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Facebook Matures, Will Build Its Own Data Center

Artist's rendering of planned Prineville, Ore. data center

Facebook said today that it would build its first data center, a 147,000-square-foot server farm to be located in Prineville, Ore. The social networking company didn’t disclose what it will cost to build, but according to public records dug up by The Bend Bulletin, the project would be valued at $188 million and employ 200 people during its 12-month construction before leveling out at 35 full-time employees.

By choosing Prineville, Facebook avoids paying about $2.8 million a year in taxes for 15 years, and can apply for other waivers as well. In addition, now Facebook has the cachet that comes with owning its own data center. And by spending a lot in up-front costs, it will be able to enjoy the benefits of a lower cost of ownership on whatever servers it places in the data center, thanks to the ability to control the entire environment. Over time, this saves Facebook money and could help it innovate to deliver a faster experience for end users.

Much like buying your own home rather than renting, becoming large enough to build your own data center is a big step in the life of a tech firm. However, Facebook could also be signaling that its wild growth over the last six years may be reaching a predictable and less torrid phase. It’s hard to commit to constructing a permanent data center if a company doesn’t know if it will need 50 or 500 new servers within the next year, but as growth becomes predictable it makes it easier to justify laying out the funds for permanent infrastructure and figuring out how much of that infrastructure the company needs. Sure a growing business could always add another data center, but building a single 100,000-square-foot data center costs far less than building two data centers of 50,000 square feet each.

Like a homeowner, Facebook can make drastic changes in its server farm and run it however it wants in order to lower costs or boost performance. In a blog post, Jonathan Heiliger, VP of technical operations at Facebook, writes that the social networking company plans to take a variety of steps to reduce the power consumption at the Prineville data center such as using an evaporative cooling system instead of chillers, bringing in outside air to cool the building between 60 percent and 70 percent of the year, re-using the heat generated by the servers to heat the office when it’s cool, and using a new proprietary and uninterpretable power supply.

Facebook’s data center won’t open until the middle of next year, and it will still lease data center space in other parts of the country, but for the site with 350 million users, it has clearly reached a point where it can plunk down the up-front capital and own.

14 Responses to “Facebook Matures, Will Build Its Own Data Center”

  1. What’s amazing is the scale of what it means to “make it” online these days. I remember when “making it” meant going from a shared hosting plan to a dedicated hosting plan. Now we talk about it in terms of owning your own datacenter. It may make for great water cooler discussion, but is owning your own datacenter really that practical? Even for a company as large as Facebook? The answer could be yes if it somehow delivers value to the millions of users of the platform. It could be no if it only serves as a distraction from the company’s core mission. Only time will tell.

    Dave Geada
    Vice President of Marketing
    StrataScale, The Cloud Hosting Experts

  2. data center

    The article says: “By choosing Prineville, Facebook avoids paying about $2.8 million a year in taxes for 15 years, and can apply for other waivers as well.” This is to say, that if they went elsewhere, they’d pay property taxes one of the luxuries of owning data center real estate. converseley, if they did not use the Oregon property for their use, it would remain status quo – owned by someone & paying property taxes.

  3. Data Center

    I must disagree that this is somehow a good use of capital. it is almost certainly going to be delivered late and over budget, like all first time moon shots. more likely, facebook sees this as a way to gain status as a major web property. but unlike GOOG, AAPL and MSFT, they don’t have Billions on the balance sheet (does this one building blow out all of the msft investment??).

    I recall that Lehman, Countrywide, WaMu and eToys all built great data centers, too…

    also, why (in a recession) would the State of Oregon pay these guys $42 MILLION DOLLARS ($2.8 MM x 15 years) to create 35 permanent jobs ?? they’d be better off using the cash to create a roaring cash-fueled bonfire and hiring 35 people to put it out…

    • The state isn’t paying anyone anything. Facebook are simply going to pay that much less in taxes, the article also says nothing of the taxes that Facebook will pay.