The competitive advantage of Dutch

Datacenters; Using Porter’s Diamond to analyse the

datacenter industry
Author: Koen Molenaar (s4063589)

Masterthesis Economic Geography

Nijmegen School of Management

Radboud Universiteit Nijmegen

Mei 2014
 RADBOUD UNIVERSITEIT NIJMEGEN

The competitive advantage of Dutch Datacenters

Using Porter’s Diamond to analyse the datacenter industry

Molenaar, K. (Koen)

Supervisor: Arnoud Lagendijk

23-12-2016

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Table of contents
Abstract.......................................................................................................................................6

1. Introduction:........................................................................................................................7

1.2 Relevance and research goals...........................................................................................9

1.3 Subquestions...................................................................................................................10

1.4 Reader’s guide.................................................................................................................12

2. Theoretical framework:........................................................................................................13

2.1 Other frameworks for industrial analysis........................................................................14

2.2 Factor conditions.............................................................................................................14

2.3 Demand conditions.........................................................................................................15

2.4 Related and supporting industries..................................................................................15

2.4.1 Club goods................................................................................................................16

2.5 Firm strategy, structure, and rivalry...............................................................................17

2.5.1 Technology and innovation in Porter’s diamond.....................................................17

2.5.2 Connectivity & economies of scale..............................................................................17

2.5.3 Internal economies of scale......................................................................................18

2.5.4 External economies of scale and first mover advantages........................................18

2.6 Government....................................................................................................................19

2.7 Chance.............................................................................................................................19

2.8 Critiques and discussion..................................................................................................19

2.8.1 Datacenters and cluster forming..............................................................................20

2.8.2 The role of the government.....................................................................................21

2.8.3 Chance and entrepreneurship..................................................................................22

2.9 Conceptual model...........................................................................................................23

2.9 Conclusion.......................................................................................................................25

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3. Methodology.........................................................................................................................26

3.1 Research strategy............................................................................................................27

3.1.1The researchers position within the research...........................................................27

3.1.2 Case selection...........................................................................................................28

3.2 Research material............................................................................................................28

4.2.2 Policy analysis...........................................................................................................28

4.2.3 Interviews.................................................................................................................29

3.2.4 Observations.............................................................................................................30

3.3 Critical reflection.............................................................................................................31

4. The backbone of the internet, the position of datacenters within the digital infrastructure
..................................................................................................................................................32

4.1The role of the datacenter within the digital infrastructure...........................................32

4.2 Datacenter sector; what makes it different from other sectors?...................................34

4.3 Digital infrastructure as a mainport................................................................................34

4.4 The effect oi datacenters on the real economy..............................................................35

4.5 Datacenter sector; a rapidly changing industry, a short insight into global processes
that shape the datacenter landscape:..................................................................................37

4.6 Conclusion.......................................................................................................................38

5. Analyses of the Dutch datacenter business climate.............................................................39

5.1 Early days of the datacenter industry.............................................................................39

5.1.2 Competition from London........................................................................................39

5.2 Important stakeholders in the Dutch digital infrastructure............................................40

5.2.1 Dutch Datacenter Association (DDA).......................................................................40

5.2.2 Netherlands Foreign Investment Agency (NFIA)......................................................40

5.2.3 AMS-IX (Amsterdam Internet Exchange) and NL-IX (Neutral Internet Exchange)...41

5.3 Applying Porter´s diamond to the Dutch datacenter market.........................................41

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 5.4 Factor conditions.............................................................................................................41

5.4.2 Power supply, reliable energy..................................................................................42

5.4.3 Education, high skilled labour availability................................................................42

5.5 Demand conditions.........................................................................................................43

5.6 Firm strategy, structure and rivalry;...............................................................................43

5.7 Related and supporting industries – club goods and IX’s...............................................44

5.7.2 Clustering of datacenters in the Netherlands..........................................................44

5.8 Government - analysis of the main hub policy...............................................................47

6. Comparative analyses...........................................................................................................49

6.1 Iceland & Sweden............................................................................................................49

6.2 Luxembourg.....................................................................................................................50

6.3 Energy prices...................................................................................................................51

7. Factors that play a role for the datacenter climate..............................................................52

7.1 Data privacy as an upcoming concern............................................................................52

7.2 Secrecy and behind the door deals.................................................................................52

7.3 Towards a broader datacenter perspective....................................................................53

7.4 The role of the government............................................................................................54

7.5 The importance of clustering – or can it be explained by the IX’s?................................54

8. Conclusion.............................................................................................................................55

9. Policy recommendations......................................................................................................57

Bibliography..............................................................................................................................58

Appendix I List of indicators......................................................................................................61

Appendix II Interview Maikel Bouricius (Green IT Amsterdam)...............................................65

Appendix III interview transcript Eric van Pelt (NFIA)..............................................................67

Appendix IV interview Job Witteman (AMS-IX).......................................................................75

Appendix V interview Luxembourg (unknown)........................................................................78

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Appendix VI observation ‘Hostingcon Europe Amsterdam´.....................................................79

Appendix VII observation ‘de rol van het lokale datacenter’...................................................79

Appendix VIII observation opening nieuw datacenter (omgeving Haarlem)...........................79

Appendix IX observation World Hosting Days..........................................................................79

Appendix X observation ‘Amsterdam als Digitale Hotspot van Europa’..................................80

Appendix XI observation More-IP – Peering into the future....................................................81

Appendix XII observation ‘Presentatie mainport voorbij RLI’..................................................81

Appendix XIII observation ‘opkomst van het lokale datacenter’.............................................82

Appendix XIV observation ‘Hostingcon Europe Amsterdam’...................................................82

Appendix XV Interviewguide.....................................................................................................83

Appendix XVI: 10 year cost of data centre operations.............................................................85

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Abstract
The digital infrastructure is one of the best performing industries in the Netherlands. With
high grow percentages and a promising future this industry has been designated as the ‘third
mainport’, meaning that there is a relatively large quantity of goods passing considering that
it is in a small country. This research investigates how the datacenter industry gained this
position and whether how they are spatially manifested in the Netherlands. Using Porter’s
diamond for the competitive advantage insights have been given on how the competitive
advantage came to be and what factors play a role. This research aims to give an insight in a
very technological industry from an action based, geographical perspective.

