Why Facebook Needs Money: Data Centers

19 thoughts on “Why Facebook Needs Money: Data Centers”

  1. Ever wonder why Virginia became the Data Center Capital of the world? One word: Dulles – When you go from 35M to <10M subscribers that you don’t need all of those data centers any more.

  2. OM…Last week they needed money to fight the NY Attorney Generals’ Supenoa and the potential onslaught of claims around their lack of action against reported child predators, this week its data centers…if you throw out any more speculations you are bound to be right eventually…then you can claim you were the first to report…nice work!

  3. Facebook can’t be like google..here is why
    Facebook is a social network – they come and go all the time.
    They opened their door to all applciations —it sounds pretty slick but any smart programmer would design his application to do just that.
    They have less substance and more gloss.
    History has shown that social networks breath for no more than 3-5 years.

  4. Thanks for bringing this up Om,

    One thing that gets ignored in this web2.0 hype is cost of infrastructure.
    1. Cost per page served is increasing.
    2. Page served per advertising dollar is increasing.
    3. Intelligence of web applications is increasing. More intelligent the application is, more expensive is the infrastructure.
    4. search and adwords was the most high margin business to be in. Newer applications like Video, online collaboration and office applications, Interactive Flash/Ajax/AIR applications require higher infrastructure costs.
    5. Think about it Google pays $300m in just electricity costs and its increasing 30-40% per year. We are not even talking about cost of facilities, servers and network.

    One thing people always miss with Web applications is, Viewership, userbase all grow exponentially and the moment they hit the peak they start declining(Next cool thing takes over). There is no such thing nice steady plateau. But, all valuation models assume a steady plateau.

  5. You can also get a good sense of how things are going by listening in to the conference calls of Equinix and Savvis. The space is prone to boom and bust cycles but we are selectively investing in this space (co-location data centers and hosting) right now.

  6. Hey Om,
    Well I left a comment here as to my little suggestions to improve user experience on gigaOM.com. One of the points was to remove moderation on comments and then days later I saw no moderation on comments(the message that your comment will be evaluated before posting), so I thought that maybe my comment got noticed.

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