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Apple Plans $1 Billion iDataCenter 260

Posted by kdawson
from the swimming-with-the-big-fish dept.
1sockchuck writes "Apple is planning a major East Coast data center to boost the capacity of its online operations, and may invest more than $1 billion in building and operating the huge server farm. That's nearly twice what Google and Microsoft typically invest in their massive cloud computing centers. The scope of the project raises interesting questions about Apple's plans, and has politicians in North Carolina jumping through hoops to pass incentives to win the project. The proposed NC incentives build on a package for Google that later proved controversial."
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Apple Plans $1 Billion iDataCenter

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  • by Anonymous Coward on Tuesday May 26, 2009 @07:50PM (#28102829)

    From TFA:

    would offer income tax breaks to companies that invest more than $1 billion over nine years

    Why should a company receive more tax breaks because they've gotten big enough to be able to drop $1 billion on a data center? If they can afford $1 billion, they can afford whatever taxes apply. How about you cut the taxes for small companies who struggle because of monopolies like Apple? Stop helping the companies who obviously don't need the help, and start helping the businesses who are risking having their doors closed forever because of a shitty economy.

    Frankly, I'm sick of seeing the rich get the gold platter treatment.

    • by Darkness404 (1287218) on Tuesday May 26, 2009 @07:59PM (#28102919)
      Its simple, this will create jobs. Apple is going to hire a massive amount of contractors to build this, probably have to hire some consultants, have to buy the hardware, etc. All this goes to help other companies and the economy. Honestly, it makes more sense to just abolish most taxes and establish a pay-per-use system and abolish all government granted monopolies, but thats just me....
      • by j1mmy (43634) on Tuesday May 26, 2009 @08:43PM (#28103383) Journal

        Business taxes should be the first to go, because businesses don't pay taxes. Their customers do. The only thing governments accomplish when they tax businesses is they raise the cost of goods and services.

        • by TubeSteak (669689) on Tuesday May 26, 2009 @09:01PM (#28103591) Journal

          Business taxes should be the first to go, because businesses don't pay taxes. Their customers do. The only thing governments accomplish when they tax businesses is they raise the cost of goods and services.

          A) Why not abolish personal income taxes first?
          B) What makes you think that corporations won't just keep prices the same and use the difference to pad their profit margin?

          • by Anonymous Coward on Tuesday May 26, 2009 @09:23PM (#28103731)
            B) In any reasonably free market, where price elasticity of demand is neither infinite nor zero, any tax break (or tax) will be split between the business and the consumer. The business can sell more by lowering its prices (and you can bet its competitors are interested in doing the same too).

            Now, that said, you probably don't want business taxes to be zero, because businesses cost the state money one way or another. It would be better for the costs to be in line with what what they pay. You'd also like things to be reasonably fair, and not have one business pay all sorts of taxes while another gets things for free, otherwise you're just distorting the labor market and making business success a function of lobbyists, friends in government, and political popularity, rather than business merit.

            • by Macrat (638047) on Tuesday May 26, 2009 @11:15PM (#28104593)

              B) In any reasonably free market

              All things are possible in fantasy land

            • by Trepidity (597)

              Why would you assume a 50/50 split? In high-margin businesses, the presence of large profits (i.e. large gaps between market price and cost) indicates that costs are not a significant factor in setting price, which is primarily set by demand. In high-profit markets, which are of course the ones where a tax on profits most applies, it's much more likely that the market price will be little changed, and the corporations will simply pocket even more profits.

            • Re: (Score:3, Interesting)

              Not necessarily. If you're trying to attract high-tech companies to an area that has no tech workers, then it makes sense to give the *first* company an incentive to build there (with smaller and smaller incentives as more companies come in). If there aren't any tech workers already in the area, it's going to cost a big company a lot of money to bring them in. That's a very real, tangible cost to the company.

              Once the area is established and has a good number of tech companies and workers, the tech workers (

              • by adolf (21054) <flodadolf@gmail.com> on Wednesday May 27, 2009 @03:08AM (#28105907) Journal

                But for a datacenter? Particularly one which exists to serve but one company's products? How, exactly, does this attract other companies to an area?