The first and main conclusion is that there is a lack of data, the interviews that have been
conducted have shown strong qualitative arguments but proving them with factual data has
turned out to be almost impossible. In the interviews and existing literature strong
correlations were found, however, data shows the exact opposite correlation. Three
explanations can be given for this gap. The lack of accurate data (1) is caused by the
recentness of this industry’ existence. Furthermore, the diversity in preferences for different
types of datacenter (2) make it hard to generalize everything into one industry. Big financial
investments that have to be made in order to construct and maintain a datacenter make
that the industry is not always transparent (3). Deals are made behind closed doors.

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 1. Introduction:
We work in the cloud, we browse web pages, visit sites and discuss on fora. By using
geographically defined terms we try to make the internet tangible. Society is depending on
the internet, not only do we do our shopping or watch videos, our sewer system is
connected to the internet, our electricity network relies on functioning digital infrastructure.
We heavily rely on a constant flow of information, not just limited to the internet. You could
even argue that the internet should be part of the Maslow’ hierarchy of human needs (van
Mensvoort, personal communication, 19-05,2016). Even though the internet is widely
accepted in society we hardly understand where it comes from. It is just there.

The infrastructure that makes the internet possible consists of many parts. Physical
land cables or sea cables are just one part of the infrastructure that makes communication
possible. Internet Service Providers (ISP’s), Internet Exchanges (IX’s) and datacenters play a
crucial role in the process of data transportation. Together they are called the digital
infrastructure, the backbone of the internet. This backbone is spread across the world,
making some areas better connected than other areas. Allegedly, states have cut off parts of
the internet and made it hard to access all data for some.

There is a hype which followed a longer trend of increasing data flows; the internet of
things. Connecting devices, gathering the data and analyze it to improve processes. From
trees in Amsterdam to wearable devices that monitor your blood pressure. The quantity of
information that is being generated is immense and must be stored somewhere. For this, we
have datacenters, big buildings full of computer equipment. Information gets more compact,
what used to be stored in a giant computer room is now stored on a few servers. However,
the square meters of floor space that is used is still increasing. A consistent, sharp increase,
in datacenter space is expected in the upcoming years.

There is a very strong presence of datacenters in the Netherlands. Together with

other European cities Paris, London and Frankfurt, Amsterdam can be seen as one of the
datacenter capitals of the world. The Dutch digital infrastructure plays a key role in the
internet eco-system of the world. Furthermore, internet exchange AMS-IX (Amsterdam) and
NL-IX (Netherlands) are both amongst the top 10 worldwide internet exchanges (Financieel

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Dagblad, 2015). One reason that has been mentioned is the presence of sea cables, coming
from the U.S. It is very unlikely that this is the only reason, this research will find other
reasons and will explain how the Netherlands has become a key player in the internet eco-
system.

It was only recently (22-9-2016), that insight has been given in the locations of
datacenters in the Netherlands. The map provided by the also relatively young (2 years)
trade organization shows a clear pattern, 65% of the datacenters are in or around
Amsterdam. The other 35% are based in other provinces, near big cities or at universities
where they are being used as supercomputers. Hyper-scale datacenters such as Google’s
newly built datacenter in Delfzijl and Microsoft’s datacenter in Middenmeer are exemplary
of the global presence of the Dutch digital infrastructure. It is no coincidence that the
headquarters of Netflix is in Amsterdam. As of late the Google datacenter is in the news.
Allegedly bribes have been paid for the construction of the datacenter (Financieel Dagblad,
2016).

The recentness of this event demonstrates the speed at which the industry is
developing. Growth numbers higher than 10% a year are not uncommon in the datacenter
industry. To illustrate this growth, last week a new datacenter in Amsterdam was
announced. Not a regular datacenter, a datacenter of 100.000 m 2 (Parool, 2016). For now, it
is not important to discuss the actual size (or implications this will have on the industry) of
this, what matters is how these immense changes affect this research.

It Is no coincidence that most datacenter activity is located near Amsterdam. The

presence of a large internet exchange (AMS-IX) only partly explains this. To fully understand
why Google is located on the outskirts of the Netherlands and thus not being part of the
Amsterdam hub will be researched further.

This research will focus on the datacenter part of the digital infrastructure. To be
more specific; on why the Netherlands has become a leading country regarding internet
traffic and datacenter storage. The primary question of this research will therefore be:

Which processes have made the Netherlands a leading datacenter country and how are
datacenters spatially manifested within the Netherlands?

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1.2 Relevance and research goals
The processes described in the introduction largely cover why this research is relevant for,
on the one hand, society and on the other hand the academic world. The more obvious
reasons are not the only reasons why this research has been conducted. This paragraph will
briefly zoom in on other ways this research is relevant.

As part of the digital infrastructure, datacenters will become increasingly more

important. The storage of data and the connectivity they provide determine accessibility in
the future. The debate about data privacy is lively, being discussed on the international,
national and local level. Who can access this data and under what circumstances can
governments or businesses use the data. This research does not aim to give an answer to
this question. Nevertheless, understanding the industry partly comes forth from this debate.

This research aims to provide insights into the different ways to look at datacenters
and their specific requirements. There is a knowledge gap at the government. Therefore, it
will end with recommendations. How come the Netherlands, as being a small country, plays
such an important role in the internet infrastructure? Furthermore, the policy
recommendations that will be provided in the last part of this research should give handles
for policy makers. To remain one of the leading countries and to understanding the rapidly
changing environment and the effects that come with it.

Furthermore, this research seeks to contribute to the academic debate whereas this
is the first research to combine datacenters and geography. To dive deeper into the how’s
and why’s of the datacenter industry and to add to the debate around the concepts that will
be explained in the second and third chapter.

