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Google's Data Center in Iowa

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Google Inc. , the world's most popular Internet search engine provider, has announced that it will build a data center in Iowa. The search engine giant will invest $200 million for the construction of this project in Council Bluffs, Iowa.

Google has been present in Iowa since 2007 and has invested more than $1.0 billion in the state. The company has accelerated its investments and is now investing in data centers.  Previously, it had invested $75.0 million in a 50MW wind farm project.

Investments in rural areas like Iowa and Nevada make sense as these states offer state tax incentives, government incentives, low-cost power, cheap land and good predictable weather. All these factors attract the IT stalwarts to invest at a cheaper cost. Microsoft Corp. (MSFT - Analyst Report) too has a data center in the state of Iowa.

Google has been steadily acquiring huge tracts of land in Iowa and now owns 1,000 acres of real estate through various acquisitions made over a period of time. The acquisition of cheap land was a smart move, as it is now building a new data center on that property at a much lower cost. 

The need for data center expansion is rising due to the growing demand for cloud computing and the ever-increasing needs of Internet users. Google has 6 data centers in the U.S., 3 in Europe, 3 under construction in Asia and plans to build another one in Chile.

The U.S. independent research firm, Gartner predicts that datacenter hardware spending will most likely cross $126.2 billion in 2015. These technology warehouses are witnessing strength, as video streaming, smartphones and apps are boosting demand for the hard drives needed to run them. 

In the third quarter of fiscal 2012, Google’s gross revenue reached a record $14.10 billion, up 28.6% sequentially and 45.1% year over year.

Both Google and Microsoft retain the Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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