                In your IBM example, it is pretty plain that other companies had a strong desire to be geographically near to IBM. The reason is obvious: It's easier to sell stuff to the guy across town, than it is to sell it to the guy across the continent.

                Therefore, it made sense for companies that either had existing business with IBM, or would like to do business with IBM (or any business that might support any of these entities, and so on) to set up shop next door. But, again, a datacenter? Stuffed full of Apple hardware to support Apple's computing cloud?

                There's a reason why the place will only employ 100 -- it's a datacenter! You've got cable monkeys, parts-swapping monkeys, HVAC monkeys, and janitorial (hell, you might even class all of these roles into "janitorial"), plus some management to deal with them. And that's...all. Everyone else associated with such a datacenter will be just as able to do their work over the network from anywhere, as they would from an office in that building.

                The folks working at that datacenter won't be decision-makers. They won't be buyers. They won't be marketers. They'll just keep the thing running.

                How, again, does this help encourage growth in that area? I mean, sure: Spending $1 billion on a new datacenter is sure to get the union trades all hot and bothered over bidding on the construction, but once it's built, who cares?

                Unlike traditional manufacturing, their product is a long series of bits on teh Intarwebs. There aren't mountains of raw materials coming on by truck and rail and leaving as finished products on pallets. There is no major consumption of goods. About the only thing that changes, once it's built, is that the power company will have shored up their services a bit to serve the area, the telephone company will have a few more circuits to look after, and a paltry 100 people will have a new job.

                Welcome to 2009.

          • by j1mmy (43634)

            A) I'd like to eliminate both! Businesses contribute a very small portion of tax revenues already. The potential for job creation and general economic growth that would result has the potential to bring in that lost revenue and then some through personal income taxes.

            B) Have you heard about this thing called competition? It's when businesses compete for greater shares of a market by lowering prices or increasing the quality of their product.

            • by Trepidity (597)

              If there were significant competition, there wouldn't be large profits to begin with, because competition drives prices towards cost plus a moderate level of profit (the minimum needed for the least greedy player to be willing to participate in the market).

        • by Rob Riggs (6418)

          The only thing governments accomplish when they tax businesses is they raise the cost of goods and services.

          Oh, they accomplish more than that. Taxes provide infrastructure that allow people access to consume those goods and services.

          • by j1mmy (43634)

            Infrastructure is usually tied to gas and/or property taxes.

            • by Rob Riggs (6418)
              Property taxes don't pay to keep sea lanes open or air traffic well controlled. They don't pay for border guards, GPS and weather satellites nor a myriad other things we rely on every day to get groceries in our pantry.
        • by cowscows (103644) on Tuesday May 26, 2009 @09:25PM (#28103743) Journal

          If you eliminate business taxes, then customers are still going to pay those taxes, the government is going to get that money somehow. It's just that instead of paying through the purchases of goods and services, we'd get taxed directly to make up the difference.

          I'd prefer that the businesses pay for their share of the nation's infrastructure via taxes. Sure, they're going to pass that cost along to me in their prices, but then when I'm spending money, I'm making a more informed decision, because what I'm being charged better reflects the true cost of the production of those goods/services.

          • by twostix (1277166)

            Business taxes exist to prevent business owners from hiding their personal wealth inside the business to avoid personal taxes.

            "Oh that 10million dollar mansion, no that's not mine! That's the businesses. I just stay there".

            "Oh that Ferrari, no that's the businesses."

            "Yacht? Businesses, not mine - see no income so no tax".

            Then at the end of the financial year these things are claimed as deductions against the business income so the sales tax paid on them is effectively wiped out.

            Outcome: A person living in

        • by Trepidity (597) <.delirium-slashdot. .at. .hackish.org.> on Wednesday May 27, 2009 @12:16AM (#28104997)

          If taxes were on revenue, and prices followed the idealistic supply/demand curve model, that would be true, because taxes would in effect be costs.

          However, corporate taxes are generally on profits, i.e. on instances where the idealized model fails to hold, because the market price set by demand is significantly above the cost of production, but for one reason or another this has failed to stimulate an increase in supply to offset it, as classical theory would predict it should. In such markets, you already have a significant deviation from classical price theory, which assumes prices in a competitive market should approach the cost of production. Instead, prices are primarily being set from the demand side without much impact from the cost side. In those cases, which are the only ones in which profit taxes apply, a tax is unlikely to significantly change prices.