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1.3 Subquestions
Multiple sub-questions have been setup and they will be presented in this paragraph. The
final goal of this research is to provide policy recommendations for the Dutch government
and related government organizations. These policy recommendations should provide a
guideline on how to maintain (or even improve) the position as one of the world’s leading
datacenter hubs.

The position a datacenter takes in a global, regional or local production network

influences the way policy makers approach the industry. Datacenters may attract other
businesses or can be looked at as a necessary requirement for other economic activity. The
construction of a datacenter, the taxes paid and the jobs they create influence the effort a
government puts in to attract and retain datacenters, hence benefiting the business climate
for datacenters. Moreover, focused activities in a country may explain the relatively high
number of datacenters in that particular case. This is, for instance, the case in Sweden where
datacenters have been built since there was a surplus of power after the steel industry
declined.

If the presence of a datacenter has a rather small effect on the economy, why then
would a government make an effort to attract datacenter? Until recently the government
has made no effort to understand the datacenter industry, A possible explanation could be;
the datacenter industry is relatively new and is characterized by rapid change and
innovation, leaving the government in the dark about their specific needs. The rapid change
of the environment in which datacenters operate could be a reason for governments not to
create policy regarding this.

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 The position of a datacenter within the digital infrastructure may, to some extent,
explain the lack of interest from the Dutch government. Furthermore, the effect of the
digital infrastructure on the ‘real economy’ should be taken into account here. This will be
part of this research for two reasons, [1] to create a better understanding of the position of
datacenters and the way in which they affect their surrounding and [2] to discuss the effect
of datacenters on the economy and possibly explain the attention that has been given from a
political perspective. This will be researched with the following question:

What (global) processes have led to the development of the datacenter industry and what
role do datacenters play in the economy?
To fully comprehend the rise of the datacenter industry the question will zoom out to
depict global trends that influence the datacenter industry. Several of these processes have
been discussed in the introduction. These processes will be discussed briefly whereas they
sketch global trends that do not necessarily affect the competitive position of the Dutch
datacenter industry.

To further investigate the competitive advantage of the Netherlands it is necessary to

understand what factors and processes shape the datacenter landscape in the Netherlands.
First, to understand the variables and second, to see if there are any exceptions. Outliers or
different cases that bias the datacenter landscape. This will be done with the two following
sub-questions:

What variables have made the Netherlands an attractive location for foreign businesses and
how are different types of datacenters spatially dispersed?

It is not obvious that there are no differences within a single country. Possible
patterns of datacenters that can be seen might give new insights into why the Netherlands
has become such a strong hub. Different types of datacenters have different reasons to
invest in different places. The variables depicting those decisions all together form the
landscape and can explain the competitive position. Regional patterns give more explanation
power to the model whereas it is corrected for potential outlier cases and unforeseen
effects.

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To discuss those, several cases on the European level have been selected and will be
researched with the following question:

What insights can other markets give in the determinants of an attractive business climate for
datacenters?

1.4 Reader’s guide

The next chapter will give an overview of the relevant theoretical concepts that will be used
in the analysis. The views of the main authors on competitive advantages will be discussed
as well as the tools they have developed to research this topic in a structured way.

In chapter 3 the methods of this research will be discussed. The way in which the
data is gathered affects the validity and trustworthiness of this research. Where the
theoretical framework provides guidelines for the analyses of the data this chapter will
further explain the consequences and the methods that will be used. Furthermore, it will
zoom in on the different aspects of the data and the role of the researcher within in this
research.

Chapter 4 will discuss the position of datacenters within the digital infrastructure.
Answering the first two sub-questions this chapter provides insights into the business that
goes beyond the datacenters themselves. The global processes that influence the datacenter
industry and effects datacenters have on their surrounding might, to some extent explain
why they are present at certain locations.

The analytical chapter that follows focuses on the Dutch case and an analysis of the
existing policy of the municipality of Amsterdam, the NFIA and other involved actors that
play a role in the datacenter industry. Furthermore, it will investigate how the Dutch hub has
come to be and what makes it different from other countries/hubs. Chapter six will discuss
multiple other European cases: Iceland, Sweden and Luxembourg. This comparative analysis
will be carried out to further investigate what factors are important in the datacenter
business climate. The final chapter will provide concluding remarks on the datacenter
business climate followed by policy recommendations.

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2. Theoretical framework:
In the theoretical framework, several terms will be explained. Terms that will be used will
close the gap between datacenter terminology on the one hand and economic geography
terms on the other hand. The main purpose of this chapter is to provide a framework from
where an analysis can be made of why the Netherlands has become a key player in the
worldwide digital infrastructure. Location factors play a key role in this process and will
hopefully provide a better understanding of the competitive position of the datacenter
industry. A good starting point is Porter’s Diamond of national advantage. This research will
mainly focus on particular parts of the diamond, parts where the datacenter market
distinguishes itself from other markets. By doing so this research seeks to offer new insights
in this theory for a particular field. Furthermore, it hopes to provide policy recommendations
for local, regional and national governments.

Figure 1, Porter’s diamond

Porter’s diamond is used mostly to compare the competitive advantage of nations.

However; it can also be used for narrowly defined industries or even particular industry
segments (Porter, 1998). In this case, we talk about the competitive advantage of a set of
firms or industries rather than a comparative advantage (Wagner, 2003, p. 16). The
comparative advantage of a country can be seen as the result of singular advantages from
multiple industry segments. There are two types of advantages; industry specific advantages

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for a country and generic advantages which a country has. These generic factors play a role,
will be discussed but will not be thoroughly examined even though they play an important
role in the business climate of the Netherlands. This will be done under the assumption that
the countries which will be used for the comparative chapter do not differ too much from
one another. Mehrizi and Pakneiat (2008, p. 86) found these generic factors one of the most
important factors while trying to explain the Telecom sector in Iran, since they are extremely
relevant in developing countries.

