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Summary:

According to a report in Friday’s Charlotte Observer, North Carolina lawmakers are falling over themselves to entice Apple to build a state-of-the-art server farm in their backyard — specifically, Catawba or Cleveland county. The carrot they’re dangling? In this case, nothing short of a multimillion-dollar tax […]

According to a report in Friday’s Charlotte Observer, North Carolina lawmakers are falling over themselves to entice Apple to build a state-of-the-art server farm in their backyard — specifically, Catawba or Cleveland county. The carrot they’re dangling? In this case, nothing short of a multimillion-dollar tax break.

According to a “state official” with knowledge of the state’s efforts, the server farm would represent a $1 billion investment.

The proposed tax changes aren’t just because North Carolina loves MacBooks and iTunes and quite fancies a bit of an Apple super-presence. Rather, the changes are proposed as a means for improving local economy and standards of living. In detail, companies qualify for the tax break if:

  • They relocate to one of North Carolina’s poorest counties
  • Provide employees with health insurance
  • Meet a minimum wage standard
  • Waive all other grants and tax breaks from the state


If the new server farm remains active for over 30 years, Apple would have corporate tax savings of more than $300 million. Why 30 years? The state already agreed to a similar incentive deal with Google, which opened a server farm in North Carolina last year, and expects to run the facility for 30 years, making a tax saving of over $260 million.

Software as Services

Apple has been moving progressively toward the Software as Services (SAS) business model for some years now. The iTunes Store and original .Mac products have long required robust server-infrastructure to support (at least in the case of the iTunes Store) millions of requests every minute.

The introduction of MobileMe saw a bold commitment from Apple to provide essential services to customers, and much of the instability and pain users experienced in the days following MobileMe’s launch were possibly due to an inadequate server backend.

The little-discussed, seldom-used iWork.com web-based collaboration service (currently in beta) will also demand a sturdy and reliable server infrastructure. While customers might tolerate the odd, fleeting instability in their MobileMe Photo gallery, a malfunctioning document collaboration service would be unforgivable.

Worth noting, however, is that Apple’s MobileMe and iWork.com subscriber-bases are tiny when compared with its iTunes customer base. The massive sales success of the iPhone (particularly Apple’s recent share growth in the smartphone market) means millions more hourly connections to the iTunes Store. Think of Apple’s recent download milestones — 1 billion apps, 6 billion songs — and the need for much-expanded server infrastructure becomes clear.

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  1. Isn’t it supposed to be Software as a Service (SaaS)?

  2. iTunes downloads are outsourced, these aren’t done on any Apple owned system, forgotten the name of the company it is outsourced to. i see the server farm for mobileme and iwork.com as these are services Apple provide from their own servers, and as they go into production and more people join, they’ll increase in server demand. who knows what else they will provide with this, hey, maybe it’s just storage for mobileme to increase from 10gb

  3. Howie Isaacks Tuesday, May 26, 2009

    It’s interesting that North Carolina understands that lowering taxes entices economic development. Why can’t the federal government and other states understand this?

  4. iWork.com: One Part of a Much Grander Vision Friday, January 1, 2010

    [...] initiative that began with MobileMe’s “Exchange for the rest of us” services in 2008 and one year later included a $1 billion server farm in North Carolina. Most recently, Apple bought Lala — very [...]

  5. iWork.com: One Part of a Much Grander Vision – BehindTheGeek Monday, January 4, 2010

    [...] initiative that began with MobileMe’s “Exchange for the rest of us” services in 2008 and one year later included a $1 billion server farm in North Carolina. Most recently, Apple bought Lala — very [...]

  6. Apple’s Billions and Billions Tuesday, February 23, 2010

    [...] this isn’t the only billion-dollar investment Apple has made recently. I wrote here back in May 2009 how Apple’s still-under-construction server farm in North Carolina also [...]

  7. Apple’s Billions and Billions « Tech News Tuesday, February 23, 2010

    [...] this isn’t the only billion-dollar investment Apple has made recently. I wrote here back in May 2009 how Apple’s still-under-construction server farm in North Carolina also [...]

  8. Apple’s Maiden Voyage Into the Cloud Tuesday, June 1, 2010

    [...] Goetz Jun. 1, 2010, 8:00am MDT No Comments        0 Apple’s billion dollar data center being constructed on a 225 acre site near Highway 321 and Startown Road in Maiden, North Carolina [...]

  9. Apple’s Maiden Voyage Into the Cloud :NewsPress.me Tuesday, June 1, 2010

    [...] Apple’s billion dollar data center being constructed on a 225 acre site near Highway 321 and Startown Road in Maiden, North Carolina could play host to a number of services. So, what are the likely candidates for what Apple will be doing with this new facility? With WWDC just one week away, Apple staffing of the new facility, and given the fact that all of the hype about what everyone already knows that Steve is going to introduce before he has a chance to introduce it, there are six very likely candidates for what Apple will announce as to what their intentions are in North Carolina. [...]

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