Iceland Datacenters Hope to Lure Microsoft and Other Tech Giants – ValueWalk Premium
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Iceland Datacenters Hope to Lure Microsoft and Other Tech Giants

Iceland Datacenters Hope to Lure Microsoft and Other Tech Giants

The tiny, cold country of Iceland is hoping to land a coup for its economy by hosting a new data center for the big boys such as Microsoft Corporation (NASDAQ:MSFT).

Iceland billionaire Bjorgolfur Thor Bjorgolfsson,  a previous owner of one of the country’s largest failed banks, is trying to bring in customers to store data on his island and grab a piece of a $41 billion market, according to Bloomberg. Back in 2007, Bjorgolfsson purchased a plot of land in a 44-acre (178,000 square meters) decommissioned military base; it is a spot safely away from island’s seismically active part.

The businessman started changing the site to a data center, called Verne Global, and at full capacity, it can serve computer power equal to the amount of a little town.

Since the 2008 financial meltdown, Iceland is trying to reinvent itself as the place to go for a “safe and secure data haven” in between North American and Europe. First up for this is an opportunity to enhance Iceland’s inaugural link to the Emerald subsea cable between London and New York.

The $300 million Emerald cable system has been planned for spring 2013 and it will increase Iceland’s connectivity. The country has had previous problems with indirect cable links since it’s located in the middle of nowhere: it’s more than 600 miles from Scotland’s coast. It has indirectly linked cable with North America via Greenland and to connect with Europe, its gone by way of the Faroe Islands.

Verne Global

But there is now hope with Verne Global. Jeff Monroe, chief executive officer of the $700 million data center opened in February said, “Iceland happens to be a rare spot on the earth where there is a convergence of attributes that tick all the boxes. You have 100 percent renewable energy. We can do 100 percent free cooling.”

Verne Global sits next to the Keflavik International Airport and utilizes two former NATO buildings for corporate offices and storage. The area is predominately residential with students.

The company’s largest investor and also an Emerald cable shareholder, is Wellcome Trust. It is a GBP 14 billion ($22 billion) U.K. investment foundation. Peter Pereira Gray, the managing director at Wellcome Trust said of the investment, “Data centers are interesting because they require a huge capital investment.. We have that capital.”

For Iceland, they have the advantage of being the Atlantic’s midpoint. Monroe said, “You’ve got a tremendous opportunity for centralizing data that would need to be replicated in Europe and North America. Iceland starts to become the center point along that route.”

In its short tenure, Verne already has New Jersey-based disaster recovery company Datapipe Inc. and Iceland’s online gaming company, CCP Games.

Large technology companies such as Microsoft have expressed interest in Iceland but according to a corporate spokesperson, “the company continues to explore new regions where infrastructure may be needed.” Locations remained unnamed.

Monroe remains optimistic and says change is coming. He said, “Iceland is going to be the place where I believe you will see some of those marquee brand names.”

Meanwhile, Google Inc. and Facebook have looked at other venues. The search engine giant landed in Finland, close to Helsinki, and converted a former mill to a data center. Facebook built its first overseas site in northern Sweden.

Recovering from the Financial Crisis

In August, Iceland finished a 33-month budget program from the International Monetary Fund. It had required capital controls on Iceland’s currency, the krona and interest rate cuts. The country is on a good path as it has outperformed numerous euro nations in their recovery from the crisis. Iceland is estimated to grow 2.5 percent in 2012 as compared to a 1.6 percent growth for the euro area, according to the IMF.

Data hosts are quickly cutting power consumption from sites and for Google, they will tap into seawater at its Finnish site to cool things down. Green data centers are expected to grow to $41 billion in four years and in the U.S., 25 percent of operating costs go to cooling data sites.

Iceland has the benefit of offering free cooling to data centers from “heat wheels”; this sends out hot air and brings in cool air. For Iceland, its power comes from renewable energy of hydroelectric and geothermal power plants under long-term contracts.


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