2.1 Other frameworks for industrial analysis

Porter’s diamond is not the only framework to analyse spatial patterns and
competitive advantages. For instance, Mehrizi and Pakneiat (2008) have compared Porter’s
diamond to a sectoral innovation system (SIS). SIS focuses on the innovation process and
competence building. Something which is not taken into account in Porter’s diamond. They
conclude that the diamond model is inappropriate to analyze sectors in developing countries
for multiple reasons (Mehrizi & Pakneiat, 2008, p.84). They conclude their research by
stating the following (p.84):

‘The diamond model is more suitable for analyzing production-related and market-
intensive aspects of sectoral development which are more the case in short run’

The context in which developments take place influence the outcome of this
research. There have been moderations to Porter’s diamond which will be discussed in the
last part of this theoretical framework. The notion that Porter’s diamond is more viable for
advantages on the short run is discussed there. Therefore, this will be an important part of
the methodology and analysis later in this research. Before bringing up other critiques it is
important to understand the aspects of the diamond to their fullest extent.

2.2 Factor conditions

Porter (1990. P. 77) divides factor conditions into two types, basic factors, and
advanced factors. Resources, both human and physical, infrastructure and capital resources
are all considered factor conditions. Infrastructure includes both physical infrastructure and
regulatory infrastructure, this regulatory infrastructure includes government policies and
programs (Ozgen, 2011). For this research, a broad definition of government policies will be

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used. Another factor condition is the availability of financing [ CITATION Kul98 \l 1043 ].
Therefore we will also take a look at companies affiliated with the government.

As stated before this research will make a distinction between generic factors and
industry specific factors. These industry specific advantages are for instance; highly skilled
(specialized) personal, digital infrastructure, climate and the availability of (green) energy. Of
course this is preliminary and these industry specific (mostly advanced) factors will be
discussed in the following chapters.

2.3 Demand conditions

The quality of the demand is more important than the quantity. If the quality of the demand
is high the products have to be more innovative hence the competitiveness of the country
becomes higher. Demanding home buyers lead to product innovation and create
technological advantages over other countries or industries. Insufficient demand from the
domestic buyers forces businesses to improve technologically thus creating a competitive
advantage over other nations. A change in demand can heavily influence an industry. If
demand drops an industry has to adapt and find new ways to make money.

2.4 Related and supporting industries

Moon et al (1998) describe related and supporting industries as following:

‘Related and supporting industries are those whereby firms coordinate or share activities in
the value chain or those which involve products that are complementary to the firms of a
given nation.’

These supporting industries have to be in reach for the sector. They provide complementary
services, technological advantages, buyers information or anything you can think of which
may help the industry to gain a competitive advantage. One type of good which is of
particular interest for this research are public goods; to be more specific, club goods. They
provide network opportunities for existing and new businesses. The concept of club goods,
as well as their effect, will be explained below.

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2.4.1 Club goods
The underlying theory for club goods is club theory. Club theory examines club goods in
economics and was first mentioned in the work of Pigou (1920) on tolls for congested roads.
Club theory is predicated on groups creating utility through exclusive collective
action[ CITATION Bru08 \l 1033 ]. Club goods are a subtype of public goods, excludable but
not rivalrous (Cornes & Todd, 1980). They are only accessible by members of a club, these
members must have chosen to become part of the club voluntarily and have the right to
leave the club if they wish to do so. Economists generally define clubs as voluntary groups in
which two or more individuals cooperate in order to create a commonly shared good
[ CITATION Bru08 \l 1033 ]. Furthermore, access to club goods could be denied if a party
chooses not to participate in the club. This is a very strict definition of club goods. [ CITATION
Ols65 \l 1033 ] states that clubs are set up in order to: ‘exploit economies of scale and to
share public goods’.

A less strict, and more often used definition for club goods targets a specific type of
good only beneficial for a specific branch. Those include; specific education, news websites
for a particular field and trade organizations. A good can only be non-rivalrous when there is
no congestion. As soon as congestion occurs the goods become challenged. This can, for
instance, occur at high-end job seekers that provide special services.

One of the main issues of clubs is, when the extra value is created in the form of club
goods, that not all members contribute for the greater cause. Some just take advantage of
what the others have created, this is the free rider problem. The free rider is an agent
gaining from the opportunities created by the other members without contributing. Weak
exclusion criteria might lead to free rider behaviour. As a special private benefit deriving
value, in part, from the fact that nonparticipants are excluded [ CITATION Bru08 \l 1033 ].

Club goods are generally seen as one of the reasons for a business to start in a
specific area. It influences the decision-making process. By allowing members to draw from
one another’s characteristics, clubs create private benefits for members. This research will
examine whether club goods also play a role in the competitive position of datacenters.

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2.5 Firm strategy, structure, and rivalry

2.5.1 Technology and innovation in Porter’s diamond

Innovation processes do not play a central role in Porter’s diamond. For that other
models provide a better framework. However, Porter does argue that when there are more
firms, geographically close together, the more rivalry there would be hence resulting in more
innovation and a better competitive position. The higher the rivalry, the better (Mehrizi &
Pakneiat, 2008).

Technological change may, according to Krugman et al (1993), lead to an effect called

leapfrogging. The technological advantage gained in country A will be diminished if country B
adopts the new technology to further improve its industry. The costs and even more
important, the gains in country B will be higher than in country A, leading to a relative
advantage over time. An underlying assumption in this model is that the new technology
does not look appealing for country A in the beginning. Besides, the nation that is lagging
behind will have relatively low wages for this industry, the combination of lower wages and
better technology improves the relative position of country B (Krugman et al, 1993). This is in
contrast with external economies of scale where the advantage of country A will become
bigger over a given period of time. There is a divergence between countries.