        • by twostix (1277166)

          So all I have to do to avoid paying taxes in your fantasy world is to put everything into my businesses name and buy everything through my business?

          That would be nice! Because I could probably put 80% of my personal expenses through my current businesses no problems.

          So then it's the wage slaves who are going to pay all the taxes. Oh and because I also get to write you off as an expense against my "income" as well I pay even less!

          Great!

    • Re: (Score:2, Insightful)

      by larry bagina (561269)

      They're also big enough that they can build their data center in any other state.

      Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

      You can complain all you want, but if you look at the numbers you'll find the top 1% of earners pay 40% (or more) of income taxes.

      • Re: (Score:2, Informative)

        by McGiraf (196030)

        "You can complain all you want, but if you look at the numbers you'll find the top 1% of earners pay 40% (or more) of income taxes."

        I have no more source than you but my guess is that they end up paying less of a percentage of their total income in taxes than the average anyway. They just have so much of it it's not even funny.

        • by j1mmy (43634)

          The point is that tax revenue suffers. This has nothing to do with how much the rich pay relative to their income, it has to do with how much they contribute to the state relative to total tax receipts.

          • by McGiraf (196030) on Tuesday May 26, 2009 @08:53PM (#28103497) Homepage

            If the wealth is more spread you do not see billionaires moving out of a state to go to a less taxed state. They have to much money and to much power. If it keeps up like it's going now this 1% will pay more than they pay now, but they will have 99% of the wealth. This is not sustainable. Let them all move to Monaco.

            • by j1mmy (43634)

              Those rich people contribute a great amount to government coffers, but consume relatively little. As revenue declines, services suffer. If the top earners continue to leave a state, the revenue will continue to go down and poverty will get worse as the government has fewer funds available to pay for social services.

              • Re: (Score:3, Informative)

                by McGiraf (196030)

                "but consume relatively little"

                hum ... that what they want you to believe.

                Public investment, private profit, read up on it. It cost a lot to all of us to make them rich, the money comes from somewhere. And when the money does not come from somewhere but is "created" by the rich, we pay when it suddenly disappear, with our real money (see financial crisis).

          • I don't quite follow.

            Millionaire A stays, and pays more money. Millionaire B leaves, and pays the same amount of money in a different state.

            End result - more tax revenue, spread around the whole country.

            But if you don't give a crap about the other states, then by all means do whatever is best for your own state, and just your own state.

            • Re: (Score:2, Insightful)

              by jo42 (227475)

              You completely missed the point.

              Millionaire A stays, and pays more money. Millionaire B leaves, and pays less amount of money in a different state.

            • by McGiraf (196030) on Tuesday May 26, 2009 @10:18PM (#28104165) Homepage

              The point, if you ignore the Monaco part, it's that if the wealth is mostly controlled by a few they have the power influence legislation to accommodate them by threatening to leave (people or corp.). By using this power they grab even more of the wealth and more of the power. Better ditribution of wealth prevents this from happening.

        • Re: (Score:2, Informative)

          by davebaum (653977)
          According to http://www.taxfoundation.org/taxdata/show/23408.html [taxfoundation.org], the rich do pay a higher percent income tax. This only covers income tax paid vs. AGI, so there can be arguments about other taxes being regressive or sources of income that aren't taxable (or aren't reported). But from the standpoint of income tax this is a reasonable metric. For 2006, the top 1% paid an average of 22.79% of their AGI in tax. The people in the top 5%-2% averaged 17.48%. The top 10%-6% paid 12.60%. One could argue that
      • by LordNimon (85072) on Tuesday May 26, 2009 @09:00PM (#28103575)
        Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

        Are you implying that many millions in Maryland left for other states because of the tax? Have you considered that perhaps there were many millionaires who lost a lot of money, and therefore were no longer millionaires?
        • by jcr (53032) <jcr@mac.cEINSTEINom minus physicist> on Tuesday May 26, 2009 @09:20PM (#28103725) Journal

          Are you implying that many millions in Maryland left for other states because of the tax? Have you considered that perhaps there were many millionaires who lost a lot of money, and therefore were no longer millionaires?

