Microsoft: Environmental Hero or Villain?

Dog bites man: "Microsoft's (NAS: MSFT) efficient data centers consume less power than expected."

Man bites dog: "Microsoft runs hyper-efficient data centers hot, wasting megawatts doing nothing useful."

Dog writes contract terms: "Microsoft's willful waste was an attempt to avoid fines from local power utility."

This bizarre turn of events really happened last year in Quincy, Wash. According to a New York Times report, Microsoft agreed to use a certain amount of power in return for the right to build a Bing and Hotmail data center in 2006, but the operation turned out to be much more power-efficient than expected. Facing $210,000 in fines for breaking the terms of the contract, Mr. Softy started burning electric power just to get closer to those minimums.

Computing modules at Microsoft's Quincy campus. These ultra-efficient modules helped get Microsoft in this mess to begin with. Source: Microsoft.

And the local community then complained about wasteful consumption and pollution instead. "For a company of that size and that nature, and with all the 'green' things they advertised to me, that was an insult," said a local utility commissioner and farmer.

The commission and Grant County's municipal utility grumbled, but cut its fines below the power-wasting cost of meeting the quota. So Microsoft gets to save money on electric bills, Washington State avoids needless power drains, and almost everyone goes home happy.

It's a complex world we live in. This episode could make you see Microsoft as an environmental hero, a self-serving capitalist, or an innovator changing the system from within. I'm sure you can come up with some other names yourself. In reality, the company signed a contract long ago that didn't account for coming improvements in low-power computing, and threw a tantrum to get out of terms that suddenly seemed oppressive. It worked.

Black and white? More like gray.

Other IT giants followed Microsoft into the hills and valleys of Grant County, lured by similar promises of low electric rates and eco-friendly operations. Dell (NAS: DELL) owns a huge data center just across the road from Microsoft's. Yahoo! (NAS: YHOO) and Intuit (NAS: INTU) also set up shop across town. All of these operations have presumably become more efficient over the years. With the exception of Dell, which is a relative latecomer to the party, all of these data center operators will probably run into similarly absurd situations over the next couple of years.

Those huge, power-gobbling data centers must exist somewhere in order to support today's cloud-based computing paradigm. The modern world simply generates too much data to be managed by a handful of servers in a supply closet. Learn more about big data and cloud computing in this special report, including the name of the ONLY stock you need to profit from the new technology revolution.

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