2.5.2 Connectivity & economies of scale

Datacenters are, as discussed in the chapter before part of a larger network. Datacenters are
connecting to other datacenters and modes of the internet. This happens in the so-called
‘meet me’ room, the place where the cables enter the datacenter. By connecting to other
datacenters and nodes of the internet higher connectivity can be reached. The speed of a
connection is (besides many other factors) also depends on distance. A connection will get
slower when further apart. Even though we are talking about milliseconds this might be a
reason to locate IT in a particular datacenter. By clustering, datacenters gain benefits that
are otherwise not there. AMS-IX (Amsterdam Internet Exchange) is one of the most
important international hubs. Together with London and Frankfurt these places are of
outmost importance for the digital infrastructure in Europe. A datacenter is a hub with
multiple connections to the internet [ CITATION Dut16 \l 1043 ]. Usually a large datacenter
has more of those connections making it more connected. Even though we are talking about

17
milliseconds this latency is important for datacenters and might be an important factor
when it comes to site selection. There is an important distinction that can be made while
further researching economies of scale; internal and external economies of scale. Both
decrease marginal costs of production but in a different way. This will be explained below.

2.5.3 Internal economies of scale

Datacenters are more efficient when they are big. They can cut in power costs, building costs
and cooling can be more efficient. Expensive equipment to ensure uptime can be purchased
if a datacenters is larger. Internal economies of scale decrease the marginal costs of
production. This can be achieved by better production processes. In case of datacenters
think about cooling, technological advantages or higher skilled employees.

Other internal economies of scale that one could think of are large purchase
discounts and cuts in administration costs. Larger companies with bigger scale effects might
have more efficient funds for R&D and thus be more innovative[ CITATION Kle97 \l 1043 ].
Another effect which should be taken into account is the learning-by-doing effect. Failures
and successes help actors to understand the things they are doing now and should do in the
future. Learning by doing can make processes more efficient [ CITATION Bos12 \l 1043 ].

2.5.4 External economies of scale and first mover advantages

The Dutch datacenter industry is acknowledged to be one of the leading countries industries
in the world. External economies of scale can be gained as the result of growth in the
industry where the business is active. This can, for example, be the existence of a trade
organization, a wide range of experts that can provide specific information. Another
important factor that will be discussed and taken into account in this research is the role of
reputation. The reputation of an industry has an effect on the way a sector is viewed. If there
is a positive reputation this might lead to more investments. Another example is the
negotiation of discounts considering high volume trades. This would be if more than
business is involved, otherwise, it will be internal economies of scale.

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2.6 Government
The government has two important components in the original form of Porter’s diamond.
First, the government has to be a stable factor. A stable government lowers the risk for a
business to invest in a country, in other words, there is less risk when it is foreseeable how
the government will behave when certain changes occur.

The second component is the enhancement of factors. By investing the government

can create a better business climate for companies to investment and therefore gaining a
competitive advantage.

It must be noted however that the role of the government part of the diamond is
heavily discussed in the academic debate. This debate is very relevant for this research since
the problems that have been addressed in the introduction might very well have to do with
the role of the government. Therefore, in paragraph 2.8.2 this discussion will be analyzed.

2.7 Chance
Chance is an external determinant, chance events just happen (Jin and Moon, 2006). An
economic crisis, for instance, can influence the competitive position of a country or industry.
Incremental inventions, as well as industry-changing innovations, also belong to this
particular part of the diamond.

2.8 Critiques and discussion

One of the arguments against Porter’s Diamond is his focus on the ‘home
base’(Moon et al, 1998). Porter uses the country of origin of the company is the reason to
explain the investment climate. Therefore some industry can not be explained. For instance
the competitiveness of small countries such as Korea (Moon et al, 1998) or export-oriented
industries such as the dairy industry from New Zealand [ CITATION Car93 \l 1043 ]. In order
to solve this issue, Rugman and D’Cruz created a double diamond model, taking into account
diamonds of other countries, becoming globally competitive (Rugman & D’Cruz, 1993). By
addressing foreign location factors the general level of competitiveness of, for instance,
Canada can be better explained.

19
 This does however not explain the competitive position of small countries such as
Korea and Singapore. By further examining the domestic demand it is not logical that these
countries are considered as a hub. Moon et al (1998) have thus created a generalized double
diamond, incorporating multinational activity into the model. This includes demand from
foreign actors hence it can explain the situation of Singapore and Korea. This could also be
the case for many European countries where demand is not solely based on domestic
income but where export and import play a significant role.

2.8.1 Datacenters and cluster forming

The determinants of Porter’s diamond create industry clusters and impact new business
ventures (Lehtinen, Poikela, Pongracz, 2006). Their research was carried out in Finland,
examining environmental businesses. Of course this is a difference, however, as will be
discussed below there are good arguments to believe datacenter clusters have the same
effect. Porter argues that the elements of the Diamond are strongest within clusters.

Porter (2000) defines clusters as following:

“Clusters are geographic concentrations of interconnected companies, specialized suppliers,

service providers, firms in related industries, and associated institutions (e.g., universities,
standards agencies, trade associations) in a particular field that compete but also
cooperate.”

Networks of experts and specialized suppliers are extremely important, they provide
advanced equipment and generate high-end knowledge. Clusters have multiple advantages.
One of them is described by (Pike et al. 2006, p.110):

“Successful cluster can forge ‘first mover’ advantages and benefit from externalities and
increase returns to establish their competitive advantage at the expense of other localities
and regions”

The first mover advantages are closely tied to piloting and knowledge transfer. Best practices
can be shared within the cluster. This is in line with the argument by the Dutch government;
to boost innovation and create an extra advantage for the digital infrastructure. The
geographic concentration of industry cluster helps ease technology transfer and innovation
[ CITATION Jus06 \l 1033 ]. The accessibility to social capital and networks create favourable

20
conditions for the exchange of knowledge and creation of new knowledge which help in
recognition of opportunities (Ozgen, 2011).

2.8.2 The role of the government

Another, widely criticized aspect of the diamond is the role of the government. Rugman and
Verbeke (1990) have argued that the government factor is valuable whereas it influences a
nation’s competitive advantage directly. Especially when they pursue interventionist trade
and industrial strategies as has happened in, for instance, South Korea. Hence they argue in
favour of adding government policy to Porter’s diamond. Porter has developed a hypothesis
concerning government policy.

