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The Cloud Services Boom

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James A. Bacon
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Source: National Bureau of Economic Research

If it seems like the cloud-services industry is the hottest economic sector in Virginia — outside the new Amazon East Coast half headquarters — that’s probably because cloud services is one of the hottest economic sectors in the United States. This chart published by the National Bureau of Economic Research shows how cloud services expenditures have boomed in recent years.

The Washington region was the only metropolitan area in Virginia with the attributes that could compete for Amazon’s HQ2, but other parts of the commonwealth can vie for data centers, as Henrico County has shown with Facebook and Mecklenburg County with Microsoft. Unlike Amazon’s HQ2 facility in Arlington/Alexandria, which envisions hiring 25,000 workers over the next decade or two, data centers require only a few dozen employees, so they can locate in labor markets as small as rural Mecklenburg County.

As long as Virginia has abundant fiber-optic trunk line capacity with connections around the world, like the new trans-Atlantic cables to Virginia Beach, and as long as the state can provide abundant, competitively priced green energy, the sky’s the limit for more cloud-services investment.

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4 responses to “The Cloud Services Boom”

  1. LarrytheG Avatar
    LarrytheG

    Merry Christmas one and all!!!

    re: ” data centers require only a few dozen employees”

    and that’s the way the 21st century job market pretty much works in spite
    of one-off companies like Amazon. “Manufacturing”in the 21st century is highly distributed and volatile Even companies like Amazon are being pushed by other business models.

    But who have thought that a more “efficient” business model is where you ship 100 widgets individually in dozens of delivery trucks with drivers instead of shipping 100 widgets in one truck to one retail store where the cost per item to ship has to be on the order of 1/100th of the individual ships?

    HEY – and this expenditure of money is called … GDP !!!

    But for 21st century knowledge workers, education is paramount in finding employment and keeping it even as jobs change.. .. it’s like your own set of tools that belong to you is portable to you and – not the folks you work for.
    Very different from a generic College Degree which is becoming an anachronism. Real education is no longer rote academics…. it’s your proven ability to understand concepts and the technology associated with it – to be able to not only articulate the current but the ability to say “what if it could do this in addition”!

    To cite an example of where technology is today and where many of us are in that world today:

    Most folks have a cell phone these days – but ask them how they can be at virtually any random location and the phone network still knows how to route a call or a text from another person at another random location to them…. so you gotta know and understand concepts like that if you want to have a decent job in the 21st century work force

    Sure , your phone has announced it’s presence to the nearest cell tower – but how does another cell tower 500 miles away route the call from another persons cell at that location to the location where you are? How does that tower your friend is connected to know what tower you are at ?

    or worse than that – what if there are multiple cell towers surrounding you… which ones “know” that you are there say as customers talking to a Verizon tower but someone 500 miles away has an AT&T phone connecting to an AT&T tower .. how does that AT&T tower know that you are connecting to a Verizon tower 500 miles away?

    Now most of us schmucks just think the whole thing is marvelous magic but the REAL point is – it’s a totally human-designed, human-operated system and yes – those are real, good-paying jobs – for those that have the right education and skill set.

    Now add GPS and internet to that same cell phone scenario – oh maybe also put all of that on a drone…..or perhaps a watch that monitors heart function and sends that data to the phone via bluetooth and from there to your Doc and that’s a point of time where we all live right now and there are gobs and gobs of jobs for those who have the education and skillsets those fields of commerce now demand.

    So yes… they CAN be located in rural areas – but the question is – is the education being delivered to the kids in those rural areas – the kind they need for real jobs? It’s not that you might be a “smart” person.. it’not even that you might get “A”s in math… it’s STEM, not just the elements of STEM but critical thinking.. the ability to use the STEM subjects to understand – and articulate concepts that are 21st century things all around us that make the world go around and do provide good jobs for those who have the “package”.

  2. TooManyTaxes Avatar
    TooManyTaxes

    Merry Christmas to all, both veterans and the new folks who have come aboard this year to share their thoughts.

    Years ago, I reviewed and help negotiate a fiber optic cable lease for a large financial services company. It’s main datacenter was located in a big metro area and it located a duplicate center in a rural area of the same state. The lease was for redundant fiber capacity. So it was protected by both a duplicate datacenter and two routes between its centers. I don’t expect many people worked at the remote location but it was there for backup and also must be paying some reasonable level of real estate taxes to the rural jurisdiction.

  3. LarrytheG Avatar
    LarrytheG

    there’s much, much more than just data centers…

    take a look at this:

    https://spectrum.ieee.org/image/MjcyMjY1NA

    these autonomous robots now come in all shapes and sizes.. some fly, some swim, some crawl like snakes in collapsed buildings or in contaminated nuclear spaces , etc. they are uber technology-driven…multiple technologies and the folks that design, build, operate, and maintain them have significant STEM level education that includes fundamental skills like not only reading – but reading to understand concepts and then to be able to take those concepts and use them to leverage even more technology-driven stuff.

    Think about where a lot of kids are today in the schools – not only the low-income ones in marginal schools but rural schools and even a lot of suburban schools where parents don’t want their kids pushed or challenged if it can impact their k-12 academic college resumes.

    We have jobs – we actually have LOTS of jobs for folks who are equipped with the level of education that is required for 21st century jobs.

    It’s no surprise than more and more companies and CEOs have foreign extraction surnames. We are not producing enough qualified grads for these fields so they are being imported on H1B visas even as we chew on each other about border walls.

  4. Acbar Avatar
    Acbar

    Jim, you’ve touched on the labor and energy implications of Virginia’s data centers and I hope you return to this topic soon when everyone is less distracted by the holidays. Let me pose this question for now: Dominion has a low-cost product because of past efficiencies and past good management; but it can squander that legacy all too quickly if it takes investment risks and abuses the trust of its regulators for the sake of short term shareholder gain. And without Dominion’s cheap retail power, where does Virginia stand in this competition for the “cloud”?

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