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Google Expands Finland Data Center

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Google Inc. (GOOG) recently announced the expansion of its data center in Finland to meet the fast-growing demand for Internet usage and data storage capacity.

The expansion will involve an additional investment of €150 million ($177 million). The company said that the project will take about 18 months to complete, creating 25 additional positions.

The data center is located in a former paper mill in the south-eastern town of Hamina on the Baltic Sea coast. Google had paid €40 million for its purchase and invested another €160 million on converting and equipping it. The center began its operations in September 2011. The data center uses sea water from the Bay of Finland to reduce its cooling costs.

The need for data center expansion is rising due to growing preferences for cloud computing. Cloud computing allows users to store and process big data at remote data centers instead of their own computers. Hence, expansion of data centers is more likely these days. Google, being no exception, has also expanded its data center to meet the requirement for more data-intensive services such as YouTube and Gmail.

A survey conducted on 100,000 facilities by a data center dedicated website, datacenterdynamics.com, shows that data center usage is expected to grow around 7% in 2012. Moreover, the website has also increased its investment projection for new data centers from about $30.0 billion in 2010-11 to $35.0 billion in 2011-2012.

Recently, Google announced that it will spend more than $300 million to construct its largest Asian data center in Taiwan. The company is scheduled to complete the construction of the Taiwanese center early next year and start operations by the end of 2013.

Google has done very well in the second quarter, with its gross revenue touching a record $12.21 billion. Revenues from both Google-owned and partner sites continued to grow in double digits on a year-over-year basis. Historically, Google has always fared better than Yahoo Inc (YHOO), which has been struggling to uphold itself, and Microsoft (MSFT), which is yet to gain critical mass.

However, legal entanglements related to competitive matters or patent infringements remain an overhang. Google retains a Zacks #3 Rank, which translates into a short-term Hold recommendation.

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