As Iowa Leads, Midwest Plays Growing Role in Cloud Geography

No one wants to wait for their music or video. That’s why the location of data centers is critical to delivering online services with low latency. As Internet titans seek to distribute large files to support videos, gaming and virtual reality, the center of the country is proving to be the ideal place to add data center capacity.

This trend is spurring a data center building boom, pumping billions of dollars into towns across America’s heartland. Five large cloud companies – Apple, Google, Amazon, Microsoft and Facebook – are investing more than $11 billion to build massive server farms across Iowa, Ohio and Nebraska.

In the latest of these projects, Apple has announced plans to invest $1.3 billion in a new data center campus in Waukee, Iowa. The company is expected to start construction of two data centers early next year, bringing the first building online in 2020.

“Our new data center in Iowa will help serve millions of people across North America who use Siri, iMessage, Apple Music and other Apple services,” said Apple CEO Tim Cook. “We’re always looking at ways to deliver even better experiences for our customers.”

During the first phase of Internet growth, data centers were built primarily in technology hubs near major cities on the coasts, especially Northern Virginia, New York and Silicon Valley. These markets remain healthy, but site selection with the emergence of the hyperscale data center – massive buildings optimized to house tens of thousands of web servers and data storage devices. Data center development shifted to areas with an abundance of cheap land and power, including rural locations.

No state has benefited more from this trend than Iowa, which is home to huge cloud campuses for Google, Microsoft, Facebook and now Apple.

“Apple’s significant investment and commitment to grow in Iowa is a clear vote of confidence in our state,” said Iowa Gov. Kim Reynolds. “This announcement further solidifies Iowa as a hub where innovation and technology flourish and demonstrates this is a place where world-class companies can thrive.”

A Convergence of Clouds

Placing data centers in the center of the country makes it easier to distribute content to major markets like Chicago and Dallas, reducing lag and buffering for streaming media like Netflix movies or Facebook videos. It also allows for data to move quickly to either coast, which can be important in application development.

As an example, Amazon Web Services customers using the company’s Ohio data centers experience just 12 milliseconds of round-trip latency when sending data to the cluster of AWS facilities in Northern Virginia. This makes it easier for customers to replicate data across the two regions, which allows for automatic failover when web applications experience performance problems or outages.

Google kicked off the Iowa data center boom with its 2007 announcement of a new facility in Council Bluffs, which over the last decade has grown into the company’s largest cloud campus, with well over 1 million square feet of data center space deployed.

The trend has accelerated in the past two years with a flurry of mega-campuses arriving in the region.

• Microsoft announced plans in June 2016 to invest up to $2 billion in a new data center in West Des Moines, where it already operates two huge data center campuses. Local officials said “Project Osmium” would boost Microsoft’s total investment in West Des Moines to nearly $3.5 billion.
• In May Facebook broke ground on a 1 million square foot data center building in Altoona. It’s the fourth data center on the company’s cloud campus, and will boost its presence to more than 2.5 million square feet of space and $1.5 billion in investment.
• Google continues to build out its campus in Council Bluffs, where it has begun building multi-story data centers to increase the data storage capacity of its existing real estate. The company expects to invest up to $2.5 billion in its Iowa cloud campus.

Data centers have emerged as attractive projects for economic development, serving as symbols of the digital economy. At least 26 states now offer economic incentives for data center projects, which include tax breaks on land, power and the purchase of servers, storage devices and power equipment like UPS systems and backup generators.

Why Cloud Campuses Love Iowa

The rapid growth of cloud computing has spurred a building boom for the major Internet platforms, as Google, Microsoft, Amazon and Facebook are all super-sizing their cloud campuses to add data center capacity.

Cloud campuses are where these companies concentrate massive amounts of computing power in multiple data center facilities. These data center hubs enable companies to rapidly add cloud capacity and electric power, creating economies of scale as more workloads migrate into these massive server farms.

Iowa has benefited from a confluence of factors that make it attractive to data centers, including its location, which provides low latency to deliver online services to the center of the country. The state has relatively low costs for land and utility power, and lower exposure to natural disasters than many areas of the nation, with low risk from hurricanes and earthquakes. Data center projects also benefit from incentive programs passed by the Iowa legislature in 2009.

Apple Joins the Data Center Party

The enormous scale of new cloud campuses can be seen in Apple plans to purchase a whopping 2,000 acres of land in Waukee. The first phase of the project will include two data center facilities that are expected to run entirely on renewable energy.

Procuring green energy has become a priority for cloud builders, who use enormous amounts of electricity as they consolidate enormous volumes of business activity inside their walls. In 2016, data center providers signed contracts for more than 1.2 gigawatts of renewable power, marking a dramatic turnaround from earlier headlines critiquing the industry’s dependence upon “dirty coal.”