Back in May, Google and SpaceX publicly announced a partnership that would tie the Google Cloud together with the Starlink satellite broadband network. This is the first in a series of steps by Google and SpaceX meant to create a faster, more reliable internet connection for enterprise companies with large footprints, especially in areas where infrastructure has lagged behind.
Beta offerings with speeds up to 150 Mbps downlink and latency of as little as 20 ms are tempting for organizations that don’t have many, if any, reliable high-speed broadband options. Because the Starlink ground stations are being installed inside Google data centers, the speed of access to these services via Starlink will be difficult to match.
Data center investments 101
As the world grows increasingly digital, data centers like the ones at Google are becoming more attractive investments globally. These aren’t simply places to store information or to run distributed applications, they amount to a sort of finite digital storage space that’s vital to modern business. You might even think of them as industrial warehouses for ones and zeros.
Since space for equipment is finite and the equipment’s storage capacity is finite, data centers, by nature, are also finite. So, even though they store things from the digital world inside, they’re not infinite like the digital world, which gives them a great deal of real world value. This is the difference between data storage and the data that’s stored inside the data centers, investment-wise.
And, although digital things like NFTs and virtual real estate are starting to get some attention among high net-worth earners, they’re not the kinds of investments most people are seeking out because of the high risk of value loss involved.
Data centers, on the other hand, can be very profitable, and as the digital world grows, more of them are needed all the time. Most often, they’re purchased as part of a data center REIT (real estate investment trust), which have natural protections against inflation inherent to the investment vehicle.
How the Google-SpaceX partnership changes the data center landscape
As we become increasingly dependent on data-centric Internet of Things items and data-heavy equipment like self-driving cars, both space and the speed at which it’s accessed are going to be vital variables in the data center equation. Those short hops between the Google data centers and their Starlink connectivity mean that tools relying on Google data centers will run as quickly as possible, even in the most remote locations. Although this was stated above, it bears repeating.
Faster speeds don’t just mean less buffering on video calls or faster response times from Google Docs, they also spell better and more complete access to data-soaking emerging technologies in areas that have so far not been able to take advantage of them. Imagine trying to perform remote robotic surgery, for example, on a low speed, high-latency connection -- that would simply never work. As these technologies are more able to be utilized in areas formerly suffering from poor connectivity, the need for these data centers will necessarily expand since people will be storing an increasing amount of newly generated data on them.
Although current speeds of the Starlink network are estimated between 50 Mbps and 150 Mbps, some users are already reporting speeds of up to 300 Mbps. Elon Musk has confirmed via Tweet that these are expected to be normal speeds later this year, once the service has exited beta testing. All of this just adds to the desirability of Google data centers and stresses the Google-Starlink partnership's understanding of the need it's seeking to fill.
Millionacres bottom line
Buying into data centers right now, especially those powered by Google and SpaceX’s Starlink, could be a very forward-thinking move for data center REIT investors. Not only does this partnership aim to fill service voids to ensure that large footprint businesses in areas with poor or no real connectivity are finally serviced by a reliable network, the very nature of it will lead to additional need for data centers, helping to grow the industry and increase the value of those finite spaces in data centers across the globe.
Microsoft has started a similar project with communications company SES. SES’s medium-Earth orbit satellites will provide similar connectivity to Microsoft Azure data centers, but centers and satellites are still under construction, with plans to enter service in the second half of the year. SpaceX also has a deal to grant access to Azure, but just how that will work remains to be seen.
For the moment, Google data centers and their low-Earth orbit SpaceX satellites are already offering these services, as Microsoft waits to go live. This will, at least initially, give Google a pretty large advantage over the Microsoft product that’s yet to even begin testing in real-life environments. Almost certainly, Microsoft will work inevitable bugs out, creating even more demand for data centers as the data space race expands.
Ultimately, data center investors are poised to benefit from Google’s venture into space, as the idea of satellite-connected data centers becomes more the norm than a novelty. Increased access to data streams and tools that rely on them will only increase the need for additional data centers. This is definitely a good time to investigate data center REITs or expand holdings if you’re already an investor.