseconds. Low latency trading refers to the network connections used by financial institutions to connect to stock exchanges and Electronic communication networks (ECNs) to execute financial transactions. With the spread of computerized trading, electronic trading now makes up 60% to 70% of the daily volume on the NYSE and algorithmic trading close to half of that. Trading using computers has developed to the point where millisecond improvements in network speeds offer a competitive advantage for financial institutions.

Low latency is also being discussed in the advertising community, as a form of advertising that responds rapidly to consumer inputs, often from tweets.

And as this wiki post mentions, advertising is a big area too.

Not a bad market group to go after – Securities trading, Gaming, and Advertising.

Thanks Rich for an informative post that helps me prove my point that speed is worth a bunch of money.

What is missing from prediction of Top 5 Green Data Center Trends in 2011? Words of wisdom from a conversation with Olivier Sanche

January 21, 2011 Dave Ohara

TriplePundit has a post on the Top 5 trends in Green Data Center in 2011.

Top Five Trends for Green Data Centers in 2011

By Kathryn Siranosian | January 18th, 2011 3 Comments

Last year, Triple Pundit took an in-depth look at how companies are greening their data centers.

Now, it’s time for us to revisit that issue and ask, “What’s new?”

What’s the list of top 5?

1. Continued emphasis on efficiency –with a twist.

2. Improving business flow through virtualization and cloud computing.

3. Modularity.

4. Innovative design and design integration.

5. Continued evolution of certification and regulation.

But does this list really help you green the data center? Something is missing. Something more important. Then, it came to me as I am researching stories for a eulogy I’ll give for Olivier Sanche’s memorial service. A method that Olivier practiced – a passion to drive for a complete system that works and is better than the rest. Which now that I am writing this makes sense why Olivier fit in Apple’s culture and admired Steve Jobs when he read about the company 20 years ago. Olivier had the same passion for data centers that Steve Jobs has for consumer products.

Read this story shared by Nic Bustamente on a conversation with Olivier Sanche. You’ll get the idea.

I was lucky enough to meet with Olivier a few weeks before his passing. We conversed about many issues. I was always amazed how he ably wore so many hats. Many folks in the industry wear one or a few hats, but Olivier wore them all so well. We fondly discussed typical data center guy stuff – outages, uptime, maintenance, design, construction – it went on for hours. Throughout the discussion he never seemed to tire. Olivier was ten years my senior, and I was starting to wear out. It was both embarrassing and humbling. I was battling bronchitis, (which later developed in to pneumonia) but we kept talking! He continued asking me pointed and highly in depth questions. I was honestly starting to get pretty physically tired, but he was so mentally engaging I didn’t want it to end, and he kept me on my toes. It always amazed me how enthused and lively he could be with his energy – his questions and the discussion kept me going. We started discussing our various company’s positions and learned that later on that month we were due to meet up again at an industry event. We talked about how many in the industry present the same thing every year, how things don’t change too often, or as much as we would like. There are very few folks in this world who drive real change, and even fewer who embrace it. Of those among us who are agents of both, Olivier was one who you could always count on to do so intelligently and thoroughly, but most importantly, without ego. His was always a passionately genuine and humanistic approach. I am glad we had the opportunity to talk one last time, and I will always cherish the final experience.

I have a hard time thinking about it, cause every time I do I start to honestly cry. I didn’t think in a million years we would have to say goodbye like this.