          I'm sure that the crash was a big factor, but it's quite easy for anyone in Maryland who wants to pay less taxes to just move across the border into Delaware, Virginia, or Pennsylvania.

          I know several people who've moved out of California for that reason.

          -jcr

      • by slamb (119285) * on Tuesday May 26, 2009 @09:10PM (#28103661) Homepage

        Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

        You seem to be trying to lead readers into believing that the tax increase caused the drop in millionaires. If so, you're badly mistaken or dishonest, and judging by your post's score some people were stupid enough to fall for it.

        Correlation is not causation! larry bagina failed to mention other, more significant factors. Namely that we're in a recession! The S&P 500 index went down 36% between 2008-01-01 to 2009-01-01! Many, many, many people's income and net worth has gone down (though not all of us were so lucky as to be above $1 million to begin with), and tax revenue has fallen all across the US! Several major states are broke! Given the economic climate, it's ridiculous to even suggest that the tax increase is at all related to the drop in millionaires without doing much better, such as:

        • showing theoretically that the tax increase was significant enough to cause so many people to no longer be millionaires.
        • showing that many millionaires have moved out of Maryland.
        • using a comparable state with no tax increase as a control, demonstrating that Maryland's fall was much greater. (This is hard, though, because there are so many things different between states, so it's a tough argument to make that another is "comparable".)
        • by chill (34294)

          Either way it demonstrates the sheer stupidity of "tax the rich" as a reliable source of income. The State was taking a beating with the economy, yet somehow the idea that "the rich" were also taking the same beating never occurred to the Maryland legislature.

        • by idobi (820896)
          And you're confusing net worth with income. My net worth is significantly less than it was a year ago, but my income hasn't changed. However, the fact is that many people from Maryland do flee to Deleware or Virginia to pay lower income taxes or property taxes.
        • by ceoyoyo (59147) on Tuesday May 26, 2009 @10:18PM (#28104169)

          Correlation is not causation!

          Wow, I hate that sentence. I don't think I've ever seen it used properly here. The correct objection in this case is: "one data point does not indicate a correlation."

          If the OP watches Maryland raise and lower taxes many times, and if the number of millionaires in Maryland tracks well enough to yield a strong probability that a correlation exists, THEN you may object that correlation does not imply causation. Although in that case you're arguing that a third factor consistently both causes Maryland to raise taxes and millionaires to leave.

      • by TubeSteak (669689) on Tuesday May 26, 2009 @09:13PM (#28103685) Journal

        You can complain all you want, but if you look at the numbers you'll find the top 1% of earners pay 40% (or more) of income taxes.

        And to put things in perspective, the top 1% nationally earn *440 times more than the avg person in the bottom 50%.
        Not to mention that Maryland has some of the richest counties in the country.

        *in 2007, I'm not sure what the 2008 number is

      • by 4D6963 (933028)
        So let's see, the millionaires who'd rather stay and pay more stay and pay more, and the ones who don't move out and pay the same thing in another state? Globally for the US it's a win.
      • by Smurf (7981)

        Last year, Maryland raised marginal tax rate on millionaires. This year, the number of millionaires in Maryland dropped by 30% and total tax revenue collected from them dropped as well.

        Lemme see. Last year, Forbes [forbes.com] counted 1,125 billionaires in the world, and this year only 793. So the number of billionaires dropped by 30%. According to your logic, that's because they moved to... Mars?

      • by twostix (1277166)

        "You can complain all you want, but if you look at the numbers you'll find the top 1% of earners pay 40% (or more) of income taxes."

        You're entirely correct,

        I wish we had a time machine, then we could go back to Feudal Europe where the Lords used to pay 80% of all the taxes and tell the upstart peasants who only paid 10% of the overall taxes to shut the fuck up and learn their place under the feet of the top 1% of 'earners'. The lords owned 95% of all the land, resources and had 80% more influence over the

    • Re: (Score:3, Informative)

      by FooAtWFU (699187)
      Well, giving tax breaks to businesses is Doing Something, which makes headlines, which helps get politicians elected, even though in practice the case for doing so is usually pretty marginal. Great deal if you're the business, mind you. Check out the Dell plant near Winston-Salem which got a boatload of incentives, and then started cutting jobs when the going got rough...
    • by Fastolfe (1470) on Tuesday May 26, 2009 @08:49PM (#28103439)

      This isn't about helping Apple. It's about helping the local communities that would benefit from Apple building a massive datacenter there. Local people get hired to do the construction. Some get hired to operate it. Others relocate just to work there. These workers need housing, restaurants and retail. This is money that flows from Apple, to its employees and contractors, to your town's businesses, to your town's residents. If you want your local economy to improve, it's in your best interests to give companies like Apple an incentive to build in your town, instead of someone else's. This means things like tax breaks.

