Microsoft’s and Google’s contrasting data center strategies reflect the differences between evolutionary and revolutionary approaches in technology implementation. History has proven that each paradigm has its own risks and rewards.

MSFT is riding the well known trends toward the usage of data center containers. This natural evolutionary approach requires a minimum investment in surrounding building infrastructure and a reliance on broadly available commodity hardware. The benefits here are a complete negation of risks related to specific vendor exposure and wasted dollars on potentially fruitless R&D efforts. In a sense MSFT is waiting for the risk/reward pareto point to clearly emerge from natural market forces. Historically this is consistent with MSFT’s development efforts (e.g., their DOS relationship with IBM or their relatively late but successful offering with Windows as compared to Apple’s products).

In contrast GOOG believes it already understands the nature of that elusive optimal data center solution. GOOG’s teams rightfully view themselves as technology visionaries and want to take a revolutionary approach in design. Hence, GOOG needs to develop custom hardware solutions. This strategy has not always paid off. For example, GOOG vacillated between purchasing servers from vendors such as RACK and designing their own compute platform solutions. And yet, our checks at Primary Global Research indicate that for the time being GOOG’s data center approach is a standard that many wish to emulate.

And, while the data center design battle rages, in the backdrop state tax laws are in flux. This is an issue that transcends both the evolutionary and revolutionary approaches. Neither MSFT nor GOOG can predict the political whims of the taxpayer – especially, when data center consolidation drives lower TCO (totally cost of ownership) and that savings is largely a result of reduced headcount. Once the legal ambiguities dissipate, the battle lines will be more cleanly drawn and, as Ashlee Vance writes in his recent NY Times Bits blog column, the evolutionists and revolutionists will be fighting in a neighborhood near you!

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