Porter’s hypothesis predicts that environmental regulations can stimulate innovation

in a sector. Porter & van der Linde (1995) describe the way of thinking before Porter’s
hypothesis as following:

‘In this static world, where firms have already made their cost-minimizing choices,
environmental regulation inevitably raises costs and will tend to reduce the market share of
domestic companies on global markets’.

Porter’s hypothesis predicts that when the strict policy is created it may affect
businesses in the short term, leading to innovation, generating a technological advantage for
the sector [ CITATION Moh01 \l 1043 ]. This innovation may lead to an early mover
advantage as discussed in the paragraph above. Most work on Porter’s hypothesis has been
conducted in the field of environmental studies. However, it is also applicable if we look at
the datacenter industry, more on this topic will be explained in the fourth chapter where
general knowledge about the industry will be given.

The main critique on Porter’s hypothesis is the assumption that businesses do not
see opportunities to innovate themselves (Wagner, 2003, p. 6). If it would increase their
competitive advantage in the long run, why not act on it?

21
2.8.3 Chance and entrepreneurship
Businesses are profit driven entities, therefore entrepreneurs seeking profit
maximization are present. They seek or find markets which are not yet in equilibrium but
where demand is higher than supply. ‘An entrepreneurial opportunity is a market
imperfection that can be exploited bringing the market to equilibrium’ [ CITATION Kir97 \l
1033 ]. Those who want to open a datacenter have to spend a relatively large amount of
money. Besides, it takes around 2 years for the construction to be finished and the get the
datacenter operational. This is the moment where a datacenter can start finding customers,
the market demands a quick response. However, if things are not going as expected and the
demand is lower than the supply the datacenter needs to remain operational. The full
datacenter, this includes the power costs. This financing might play an extremely important
part in the decision-making process of datacenters and will, therefore, be further analyzed in
the following chapters.

22
2.9 Conceptual model
The information and the concepts that have been given above form a conceptual
framework.

Figure 2. conceptual model

The arrows in the conceptual model indicate the following relationships:

(1) The economic impact datacenters have will influence the attitude of the government. If
the economic impact is high, the attitude of the government will be positive.
(2) A positive attitude is beneficial for the competitive position of the Dutch datacenter
industry.
(3) The spatial manifestation of datacenters influences the competitive position of the Dutch
datacenter industry.
(4) Regional processes influence the way datacenters are spread across the Netherlands.
These regional processes are, for instance, ground prices, energy prices and availability of
green energy.

23
(5) The presence of a functioning digital infrastructure has a positive influence on the overall
economy. Not only a direct impact (jobs, taxes etcetera) but also the indirect impact by
attracting related businesses. These effects will be discussed in the fourth chapter.
(6) Datacenters are spatially manifested in both the Netherlands and in Europe. The spatial
manifestation in Europe influences the competitive position of the Netherlands as a
worldwide hub. The exact relation will be explained further on in this research, a
comparative analysis will be made in chapter six.
(7) Regional processes influence both the national and international manifestation of
datacenters. Processes involving law and data privacy heavily affect the datacenter industry
(8) Not only regional processes play a role, international processes influence the spatial
manifestation within Europe. Increasing dataflows are not regional but should be looked at
from an international perspective.
(9) They not only influence the European manifestation. By being one of the leading
datacenter hubs global processes directly impact the national ecosystem. One could even
argue that discourse changes on the national level influence international processes. This,
however, needs more argumentation which will be given in chapter five.

24
2.9 Conclusion
The different aspects of Porter’s diamond all influence the competitive position of a nation.
It can be seen as an accumulation of different industries. The abovementioned critiques do
not outweigh the advantages Porter’s diamond has over other theoretical frameworks to
measure the competitive advantage of an industry or nation. The theoretical concepts that
have been presented offer a framework to answer the sub-questions and the primary
questions that have been posed.

As shown in the conceptual framework there are, hypothetically speaking, causal

relations between factors. It is, therefore, crucial to understand that outcomes in one area
might correlate (one could argue that there is a causal relation between certain parts) with
one another. Therefore, it has been made observable what factors play a role in this
research. The indicators and the way they will be measured are shown in Appendix I.

The policy recommendations in the final part of this thesis have two goals. First, to
optimize the behaviour of the government concerning regulations and second; to see
whether the government should have a role in determining and possibly influencing the
chance (and of course the more obvious government) part of the diamond. The next
paragraphs will explain the relevant variables and how they will be measured to achieve
abovementioned goals. They are based on the theoretical concepts that were described
earlier. Furthermore, explorative interviews have been held to gain a better understanding
of the different factors that are relevant for the datacenter industry.

It is not possible to ‘measure’ all relevant indicators. Some are qualitative, some are
based on stories that cannot be proven by hard data. This critique and other side notes will
be discussed in the methodological chapter following the indicators. All indicators are
discussed briefly. In the following chapters, it should become clear why these factors will be
taken into account and in what ways they affect the main question. Especially the fourth
chapter should create a better understanding of the datacenter industry. The next chapter
will discuss methodological considerations that have been made throughout the course of
this research.

25
3. Methodology:

This chapter explains why certain choices have been made and how they have affected the
research. Information will be gathered through multiple channels namely; interviews with
experts, policy study, literature study and observations. All these types of data will be briefly
discussed in the second part of this chapter as the research material.

Throughout this chapter validity and trustworthiness of the research will play a
central role. First and foremost, reflecting on the data gathering process. The first thing that
will be discussed in this chapter is the role of the researcher, how does the researcher
potentially influence the outcomes of the research? One of the research questions seeks to
gain knowledge from a comparison between countries, therefore the case selection
procedure will be explained. Finally, there will be a critical reflection on the gathered
material and the effects this has had on the trustworthiness and validity of this research.

For this research, there will be no survey carried out. Response rates in the
datacenter industry are low and trade organizations and other actors have an exceptionally
clear view of what is happening in the datacenter industry (Grove, personal communication,
12-02-2016).