      • by twostix (1277166)

        Why?

        "Companies like Apple" only account for a tiny fraction of the wealth in any country, state or city, not to mention bring almost no tax revenue.

        It's small and medium sized businesses that run economies, that's who states and cities should cater to. Bringing in single large entities has it's own very real sets of problems for cities as well - and often ends up being a tax burden on anyone who isn't employed by the company.

    • by mgblst (80109)

      It comes from the fact that these companies generate jobs, so we get states competing for them. A bunch of states will offer rewards to the companies, to establish their plants there. It works out ok for the state, but would be better if no state offered these tax breaks.

    • ..."because of monopolies like Apple..."

      Apple is not a monopoly. Apple is what is keeping Microsoft from looking like the monopoly it is.

  • by Anonymous Coward on Tuesday May 26, 2009 @07:55PM (#28102885)

    "The $1B price tag is nearly twice what Microsoft and Google typically invest..."

    Is that because Apple is using its own hardware? Google and MS should be able to get a hell of a lot cheaper hardware using commodity mobos than Apple using its own expensive machines. Of course, Apple's margins are 50%, so one wonders if they're charging themselves retail or wholesale.

  • Of course (Score:5, Funny)

    by Darkness404 (1287218) on Tuesday May 26, 2009 @07:56PM (#28102889)

    may invest more than $1 billion in building and operating the huge server farm. That's nearly twice what Google and Microsoft typically invest in their massive cloud

    Of course, this is Apple, all Apple hardware is going to me more expensive then typical PC hardware. On the plus side all machines can be running OS X.

  • by nrasch (303043) on Tuesday May 26, 2009 @07:59PM (#28102921)

    It cracks me up to keep seeing states jumping through hoops and giving away all sorts of tax revenues for these big companies to set up shop. Then, later on, the company reveals that only about 30 jobs are going to be created in actuality, and the state has lost more than if they had just let the deal pass them by.

    I have yet to hear of a happy ending for one of these deals for the state, and I'd be happy to be corrected if some one has a link....

    • by Shados (741919) on Tuesday May 26, 2009 @08:04PM (#28102975)

      Funnier is something that happened here a while ago. A very large telecom company that everyone here has heard of opened an employee center after being given a rediculous amount of benefits, tax deductions, paid lease, etc for a few years.

      They did hire as many people as they said they would. Then came the day when the deductions and all the free stuff ran out, as per the contract. On that very day, they announced they were closing all operations in that area and fired everyone.

      Fun stuff.

      • Re: (Score:3, Informative)

        by value_added (719364)

        Dunno about telecoms, but I think it's safe to call that the Walmart model.

      • Re: (Score:3, Insightful)

        by neoform (551705)

        How easy do you think it is to move a $1,000,000,000 data center? I'd venture to say it's not even possible without spending more than the actual cost of the center.

      • Re: (Score:3, Interesting)

        by QuantumRiff (120817)
        Funny, that sounds exactly like Dell's Call center in a small, economically distressed Southern Oregon town. Except Dell never quite hired as many as they said, later got sued for labor violations... (requiring people to be there up to 20 minutes before work, at their desk and ready, but not clocked in, etc...) And Dell trashed the building, and the city, which leased them the property, had to clean up the mess afterwords.
    • Re: (Score:3, Interesting)

      by Anonymous Coward

      http://en.wikipedia.org/wiki/EA_Montreal
      http://en.wikipedia.org/wiki/Ubisoft_Montreal
      http://en.wikipedia.org/wiki/Eidos_Montreal

      In short, subsidies made Montreal (and the province of Quebec in general) one of the top hubs of video game production in the world. Similar measures in British Columbia have also contributed in positioning Canada in the video games industry.

