Once again, Iceland is trying to sell itself as a prime data center location, but persistent concerns about financial stability, network connectivity and the available labor pool make many users hesitant to consider the site for data center location.
In 2007 the Invest in Iceland Agency made a substantial push to attract data centers to the country, boasting clean and cheap geothermal and hydropower. The government agency mainly tried to sell Iceland as a good backup data center location, saying that in addition to power benefits, the country had temperatures that fluctuated little and a stable economy.
So much for the stable economy. Last year, the country's three large global banks collapsed and the country's financial situation put in high relief the impact of the global recession. According to a Vanity Fair article this year, within weeks of the banks collapsing, one-third of the population considered leaving the country.
"If you and I were having this conversation last year, I would say it was absolutely highly impactful," said Jeff Monroe, the CEO of Verne Global, which is building a hosting data center there now. "We went through a time with risk around Iceland where people wouldn't put foreign investment into the country."
Iceland: Risky or low cost for data center site selection?
But with time, the financial situation has changed somewhat , said Monroe, who cited new elections and the government's ability to work on its financial issues and secure loans. But John Boyd, the president of data center location consultant the Boyd Company, stresses that the financial situation must still be considered a risk factor.
"The financial meltdown is a backdrop to all of this, and the financial situation in Iceland could be an issue," he said. "However, I will say this: There is no perfect location. We're in the business of making tradeoffs on behalf of our clients, and every project has different tradeoffs."
Boyd added that the scarcity of technical talent either in Iceland already there or willing to relocate could be another issue. Another is latency issues with connectivity, although proponents of Iceland-based data centers that they're not ideal for online trading applications. But Boyd said the No. 1 consideration for almost all his clients is the cost of energy. Since Iceland has cheap power, it can't be summarily dismissed.
But there are other problems with locating a data center -- even a backup data center -- in Iceland. It is one thing if a hosting provider operates and maintains a company's data center backup location. But if a company wants to run its own data center in any remote location, logistical issues quickly crop up.
"There are things I look at when building a data center in a 'lights dim' fashion with hands-on support,' said Gary Simpson, the VP of global operations for storage company NetApp. "I try to locate within 30 miles of a major metropolitan area. That way I don't have as many logistics issues, vendor issues and employment issues."