This research has been carried out in 2016. To be more precise, the data gathering
was from January until October. One conclusion is that there is a lack of data about
datacenters. The director of the trade organization for datacenters (Dutch Datacenter
Association) has stated the same (Grove, personal communication, 10-02-2016). Besides
several qualitative reports, there is no database containing information about where
datacenter customers come from, how much capacity datacenters have or even more
general data, how much income is generated from the datacenter industry. The recentness
of the industry is an explanation. The Dutch bureau of statistics (CBS) does not have a code
for the datacenter industry. The code ‘registrar’ is too generic and includes all those that
register domains hence it is not a good measure. Another reason for this lack of data is the
unfamiliarity with the industry. To have at least some understanding of technical details
behind the processes that take place can be a solution. At this very moment, the CBS is
working on a special code for datacenters, this was initiated by the DDA. The consequences
of this ‘missing’ data will be discussed in the critical reflection.

26
3.1 Research strategy
In optimal situations gathered data will be checked by comparing it to three other sources;
data triangulation. Unfortunately, this is not always possible, therefore the implications this
has on this research will be discussed below.

3.1.1The researchers position within the research

There are positions from where a researcher can do his or her research. The background of
the researcher as well as their position during interviews and observations affect the
outcome of the gathered data. Creswell (2013), describes five different ways in which a
researcher can be involved. The researcher can be a: ‘complete participant’, ‘participant as
observer’, ‘observer as participant’ or ‘complete participant’. For this research, I am doing
my internship at ISPConnect, the Dutch trade organization for internet service providers
(ISP’s). All Dutch trade organizations involved in the digital infrastructure are part of a
national organization called DINL (Digitale INfrastructuur Nederland). They cooperate to
organize events, are responsible for representation in The Hague and bring together people
with shared interests. Therefore, the researcher can be seen as completely involved in the
industry in which this research will be conducted. However, the trade organization for
internet service providers does not have mutual interests with the datacenter industry. ISP’s
may be the customers of datacenters and therefore work together as part of the digital
infrastructure but they have different interests in many other regards. Before every
interview, it will be clearly stated that the research is intended for research purposes only.
Furthermore, interviewees will be asked whether data can be published and if preferred, the
name of the interviewee can be removed. An important note that should be made here is
that the industry is small, actors are well-connected and aware of the industry in which they
work. It might not be possible to make gathered data ‘untraceable’.

The position of the researcher can be linked to action research, actively being
involved in the population that is being researched. ‘To actively engage and benefit groups
outside academia’ (Wynne-Jones et al, 2015). Morely (1983) recognized the potential of this
approach. ‘To exchange between geographical theory and method and multi-organizational
problem domains that ultimately constitute the open environmental systems framing all
human geographical research’ (Morely, 1983). One of the aims of this research is to

27
contribute to the debate evolving around action research as a geographical theory and
practice. Indirectly, by carrying out this research with this approach.

3.1.2 Case selection

Three cases have been selected to further explore why datacenters have chosen the
Netherlands. The cases will be selected based on their availability and their position within
the network of datacenters. Ideally, they provide new insights in the way the datacenter
industry has become so present in certain places. Therefore, these cases are preferentially
outlier cases, generating new information about specific location factors, argued from a
qualitative perspective.

3.2 Research material

The research material consists of; (1) existing literature, (2) policy created by Dutch and
foreign actors, (3) interviews with experts and (4) observations in the field. This research will
also use secondary datasets whenever possible, a short note on this and the lack of survey
data will be presented in the last part of this chapter. A list of indicators, based on Porter’s
diamond, is shown in appendix I.

3.2.1 Literature study

A literature study will be carried out to find out what research has already been done and
how different theories relate. The goal of the theoretical framework is to make clear why
and how geographical concepts play a role.

4.2.2 Policy analysis

This research will analyze Dutch and foreign policy. Furthermore, it will analyse business
plans and websites to develop a cohesive understanding of datacenter investments. Besides
these national policies, the policy of relevant organizations will be analysed. These include
companies such as the Netherlands Foreign Investment Agency, InvestInHolland, Schiphol
Group and AMS-IX. These are different organizations with different interests. This will be
done wherever possible, not all organizations have a written policy document. Some only
have an invisible set of rules and others have not written things down since the industry is
changing rapidly. The lack of knowledge from the government side might also be a cause of
this. More about this in the analyses of the Dutch digital main hub policy.

28
 By investing and comparing different policies from related industries it should
become clear what certain organizations offer for the datacenter market. The related and
supporting industries are pointed out by Porter (1995) as one of the factor conditions.
Furthermore, they might contain interesting arguments as for why datacenter are present at
certain locations.

4.2.3 Interviews
Interviews were held with fully personalized interview guides. The interviews are semi-
structured to provide enough space for discussion for the interview partner. A first,
explorative, interview has been conducted with Stijn Grove, director of the Dutch Datacenter
Association. This interview has given insights into the most dominant factors that have
contributed to the Dutch datacenter climate.

Most interviews have been held on a non-official basis. Some phrases have been
anonymised. Throughout the course of this research the researcher has visited many events
where datacenter topics were discussed. These will be discussed in the next paragraph.
However, some crucial information has been gained during presentations and general
knowledge from within the industry has been put on paper in this research. One anonymous
interview is listed below, this person has agreed to have the interview recorded but has later
withdrawn his/her approval.

Table 1, interviews

Name Date Organization Appendix

Stijn Grove 10-02- Dutch Datacenter Association (DDA) II
2016
Maikel Bouricius 26-04- Green IT Amsterdam II
2016
Eric van Pelt 27-04- Netherlands Foreign Investment III
2016 Agency (NFIA)
Job WItteman 21-06- Amsterdam Internet Exchange IV
2016 (AMS-IX)
Anonymous - A leading telecom company V

3.2.4 Observations
Observations have been made throughout the course of writing this thesis. Most of the time
in informal settings. Conversations at the events have not been recorded. In order to fully

29
understand the industry, the researcher has to become part of the industry. Multiple events
have been visited to gain a better understanding of the industry. As stated before the
researcher is working in the field and has daily contacts with the people working in the
industry. The observations are listed below. Short summaries of the content are in the
appendices.