    • by FooAtWFU (699187)
      Check out the Winston-Salem, NC Dell plant. $280 million in tax breaks, and now they're laying people off. The baseball-stadium deal is a boondoggle too - basically the movers and shakers in town patting the movers and shakers on the back...
    • by snaz555 (903274)

      It cracks me up to keep seeing states jumping through hoops and giving away all sorts of tax revenues for these big companies to set up shop. Then, later on, the company reveals that only about 30 jobs are going to be created in actuality, and the state has lost more than if they had just let the deal pass them by.

      Does this include the verbal open offers for officials who helped secure the deal?

  • Surprise? (Score:5, Insightful)

    by Longjmp (632577) on Tuesday May 26, 2009 @08:01PM (#28102947)
    So, Apple is changing from a hardware company to a media company. Who would have guessed that after iTunes, iPods and iPhone (iPad next?) Seriously.
    • When they finally start making the majority of their money via media rather than hardware, will they then start selling OS/X unbundled for use on specific hardware platforms?

  • Streaming Gaming (Score:5, Interesting)

    by Enderandrew (866215) <{moc.liamg} {ta} {werdnaredne}> on Tuesday May 26, 2009 @08:08PM (#28103015) Homepage Journal

    I think Apple will take a page out of Nintendo's book and reinvent casual, portable gaming. Imagine streamed games to your iPhone?

    • Re: (Score:3, Insightful)

      by neoform (551705)

      They better work on battery life then. If I play games and use the internet on my iPhone for more than an hour I've taken about 50% of my battery away.

  • It's for the ipad... (Score:4, Interesting)

    by Culture20 (968837) on Tuesday May 26, 2009 @08:31PM (#28103271)
    You know, that mini-touchscreen tablet that everyone thinks is coming? Instead of allowing people to use google-docs and discover that the touch interface doesn't work with regular software, Apple has been developing its own cloud computing software applications. With your $1,500 purchase of $300 of hardware, you get to use Apple's cluster-farm to write your iDocs (assuming your net connection stays up).
    • by jcr (53032)

      Not likely.

      Time sharing was a good idea back when CPUs were expensive. Its time has passed.

      -jcr

      • by Culture20 (968837)
        Unless you can market it as the new hotness; potential super-computing head-nodes in your pocket.
  • by Herby Sagues (925683) on Tuesday May 26, 2009 @09:12PM (#28103677)
    Maybe the datacenter is not that big. Maybe it is just a $500M datacenter but they plan to power it with Macs.
  • by failedlogic (627314) on Tuesday May 26, 2009 @09:16PM (#28103707)

    Pffft! This is so easy to figure out, they don't need a veil of secrecy. I've already figured out the datacenter setup.

    I decided Apple should setup a lot of Mac Pros for their data center. Reason: Cost to Performance Ratio. Don't go telling me Apple is more expensive than Dell. You cannot compare the two since Dell does not sell AppleCare.

    I went on the Apple Website, to order 999 Maxed out Mac Pro systems with RAID cards, 32 GB of RAM and max hard drives, and 3 year Apple care. Did the same thing with some Xserves (but this has support contract + something called a "Promise VTrak E-Class 16x SAS RAID Subsystem"). Whatever. My only concern is maxing out the shopping cart so that I know I am getting the best possible configuration. Note: Apple's systems are more expensive in the Europe which is why they are setting up in the US.

    I also included next business day shipping (at 999 systems its $5,000 and BTW is was the same price as 2 business day shipping so I'm not splurging).

    Here's my tally:
    999 Mac Pro (Maxed out) Total = ~ $16,000,000
    999 XServe (Maxed out)Total = ~ $86,000,000

    So for $1 Billion, Apple could have

    (1,000,000,000/16,000,000) * 99 = 6,187.5 Mad Pro Systems
    (1,000,000,000 / 86,000,000) = 11.627907 * 99 = 1,151.16279 XServe Systems

    Footnote: Use these numbers with a grain of salt as I explain below.

    1) I didn't account if Apple will give themselves a discount. If they wait for back-to-school time, they might give themselves a free iPod and printer with each system purchase. Probably not the Xserves though. All the more in favor of the Mac Pro.

