Cuts at C&W?

The rolling retrenchment continues in the hosting sector. The Financial Times of London reports today that Cable & Wireless may cut 2,000 to 3,000 jobs, with many of those job losses likely to fall in the company's Global division, which includes its U.S. hosting unit, Exodus. The paper cites impending meetings between C&W management and employee representatives. Read more here.

Vendors Target
The Data Center

It's already been a busy month for product announcements in the data center sector, as some of computing's biggest names are jousting for the hearts, minds and dollars of facility operators. The battle is being joined over efficiency, as data center managers seek to squeeze extra dollars and watts out of every square foot of their computer space.

Last week, Sun Microsystems announced its new vision for data center architecture, which emphasizes improved scalability through distributed computing. "We've created a dynamic system environment that will revolutionize the network," said Scott McNealy, the chairman, president and CEO of Sun. Early media reviews found the plan as long on vision and short on details.

Today IBM raised the stakes in its blade server battle with Hewlett Packard, announcing its thinnest server yet and a big new customer, AOL Time Warner. IBM also says its eServer BladeCenter has a fan in Microsoft, which says it will bring out Microsoft Exchange 2000 software on BladeCenter later this quarter. Hewlett Packard, for its part, challenged IBM's claims that its new server is more compact and squishier than HP's competing product.

If IBM, HP, Microsoft and Sun are putting this much energy into the data center sector, what does that tell us about the future? Perhaps not much. Venders have been known to go overboard chasing markets that never materialized. But it reinforces the profound shift in priorities from the speed-to-market phase of the data center "gold rush," when efficiency sometimes seemed less crucial than having it done yesterday.

The Task Before Us

What will be the legacy of Sept. 11, 2002? Years from now, will our observances make a difference? As Gov. George Pataki read from the Gettysburg Address this morning at Ground Zero, it struck me that Abraham Lincoln and those gathered at Gettysburg probably wondered the same thing. "The world will take little note, nor long remember, what we say here," Lincoln said on Nov. 19, 1863. He was wrong. Nearly 149 years later, those words speak to a different generation of grieving Americans.

And yet, Lincoln realized that speeches alone would not suffice. His words retain their power because they sprung from a deeper commitment, and called a wounded America to respond to the extraordinary demands of the moment; to be "dedicated to the great task remaining before us."

And so it is for America this morning. Our remembrances of Sept. 11, 2001 have produced an awesome quantity of words. Yet the sum total of all the speeches, eulogies, poems and songs will be diminished if we fail to follow through on our nation's unfinished work. A year after the terrorist attacks, it is still not easy to define exactly what that means, and how we go about it. History will judge the meaning of Sept. 11, 2002 not by the eloquence of our words, but by the depth of our convictions, and where they lead us from here.

Ultra-Secure Overkill

Back in the 1970s National Lampoon published a memorable parody of a local Sunday newspaper, mocking the genre's often parochial world view. "LOCAL COUPLE MISSING IN ORIENT!" screamed the all-caps banner headline. Underneath, in smaller type was the subhead: "Japan destroyed." I recalled this yesterday as I read yet another press release touting an ultra-secure bunker facility. At times it seemed disconnected from reality.

“This is NORAD for the private sector," said Jarvis Entertainment Group president John Jarvis in touting the new Houston-area facility his company is developing. "The underground bunker is essentially disaster proof.” The company's press release goes on to note that "two-foot thick concrete walls and heavy metal blast doors are designed to withstand a 25 megaton nuclear blast within four miles."

Twenty-five megatons? That's a big bomb. How much damage would result from that size explosion? Believe it or not, you can actually chart this for a city near you using the Blast Mapper from PBS (proof that you can find just about anything on the web). A 25-megaton nuclear blast would kill 98 percent of the people within 6.5 miles of the detonation point, and destroy all residential homes and most office buildings for 10 miles around. Flying glass and debris would seriously injure people as far as 30 miles away.

But your data would be safe! Maybe I've just read too many of these releases, but this strikes me as an extension of the insular perspective found in the "Local Couple Missing" headline. That's particularly true for providers focusing on the local business market. Allow me to propose a litmus test for future press releases: Would a disaster that tests your marketing claims also kill most of your clients?

Sure, everybody wants to tout the security of customer data. Ours is an industry designed to address the worst-case scenario, and nuclear events are the Big Fear nowadays. But I think perhaps it's time to tone down the rhetoric about ultra-secure facilities' ability to survive a nuclear holocaust.

Global Switch Deal?

This week there are several stories in the British press about the possible sale of Global Switch, the European carrier hotel chain now owned by Chelsfield plc. They offer fresh data on the carrying cost and potential sale price of premium data center properties. A story in Property Week (free registration required) reports that Morley Fund Management is in talks to buy Global Switch for about $620 million (400 million pounds). According to another story in The Independent, the construction cost for the facilities was about $883 million (570 million pounds).

By that math, the sale price being negotiated works out to about 71 percent of what it cost Global Switch to build the sites. According to Property Week, it's about $336 per square foot, which it described as "considerably lower than the portfolio's 'replacement cost'." Indeed, the 2 million square foot footprint of the Global Switch centers, along with the $883 million construction cost, works out to better than $440 a square foot.

Does that make the sale price being negotiated a good deal for Morley? Property Week seems to think so in its analysis. Neither story offers data on how many customers are involved and the vacancy rates at the Global Switch properties.

But carrier hotels filled with customers command entirely different valuations than empty data centers, as we saw earlier this year in Global Innovation's purchase of high-profile properties in Miami and Dallas. By most accounts, Chelsfield and its initial partners, TrizecHahn and the Ruhan family, have taken their lumps on Global Switch. But the new deal appears to offer the prospect that Chelsfield could offload Global Switch for slightly more than its current carrying cost on their books.