As technology changes, the costs and benefits of centralization of resources change. In the batch processing and time sharing eras, computer operations were centralized within organizations. The personal computer enabled significant decentralization. Organization continued operating large mainframe computers, but the personal computers on our desks and in our homes outpaced them. In the early days of the Internet, organizations and even users to operated their own servers. While many still do, economies of scale are leading to re-centralization, and servers are increasingly located outside the organization. Every major city has large buildings loaded with communication and computing equipment. The One Wilshire building, 1shown below, looks like any downtown Los Angeles office building from the outside, but inside it is packed with racks of servers and communication equipment.
Data center capacity is in great demand. Keeping up with video and other Internet activity will require rapid expansion and improved density. The economies of scale are such that datacenter ownership will become highly concentrated, which may lead to non-competitive markets, exposing users to non-competitive prices and service.
Data centers also require great amounts of electric power for equipment operation and air conditioning. We see large operators like Google and Microsoft building data centers near sources of low-cost power like The Dalles, Orgon. 2
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