    2) Also, I used Google to do the math. Since they likely want to compete with Apple, they might be up to what I am doing (even before it is indexed) and are intentionally fudging the numbers.

  • by ErichTheRed (39327) on Tuesday May 26, 2009 @09:39PM (#28103875)

    First, I've never been a big fan of these side deals that state and local governments make to entice businesses to relocate or expand to their area. I understand why they do it, but there's a flip side that a lot of people don't realize.

    • Several posts have already pointed out instances where a company moves in, sets up, then closes their operation as soon as the free power/zero taxes run out. This means that all the people who were employed are either unemployed or (if they're lucky) forced to move somewhere else. Companies can play this game as many times as municipalities will allow them to.
    • Especially in economically depressed areas, where the company may be one of the only high-wage employers, what happens when a worker at the company loses their job? If the spouse works, is there any employment opportunity beyond your company and retail/service jobs?
    • On the local front, an employer coming to town and increasing average wages may sound good, but it's only good for the employees of that company. Locals who don't work there have to deal with higher housing, food and other prices. Local businesses have to raise wages to keep up with the newcomer, which means they have to charge customers more.
    • I know a lot of people claim that the rich pay a lot of taxes, but it seems to me that reducing their companies' tax rate makes local budget problems even worse. As good as it would be, running a local government is not free. You need to pay for roads, schools, police, etc. Economically depressed areas that don't spend money on these things stay economically depressed (bad infrastructure, crappy schools and teachers, high crime due to the underfunded police.) Instead of forcing middle class taxpayers to pay more taxes, share the burden with those who can afford it more.

    Second, I actually have reverse experience with this. I live in the Northeast, which is not the cheapest place in the country to do business by a long shot. The company I work for has decided to relocate a lot of their work down South. That's great if you love the heat and don't care about moving. Tech workers are often the first to consider in any move like this -- I seriously think executives believe a stereotype that all tech workers live in a one-bedroom apartment or with Mom, have posessions that fit in half a U-Haul, don't care if they live in Boston, MA or Branson, MO and will move wherever the company tells them to. This has happened to me at 2 companies before (I'm on Offered Relocation #3 now,) and I'm not going (again.) That decision boiled down to a few things for me. First, I really like living where I live -- I don't think I could be happy where they're relocating. Second, if I did move, it'd be one-way. Sure, you can sell your house in the Northeast and buy 2.5 of them in the South, but you'll never be able to move back without huge sacrifice. Third, even if I kept my salary, there' s no guarantee I'll keep my job. Companies aren't the same way about their employees anymore -- even if you do an awesome job and have a long tenure with the company, they won't blink at the idea of letting you go. Then what? The local market salaries are 50% less than they are back home. Fortunately, I'd have savings from not spending all my money on a new house, but I know way too many people who would move down and live like kings on the salary differential.

    As I said, I definitely get why municipalities jump at the chance to get a new employer in town, and why employers pursue these tax incentive deals. But just like they taught the MBAs in Economics 101, everything has externalities and nothing is free!

    • by ArsonSmith (13997)

      So they should keep the area economically depressed rather than boasting it even if only shortly? You try to use the ole "Economics 101" argument. Well maybe you should read up on that class once again. Boasting an economy even for a few boasts the entire economy. Repeat after me, "It's not a fixed size Pie." Just by taking your piece of the pie you create a bigger pie.

  • I worked for a company that had received huge state and local tax incentives to build a new HQ in Kansas. The incentives had provisions that required the company to maintain a certain number of employees and very high (for the area) average salary. It took 2 years to build the building, and it was a model of "green" construction that had all the state & local politicians creaming their pants. 30 days before move-in, the company was bought out. The buying company had no choice but to let them move in

  • It must be nice for a hardware company to build its own datacenters. They get the hardware at cost, and since they're one of the largest purchasers of components, their cost is probably better than Google's. Which is not to say that XServe comes out being cheaper than Google's bare bone server, but you get my drift. Throw some Cisco and F5 on all this goodness, hook up HVAC and UPS and it's all ready to go.

  • by eiapoce (1049910) on Wednesday May 27, 2009 @03:24AM (#28106035)

    170 Comments and still no-one has linked this datacenter to the coming MacTablet and the mobile ME. What about the tablet operates mostly on internet??

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