FireHost has rebranded to Armor, reflecting a shifting focus to security and compliance solutions, rather than cloud hosting, according to an announcement on Monday.

The post FireHost Rebrands to Armor, Sharpening Cybersecurity Focus appeared first on Web Hosting Talk.

 

In the week ending August 28, 2015, there are several discounts on hosting, including a full website package from BigRock.

The post Web Hosting Sales and Promos Roundup – August 28, 2015 appeared first on Web Hosting Talk.

 

Healthcare organizations continue to be a major target for cybercriminals as 81 percent of healthcare executives report that their organizations have been hit by at least one malware, botnet or other cyberattack over the past two years, according to the 2015 KPMG Healthcare Cybersecurity Survey.

The post Healthcare Organizations Unprepared for Increasing Cyberattacks: Report appeared first on Web Hosting Talk.

 

One of the dangers of artificially low interest rates is malinvestment: money put into certain projects is misplaced because demand in that area is unsustainable or overestimated. Do data centers fall into that category?

The Trouble With Malinvestment

Malinvestment goes hand in hand with booms and busts. For instance, suppressed mortgage rates can lead consumers to buy more housing than they can afford, resulting in a surge in construction. That’s the boom. But when those mortgage rates rise to normal levels, demand shrinks leaving an excess supply. Prices must drop to clear the market. That’s the bust.

The Effective Federal Funds Rate, which guides interest rates throughout the market, has been essentially zero for more than half a decade. Assuming an inflation rate of about 2%, that leaves plenty of room for borrowing at what amounts to a negative interest rate. (If I borrow money at 1% interest, but inflation is 2%, then the purchasing power of what I pay back diminishes faster than the interest I accumulate. For a business that can peg its prices to that inflation rate, this situation makes for a fantastic deal.)

interest rates

The problem is that “free money” is simply unsustainable. Businesses and consumers cannot borrow unlimited amounts at no cost; otherwise, there would be little point to production since there’s always the possibility of just borrowing more money to cover any needs. But it’s easy to see where that process would lead.

The problem with overall low interest rates is that malinvestment could crop up almost anywhere. Over five years of the Federal Reserve’s zero-interest-rate policy essentially guarantees that some segments of the economy have seen far too much investment. One likely area is oil. Overall, energy consumption in the U.S. has remained roughly stagnant since about 2000, and may even be on a slight downward trend. Per-capita consumption has certainly fallen.

malinvestment

Yet investment in energy production (particularly shale oil) has vastly increased since the last recession. Some of that investment may be due to geopolitical concerns (as though some backward Middle Eastern nations are really threats to the U.S. and its nuclear arsenal), but it doesn’t change the fact that it means a global increase in energy supply without a concomitant increase in demand. The result has been a falling oil price, although the recent drop may be due mostly to a decline in demand rather than an increase in supply; either way, however, the market overinvested in energy production.

Data Centers at Risk?

The question, then, is whether data centers are like oil: is there too much supply for the demand? Two matters complicate this question. First, as mentioned above, the low interest rates mean malinvestment could be almost anywhere. (Some bubbles, however, may be readily identifiable for a variety of reasons: higher education is most certainly one of them.) Second, many bubbles are difficult to identify until they pop. Naturally, some market watchers identify certain cases ahead of time (e.g., Peter Schiff and the housing bubble before the Great Recession), but for the average consumer, judging between competing voices can be extremely difficult. And even knowledgeable investors can be mistaken.

Also, a bubble isn’t necessarily the same thing as standard market action in response to changing conditions. For instance, a certain region—say, the New York metropolitan area—may see rising and falling data center supply with changes in demand or even supply variations in competing regions. Those changes aren’t the same as an interest-rate-driven bubble; they are simply the market attempting to determine the appropriate level of supply to meet demand in light of the natural variables.

What, then, might indicate potential malinvestment in data centers? One indicator is overzealous expectations. In 2013, a T5 Data Centers blog by Pete Marin lists a number of predictions that supposedly back the notion that data center supply is all but impossible. Among them are the preposterous (a commercial quantum computer and a $1,000 PC with the same compute power as a human brain by 2020) to the dubious (various predictions about the amount of data that will be created without any consideration for whether that data has any value). Some of these predictions are not unlike the notion that housing prices will always go up just because that’s the way it is. The decline of Moore’s Law, fewer compelling features in mobile devices and falling interest in older technologies (PCs) belies the view that technology will clearly continue to be deployed at an increasing pace.

