One of the advantages that modular data centers enjoy is lower build costs than traditional or legacy facilities. But this was not always the case and the capital cost of early modular solutions could be as much as 15% higher. Nevertheless, total cost of ownership (TCO) showed a big improvement because you could introduce capacity on a just-in-time (JIT) basis, and in terms of efficiency you could track the load accurately, only putting in the infrastructure you needed when you needed it.
Today with a more standardized approach and as manufacturing volumes grow, we can see reductions in the capital cost of equipment and at Schneider Electric, we expect our customers to see 10 to 20% lower CAPEX. As volume goes up and prices come down, we can also anticipate that total cost of ownership could be reduced by as much as 25%.
Data center costs are generally expressed as a euro or dollar per watt multiple. Tier1 Research, a leading commentator on the data center industry, conducted a study on this topic and based it on 20 modular data center (MDC) providers. They concluded that the value should be $10 per watt. In comparison, Microsoft gives a figure of $6 per watt and Google gives an unbelievably low figure of $2.7 per watt. Given Google builds its own servers and is an unusual case, its numbers probably aren’t representative of your average enterprise data center.
Schneider Electric regards $6 per watt as being in the right ballpark for a total facility; but for individual, containerized, facility modules, it expects the cost to be nearer $2 per watt for power and cooling infrastructure. To illustrate the point, the power and cooling facility modules launched in late 2011 at DatacenterDynamics London carry a 600,000 euro price tag for 500kW of power or cooling, representing an extremely attractive 1.2 euro/watt (or approximately $1.8/watt).
For businesses buying into this sort of architecture for their data centers, capital write downs will need to be significantly shorter – perhaps halved from 10 to five years. Modular or containerized systems therefore present an area which could cause resurgence in the popularity of finance leasing. One advantage of leasing is that you can swap modules as they reach end of life or require upgrade and replace them with new generation equipment. In turn this may provide a fast route to the higher capacity, higher efficiency or lower costs generally associated with product development in the technology industries. Imagine a data center which cost less to own but provided more capacity than when it was first built!
The goal of most modular data center providers is to deliver new capacity within a three to four month delivery window – more than six times faster than traditional designs. This timeframe has the potential to eliminate the data center as a bottleneck which stalls the provision of new IT services. It will bring more or less into parity the time for required IT provisioning and availability of new physical infrastructure capacity.
So how much should modular data centers cost? We’ve outlined a range in this blog, but want to hear from you. What do you think you should pay and do you think leasing would be an effective way to finance your data center infrastructure?