Data Centers Critical to Online Expansion

To support expanded online services, Microsoft is investing billions of dollars in building and operating data centers. After two years of relative secrecy, the company has begun to talk about the issues involved in building and running these data centers, partially in hopes of spurring more industrywide cooperation in negotiating with suppliers, as well as to reassure investors that this money is being spent effectively. Although many details are still trade secrets, corporate customers and online advertisers can take comfort that Microsoft is investing in this business for the long haul, with an emphasis on Microsoft-owned-and-operated data centers offering high availability.

Why Build?

Since 2005, Microsoft has steadily increased its investment in online services, an initiative that has gradually become known as the “software plus services” strategy. This effort aims to capture new sources of revenue, such as online advertising and hosted business applications, and responds to threats to Microsoft’s traditional software model from online companies such as Google and Salesforce.com.