We’ve heard about Google, Microsoft, and Amazon going on a data center building spree. It’s one of the worst kept secrets in the technology business — even though all three attempt to be as discreet about it as possible. Nevertheless, it makes perfect sense for them. Their cards are on the table. We know they plan to invest heavily in Web-based services over the next decade.

On the other hand, reports that Apple is about to break ground on a new data center in Maiden, North Carolina that is even bigger than the behemoths being built by Microsoft, Google, and Amazon is startling, to say the least. Let’s take a look at what we know about Apple’s new data center and speculate on what Apple might be planning for it.

Apple’s east cost IT hub

On his Cult of the Mac blog, Leander Kahney has a good interview with Rich Miller from Data Center Knowledge about Apple’s big plans in North Carolina. Here’s what we know so far:

  • Location: Town of Maiden in western North Carolina, 40 miles northwest of Charlotte
  • Size: 500,000 square feet on roughly 200 acres of land
  • Purpose: Will serve ostensibly as Apple’s east coast IT hub, with it’s west coast hub in Newark, CA (109,000 square feet)
  • Timing: Expected to break ground with bulldozers in mid-August
  • Cost: $1 billion over 10 years
  • Staff: 50 full-time employees
  • Bandwidth: Dual fiber lines
  • Cost of electricity: 4-5 cents per kilowatt hour from Duke Energy (vs. 7-12 cents per kilowatt hour in California)
  • Alternate location: Virginia lost the bidding war with North Carolina over tax breaks and electricity costs

Miller said:

“The early site plans indicate Apple is planning about 500,000 square feet of data center space in a single building. That would place it among the largest data centers in the world. For comparison purposes, Apple’s existing data center in Newark, California is a little more than 100,000 square feet. Most new stand-alone enterprise data centers are in the range of 100,000 to 200,000 square feet. So this would qualify as a big-ass data center.”

The only other data centers that are on this scale are Microsoft’s new Chicago data center, the Phoenix ONE data center, and the SuperNAP data center in Las Vegas. All three of those have a little over 400,000 square feet of space dedicated to data center use.

Miller also added, “The companies that are building the biggest data centers tend to also have the biggest cloud ambitions.”

An Apple-shaped cloud?

So the natural question is what Apple plans to do with all of this data center space? The fact that the new data center is likely to be five times larger than Apple’s west coast data center is the most curious part. It makes sense for Apple to have bi-coastal data center redundancy and to plan for growth in its online services (MobileMe, App Store, iTunes Music Store), but that alone will not consume enough storage and server cycles to justify a tripling or quadrupling of Apple’s data center capacity.

Thus, a build-out with this kind of scale suggests that Apple has bigger plans in the works. Here are what I consider to be the four most logical possibilities:

  1. Video library expansion: Apple has already started renting and selling movies and TV shows on-demand via iTunes. The online rental business is set to explode over the next five years, so Apple probably sees a ton of opportunity here. However, video is a resource hog in storage and CPU cycles so a significant upgrade in capacity would make sense if Apple is moving in this direction.
  2. Online document storage: With iDisk and MobileMe, Apple has already dabbled in online storage for end users. Google is expected to blow this open any day now (and has been for years), but Apple may see an opportunity to provide Macs, iPods, and iPhones with some basic online storage capability (with the option to purchase more) to greatly simplify storage, transfers, and backups for users. This could also come into play with the long-rumored Apple tablet, which would likely have minimal local storage and might need a cloud storage option for archiving a library of songs, videos, or files.
  3. Web-based software suites: Most of the Web-based applications currently available are still very rudimentary. However, there are signs that more powerful apps are coming. Adobe’s online version of Photoshop is slick. The forthcoming Web version of Microsoft Office is very powerful. With advanced Javascript and AJAX, the tools are now there for more sophisticated cloud-based apps. For Apple, that could mean that it’s time to take its iLife and iWork suites and turn them into Web-based applications that expand even beyond the Mac, and even beyond the PC, to smartphones.
  4. Digital library build-out: One of the possibilities for Apple’s rumored tablet device is that it’s meant to primarily be a reading device. That means not only reading Web sites and blogs, but magazines and books as well. If that’s the case, Apple may be preparing for a massive a build-out of a digital content library that it would peddle through iTunes. In some ways, this has already started with the books and magazines now being sold through the iPhone App Store thanks to new capabilities in the iPhone 3.0 software.

The most likely scenario is the video expansion. However, the digital library buildout would be the most revolutionary concept, so that night be a shiny object that Apple is chasing.