Google Throws Open Doors to Its Top-Secret Data Center

In my attempt to catch up on my readings over the Holidays which includes Wired Magazine, I cam across this piece about Google data centers.  In an unprecedented manor, Google granted access to Wire writer Steven Levy who was able to tour a few facilities including the data center in Lenoir, NC which is close to where I used to reside.

Typically you would think of these giant centers as the ultimate consumers of energy.  While they do consume a lot, Google has been able to re-engineer these data centers to use less while producing additional capacity.  These data centers definitively help to provide Google with a competitive advantage.

The full Wired article can be viewed here.  The video below also gives you good insight as well

• This is what makes Google Google: its physical network, its thousands of fiber miles, and those many thousands of servers that, in aggregate, add up to the mother of all clouds. This multibillion-dollar infrastructure allows the company to index 20 billion web pages a day. To handle more than 3 billion daily search queries. To conduct millions of ad auctions in real time. To offer free email storage to 425 million Gmail users. To zip millions of YouTube videos to users every day. To deliver search results before the user has finished typing the query. In the near future, when Google releases the wearable computing platform called Glass, this infrastructure will power its visual search results.
• Hölzle and his team designed the $600 million facility in light of a radical insight: Server rooms did not have to be kept so cold. The machines throw off prodigious amounts of heat. Traditionally, data centers cool them off with giant computer room air conditioners, or CRACs, typically jammed under raised floors and cranked up to arctic levels. That requires massive amounts of energy; data centers consume up to 1.5 percent of all the electricity in the world.
• Google’s breakthroughs extend well beyond energy. Indeed, while Google is still thought of as an Internet company, it has also grown into one of the world’s largest hardware manufacturers, thanks to the fact that it builds much of its own equipment. In 1999, Hölzle bought parts for 2,000 stripped-down “breadboards” from “three guys who had an electronics shop.” By going homebrew and eliminating unneeded components, Google built a batch of servers for about $1,500 apiece, instead of the then-standard $5,000. Hölzle, Page, and a third engineer designed the rigs themselves. “It wasn’t really ‘designed,’” Hölzle says, gesturing with air quotes.
• All of these innovations helped Google achieve unprecedented energy savings. The standard measurement of data center efficiency is called power usage effectiveness, or PUE. A perfect number is 1.0, meaning all the power drawn by the facility is put to use. Experts considered 2.0—indicating half the power is wasted—to be a reasonable number for a data center. Google was getting an unprecedented 1.2.

2013: Talk Gets Cheaper, TV Gets Smarter

WSJ tech columnist, Walt Mossberg, is out with his views for what to expect in 2013.  Below are a few of the topics that he addresses in his article here with our own comments.

• Tablets vs. PCs, your beginning to see more things that you can do on a tablet that you used to only be done on a PC
• Integrating Hardware and Software, companies are beginning to follow Apple's lead where they make the hardware and the software
• Rethinking Television, I personally own two Sony Google smart TV's and honestly they both come in very handy with my large family.  I agree that this technology will continue to improve especially if Apple can get into the ball game
• Cheaper Smartphones and Plans, Apple has already stated that it is coming after the low cost smart phone market...well maybe slightly below its current line of product pricing. 
• Costlier, Better Music Players, I abandoned my music player a long time ago when I went with my iPhone.  It's hard to imagine this sector being able to grow.  I can envision it walking away like the walk-man

Andy Puddicombe: All it takes is 10 mindful minutes

2013 Week 2 Performance.....A Quite, Steady Week

For the most part this week it was a steady march higher with the occasional bumps along the way. Economic news was light this week and there wasn't much news out of Washington which probably led to some of the calmness.

This week however things could begin to get a little more volatile especially for those companies that begin reporting their quarterly earnings and calendar full year performances.  We really like to use MSN Earnings Calendar function which can help you find out when specific companies report or to get a look at a total week's worth of reports.

Even though equity markets weren't as high as the first trading week of the year, gains were still positive.  Last year the DWCM Fund was hot hot hot in Q1 thanks to Apple's huge performance.  This year while we remain in positive territory, the gains have not been as large and we are actually trailing the four major benchmarks that we track against.

The under-performance can be broken down in a few different views.  First as we just mention, Apple which is our largest holding, has lagged the markets down 2.2% while the overall equity markets have been up over 3%.  Second, our portfolio positioning is more defensive than it was last year.  Our cash position is much higher and our current selection of stocks have a defensive tilt to them.  Finally, our short position in a group of home builders has continued to be under pressure as the housing segment delivers decent number, and our short position in Netflix has been disappointing as the stock has rallied higher and rewarded riskier names.

We plan on sticking by Apple and would look to add to our position down around the $500 level.  However, any drop below $500 would be detrimental to the stock and additional losses could ensue as this is a key technical level.

We want to get through this next fiscal debate in Washington before choosing to unwind any of our short positions.  We set up these positions as an additional defensive barrier to any declines in the markets due to going off the Fiscal Cliff.  That situation has since stabilized for now, but as the next date of Fiscal austerity comes closer so too will increased volatility.

Overall, the market feels a little overheated from the big gains that we have seen on the last day of 2012 and the first two weeks of 2013.  Much of our open orders continue to sit as prices have moved higher.  As we state time and time again, we are not in a hurry to chase market performance to the upside.  We can and have the ability to be patient in the short-term which could also result in some short-term under-performance which we are okay with.  Recall that our first objective is capital preservation and then long-term capital appreciation.

The Week Ahead
There will be a slightly heavier load of economic data being release this week along with a plethora of Fed speeches including Bernanke to start the week.  Look for markets to feed off of earnings report that begin to get into full swing.

Being in Metro Detroit, the North American International Auto Show kicks off in full gear on Monday.  There are a reported 50 new vehicle launches at the show this year although be careful what constitutes a new launch.  Most launches aren't a complete makeover of a vehicle, instead they are likely to be minor or subtle changes to the exiting line.

• Mon - Ben Bernanke Speaks
• Tue - Producer Price Index, Retail Sales, Empire State Mfg Survey, Business Inventories
• Wed - Consumer Price Index, Housing Market Index
• Thu - Housing Starts, Jobless Claims, Philadelphia Fed Survey, 
• Fri - Consumer Sentiment (p)

Have a great week!

DreamWorks Capital Management

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