Microsoft is accelerating a global expansion of its data center infrastructure to support growth in its Azure cloud services and Xbox Live gaming service. At a time when many cloud builders are debating whether to build or buy their data center space, Microsoft is doing both.

Microsoft has long been one of the Internet’s master builders, investing $15 billion in data centers that now house more than 1 million servers. It has construction projects underway in at least five locations across the globe, from Singapore to Des Moines. And now Microsoft has also become the biggest customer in the market for turn-key “wholesale” data centers.

In recent weeks Microsoft has leased large chunks of server space in data centers  in Silicon Valley and northern Virginia, two key hubs for Internet traffic. The latest leases, which total about 9.4 megawatts of critical power, establish Microsoft as the biggest fish in the market for super wholesale tenants: cloud builders who can lease vast chunks of server space. This group of companies – which also includes Facebook, Apple and Rackspace – can use their scale as leverage in pricing, and sometimes get discounts by working deals for space in multiple markets.

Lease Deals on Both Coasts

That appears to be what Microsoft did last month, when it lined up large leases with data center developer DuPont Fabros Technology (DFT) in Santa Clara, Calif. and Reston, Virginia. DFT doesn’t identify its tenants, but said recently that a Fortune 50 customer had leased 6.83 megawatts of space in Santa Clara, Calif. and another 2.6 megawatts of power in Reston, Virginia. An analysis of DFT’s leasing and known customer base makes it clear that the tenant is Microsoft.

Microsoft wouldn’t comment on its latest leasing activity, other than to confirm that it uses both leased and company-owned data centers.

In 2012 Microsoft added more wholesale space than any other company, according to a report from realty firm Avison Young, leasing 12 megawatts of space from DuPont Fabros across facilities in Santa Clara, Chicago and Virginia. Add in the new deals, and Microsoft has leased more than 21 megawatts of wholesale space in the last 15 months.

Meanwhile, the company continues to build its own data centers in Singapore and four markets in the United States – Quincy, Washington; Boydton, Virginia; West Des Moines, Iowa; and Cheyenne, Wyoming. This week Microsoft said it would also invest $250 million to build a new data center in Finland.

Growth for Azure Cloud, Xbox Live

What’s behind all this data center expansion? One factor, Microsoft says, is the steady growth of its Windows Azure cloud computing platform. There’s also a major upgrade of the company’s Xbox Live infrastructure to support the launch of Microsoft’s new Xbox One on Nov. 22.

“Today, 15,000 servers power the modern Xbox Live experience,” Microsoft’s Marc Whitten said in introducing the new platform in May. “But this year, we will have more than 300,000 servers for Xbox One.”

That’s a lot of servers. Microsoft hasn’t said whether that means physical servers or virtual servers (VMs). But even 300,000 virtual servers would require significant additional infrastructure.

Both Building and Buying

As it seeks to expand its infrastructure to support those workloads, Microsoft is pursuing a hybrid strategy in which it builds state-of-the-art data centers in areas where land and power are cheap, and leases third-party wholesale space in key markets where it is expensive to build and operate large server farms.

Company-built facilities offer economies of scale and can be customized with efficient designs that offer savings on power bills. In the wholesale data center model, a tenant leases a dedicated, fully-built data center space. This approach offers faster deployment of new capacity, and the ability to manage capital spends in regions where economics for hyperscale facilities are less attractive.

“When choosing future data center sites, we take into account over 35 weighted criteria including close proximity to customers, an ample and reliable power source and fiber optic networks, a large pool of skilled labor, and affordable energy rates to determine the long-term viability of each site,” said Tim McDowd, a spokesman for Microsoft Global Foundation Services, which builds the company’s data centers.

There’s also a two-pronged approach to deployment models. In its company-built data centers, Microsoft is deploying IT capacity in factory-built data center modules that can operate outdoors with limited generator support. In its leased facilities, Microsoft will likely deploy servers in traditional racks and containment systems.

http://www.datacenterknowledge.com/archives/2013/09/09/microsoft-data-center-expansion/

And that's exactly why you can tell me a billion times DA CLAOODZZZ IS PR BS... If there is just 0.00001% gain to have no gaikai , Sony eventual partnership with AWS will ever come close to that 0.00001% and in all honesty looking at how I rely on cloud everything (storage/computing/streaming) on a daily basis with all my connected device... I have absolutely. No doubt that Xbox one will be that much better for me than any other console could be... No doubt about what so ever...

This was remarkably painful to read. 

Ya I have no fucking clue whats hes trying to say

He's saying he finds the cloud useful in his everyday life due to things like storage, streaming, and computing, and that he is excited for the possibilities as far as gaming on the Xbox One is concerned going forward.

Always happy to help.

Ur an excellent interpreter, it would have taken me years to crack that code

Hosted solutions, cloud computing and cloud storage are rising like there is no sky. I work as a network presales engineer and pretty much everybody I talk to are trying to understand how the cloud could help them reduce cost and improve performace. Microsoft is very very smart on investing as they are on the cloud. And they are not alone, almost every other network/software company is looking on doing the same...

Bet that the factory I work at has helped produce some of the server boards.  I might have ICT a few of the boards.  Some of the boards we test are 40-50k each and they put a few of those and a few 30-40k boards and a bunch more 10-20k boards in a single unit.  Imagine barely getting paid over 10 and handling 20-50 boards that are worth 40 or 50k each along with numerous other products from different customers.  So if you dropped the board/damaged a board/scrapped it then that would be worth more than 2 years of you working at the job.

Microsoft is actually doing exactly what they said they would, setting servers, expanding Xbox Live. This is awesome!

Hard to imaging when the Xbox 360 came out, that we would be streaming virtually any movie or TV in 1080P 5.1 sound.

So excited to see what the new Xbox One is going to bring to our homes and lives.

Then don't read.... 1 c0u1d m4k3 1t w0rst...
Lol I love it when they try to make it out like it is impossible to read me, when the only actual difference is: I use ........ Instead of commas or full stops. You guys must blow at reading your own language. I wonder how in pain you feel when you read an original copy of Othello.

well so to get back on the subject at hand. Yeah! I was saying that Microsoft investment/implication in cloud technology is a great plus for the future of XBox One and nobody in the competition will be able to catch up on that side of the business. Looking at how much today I already rely/use cloud based technologies on a daily basis, some of which I expect to be on XBox One (mass storage/backup, data streaming, non latency sensible apps), I know for a fact that not being able to afford the QoS MS can is a huge minus for me and it will be for many entertainment consumers by 2020.
PR BS or not I'd take a WiiU with cloud capabilities ready for the long hall, over any PS4 with a gazillion petaflops more. Because to me, not only a 50% gain in graphic power at that mid range level of gpu is like braging about a fiat 500 being better or worst than a vw beetle. But also because having that questionable advantage at the beginning of the Gen won't matter compared to the benefits the cloud will bring to an entertainment box such as XB1 by the end of the Gen, not even talking about games and/or ingame computing. To make an analogy with formula one: it can be sometimes better to have the better tire change/pit stop strategy than having the more powerful engine during a race.
so yeah I'm excited someone in that business is trying to make something more than just yet another gaming rig with more power but no flare or multi purposing or future proofing