Another indicator is investment in big data center consumers that offer dubious value in return. To illustrate that situation, we need only look at our old pal Twitter, which I have covered on numerous occasions with regard to its inability to turn a profit and the overall dubious nature of the social-media business model. In this case, data centers are basically just big data-collection engines for advertisers; if the advertisers aren’t getting value in return, they will eventually jump ship. In fact, the entire big data phenomenon may be losing the steam that it never really had in the first place. Unless storing gobs of data can really yield beneficial insights (more likely, good customer service provides a far better return than pie-in-the-sky golden nuggets of information), companies won’t continue to invest in storage capacity and may even pull back.

Yet another indicator is excess server capacity. According to some estimates, about one-third of servers are “comatose,” meaning they consume resources but provide no useful service. Such rank inefficiency of capital expenditure may indicate a number of things; malinvestment is one (but not the only) possibility.

According to IDC’s latest market forecast, global shipments of PCs will decline 8.7%; for tablets, it’s 8%. Fred O’Connor noted at Computerworld, “Combined volume shipments of PCs, tablets and smartphones are expected to increase only in the single digits through 2019. This could indicate market saturation or the effect of a ‘good enough computing’ mentality among potential buyers, IDC said.” These facts by themselves don’t necessarily reflect on the data center market, but they do raise the question as to whether companies have overshot the mark with regard to capacity in the industry as a whole.

Conclusions

Is there data center malinvestment? The answer is unclear, but an argument could be made either way, depending on how one ranks the various dynamics. Like any market, data centers will see differing levels of supply and demand in different segments (locations, market types such as colocation or wholesale, and so on). The question of whether there’s a bubble comes down to whether the supply is fit for a sustainable amount of demand. Unfortunately, the answer may only become clear when interest rates normalize—something the Federal Reserve has been loath to do. Recent troubles in global equity markets, including the U.S., mean near-zero interest rates will likely continue for some time. If data centers do represent an area of malinvestment (i.e., a bubble), the eventual outcome could be worse the longer those rates stay low. If the industry is simply meeting the demand of a burgeoning market, however, then the eventual result may be less unpleasant. But the only way to find out for sure is to wait and see.

The post Data Center Malinvestment? appeared first on The Data Center Journal.

 

Hong-Kong based cloud service provider ReadySpace announced Thursday that it has joined the Red Hat Certified Cloud and Service Provider program.

The post ReadySpace Joins Red Hat Certified Cloud and Service Provider Program appeared first on Web Hosting Talk.

 

Managed virtual private cloud services are gaining popularity as part of data center outsourcing contracts enterprises make with the likes of IBM, HP, or Dell.

The post Managed Private Cloud on the Rise as Data Center Outsourcing Service appeared first on Web Hosting Talk.

 

At the OpenStack Silicon Valley event this week, cloud professionals are discussing an OpenStack ecosystem that’s drastically different than when the event first launched five years ago. The software has considerably matured, but it’s also taking on even greater roles including this year’s hot topic: containers.

The post Assessing the State of the Cloud and Containers at OpenStack Silicon Valley appeared first on Web Hosting Talk.

 

Microsoft Office 365 has passed Google Apps as the most popular cloud application suite among enterprises, according to a new report by cloud access security company Bitglass.

The post Enterprises Prefer Microsoft Office 365 Over Google Apps: Report appeared first on Web Hosting Talk.

 

A Carnegie Mellon University student and former FireEye intern pleaded guilty on Tuesday to designing the “Dendroid” malware and attempting to sell it on the recently-busted Darkode.

The post Former FireEye Intern Pleads Guilty in Dendroid Malware Case appeared first on Web Hosting Talk.

 

A former VMware engineer has brought what he learned from years of working with enterprise clients on their cloud needs to a new company that came out of stealth this week.

The post ZeroStack Comes Out of Stealth to Help Enterprises Take Control, Simplify Private Cloud appeared first on Web Hosting Talk.

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