New $130 Million Server Farm in Virginia
Part of Intel's $1 Billion Drive into ISP Market
Intel (www.intel.com), whose little chips run some 80 percent of the world's PCs, is rapidly moving into another sector: the hot Internet service provider (ISP) market, where Intel has recently announced major new facilities in California and Virginia that total US$280 in capital expenditures.
Those U.S. mega-projects are part of Intel's recent efforts to stimulate global growth outside its core chip business. Moving aggressively, the company has initiated a series of major new ISP facility expansions that will take in Asia, Europe, Latin America and the United States. All told, Intel's big expansion into the ISP market will involve a total capital expenditure of $1 billion in new facilities by the end of the year 2000, company officials say.
Spearheading that rapid growth into the ISP sector is Intel Online Services, the subsidiary that Intel recently formed to manage the hosting, storage, transaction and delivery of Web content and e-commerce sources.
"We believe Intel Online Services' second-generation approach fills an important need in a surge economy which is characterized by the dynamic unpredictability of Internet demand," said Mike Aymar, Intel vice president and general manager of Intel Online Services. "The benefit of Intel Online Services is the rapid time-to-market it provides solutions developers, as well as optimal hosting reliability for customers."
Santa Clara, Calif.-based Intel made it latest big ISP splash with the recently announced $130 million Internet service center that it's locating in Fairfax County in Northern Virginia. The Fairfax Country site, which will be the first location for an Intel service center on the U.S. East Coast, is expected to create up to 250 new jobs when it's fully operational in the first quarter of 2000.
The new center will also put a huge group of high-powered computer servers to work.
For example, Intel's first Web-hosting site, an 85,000-sq.-ft. (7,650-sq.-m.), $150 million facility that opened in August near the company's Santa Clara headquarters, is designed to accommodate as many as 10,000 high-end servers. The operation in Fairfax County will rival that capacity. The 73,000-sq.-ft. (6,570-sq.-m.) facility is expected to hold 8,000 servers, Intel officials say.
Intel officials said the company considered a number of undisclosed sites in other states before picking the Virginia location near Dulles Airport.
"A large and growing proportion of the world's Internet traffic flows through Virginia," Aymar explained. "That made Virginia a natural location for Intel's expanding Internet services hosting business."
The Intel announcement marked another major high-tech win for Northern Virginia, whose corporate roster includes the headquarters for America OnLine and MCI.
"Virginia is cementing its position as the Internet capital of the world," said Gov. Jim Gilmore. "I am proud that Intel recognizes the tremendous potential and opportunity in our commonwealth and has decided to locate this important new facility here."
The only incentive in the deal that has been disclosed thus far is a $200,000 grant from the Virginia Governor's Opportunity Fund. The grant will be used to assist Fairfax County with site preparation, says the governor's office. The Virginia Dept. of Business Assistance will also provide work-force training for Intel's new operation.
In selecting the Virginia site, Gilmore added, Intel worked closely with the Virginia Economic Development Partnership (www.yesvirginia.org) and the Fairfax County Economic Development Authority.
The two "server farms" in Virginia and California are only part of Intel's billion-dollar drive into the global ISP market. The company has already announced that it's building similarly huge centers in London and Tokyo. And by the end of 2000, Intel Online Services expects to have selected sites for a total of 12 centers in operation that span Asia, Europe, Latin America and the United States, company officials say.
Intel's aggressiveness in entering the ISP market is also evident in its late-September agreement with NEC Corp., Japan's biggest manufacturer of personal computers and microchips.
The Intel-NEC agreement will combine the two companies' worldwide Internet service businesses. The pact will extend the reach of both Intel's and NEC's online networks, analysts say. And the combination will make it easier for businesses and individuals in different countries to place orders, bill each other and conduct electronic commerce online, Intel and NEC officials say.