Name Date Organization Appendix

Hostingcon Amsterdam 1-10-2015 HostingCon VI
Europe
De rol van het lokale 10-02-2016 EvoSwitch VII
datacenter
Opening nieuw 26-04-2016 Green IT Amsterdam VIII
datacenter (omgeving
Haarlem
World Hosting Days 14-03-2016 WHD.global IX
-18-03-2016
Amsterdam als digitale 27-04-2016 Netherlands Foreign X
hotspot van Europa Investment Agency (NFIA)
More-IP Peering into the 19-05-2016 Amsterdam Internet XI
future Exchange (AMS-IX)
Presentatie mainport 01-07-2016 RLT XII
voorbij RLT
Opkomst van het lokale 22-09-2016 Twin Datacenter Arnhem & XIII
datacenter ISPConnect
Hostingcon Europe 12&13–11- HostingCon XIV
Amsterdam 2016
Table 2, events

Finally, this research has been presented in a preliminary phase at an event where the rise of
the proximity datacenter was discussed. The feedback from the present datacenter
professionals has been considered in this research.

3.3 Critical reflection

In optimal situations gathered data is checked by triangulation, getting the same result from
three different sources. However, constraints by time and means limit the ability to do that.
As discussed in the previous paragraph there is a lack of ‘hard’ facts about the datacenter
industry. That research that has been previously conducted is mainly carried out by
consultancy agencies that do not share their sources. This lack of data can partially be

30
addressed to a lack of understanding at the relevant actors and the recentness of this
industry becoming mainstream and relevant.

With hindsight, this research should have been carried out in a later stage. The data
that was lacking at first has become available in the final weeks of this research. This rapid
change will continue and offers opportunities for researchers. Therefore, the
recommendations that are focused on further research are extra valuable. They will be given
at the end of this research.

31
4. The backbone of the internet, the position of datacenters within the
digital infrastructure
So what exactly is the role of datacenters within the digital infrastructure and even more
important; what is the effect of the digital infrastructure on the ‘real’ economy? As stated
before the digital infrastructure can be considered as the third mainport of the Netherlands.
The effect datacenters have on the economy can, as hypothesized, explain the business
climate in the Netherlands. By answering this question, it should be clear what the added
value of datacenters is for society and what their functionality is. The outline of this chapter
will be as following; first, the role of datacenters within the digital infrastructure will be
provided. Second, an exact definition of the principle of ‘mainport’ will be given. Why did the
Dutch government decide to make internet infrastructure the third mainport. What
implications does this have for policy and the future perspective. The last part of this chapter
will give the possible effects datacenters have on the real economy.

4.1The role of the datacenter within the digital infrastructure

In order to understand the effect of a datacenter on the real economy, it is crucial to get
clear what role a datacenters plays in the digital infrastructure. The decision by the
government to make the digital infrastructure the third main hub does have an effect on
datacenters but it might not be direct. “The Dutch Digital Infrastructure is part of a global
backbone for delivering digital services to enterprises and consumers on a variety of devices”
(Deloitte, 2014). This digital infrastructure is the backbone of the real economy and plays a
part in internal and external business processes. The role of the datacenter within the digital
infrastructure can be described as following [ CITATION Sti15 \l 1043 ]:

“Together with internet-exchanges, connectivity providers, hosting and internetservice

providers datacenters form the digital infrastructure”

However, datacenters are not all the same. Authors use different distinction criteria to set
up a categorization for datacenters. Lesser (2012) makes a distinction between four types of
datacenters;

- public cloud providers (Amazon, Google)

- scientific computing centers (national laboratories)

32
- co-location centers (private ‘clouds’ where servers are housed together)

- ‘in-house’ datacenters (facilities owned and operated by company using the servers)

The type of datacenters influences the position within the digital infrastructure. In recent
years, there has been a shift towards different types of data storage. If we believe the news
articles that are written and the ad campaigns, we see on the internet the in-house
datacenters are disappearing and the public cloud providers flourish. This shift towards more
cloud-oriented structures will be discussed in paragraph 2.6. Another fascinating thing is
happening, we see a rise in the use of local datacenters. The so-called proximity datacenter.
Datacenters near the core business facility, preferably in the region. This is not necessarily
the cheapest solution but we can certainly speak about ‘the rise of the proximity
datacenter’.

Two types of datacenters are of particular interest for this research, the public cloud
providers datacenters and the co-location (colo) datacenters. These are chosen for multiple
reasons. Public cloud providers build large datacenters, the larger the better, on locations
which are the cheapest and well connected, their investment behaviour strongly differs from
the other types of datacenter. They have special needs and are responsible for a large part
of the infrastructure. Furthermore, they will play a key role in the shift towards the cloud
and are relatively footloose when it comes to site selection and are looking to maximize
profits and cut costs where possible.

Colo datacenters are multi-tenant and offer infrastructure space for all those in need.
Small size businesses, medium size, and enterprise businesses are all welcome to host their
infrastructure and put their servers in the datacenter. Colo datacenters offer a different level
of services, from just providing space to managed hosting. It is this type of datacenter where
we can see the most rapid changes. From simple Infrastructure as a service (IaaS) to
managed hosting where the customer has outsourced the entire node of the production
network to the datacenter.

33
4.2 Datacenter sector; what makes it different from other sectors?
An important part of Porter´s diamond is the structure of the market. Demand conditions
are seen as a separate factor and rivalry is part of the more strategic side of the diamond.
Specific players (i.e. rivalry) however will not be part of this. By describing common
processes for this particular industry an understanding will be created on how it differs from
other sectors for which Porter´s diamond is relevant. However, this paragraph will describe
the status of the datacenter industry and the differences with other sectors. The datacenter
market in Europe evolves mostly around 4 clusters, Frankfurt, London, Amsterdam and Paris
(FLAP).

4.3 Digital infrastructure as a mainport

The digital infrastructure of the Netherlands has been selected as the third mainport after
Schiphol and Rotterdam. Deloitte (2013) describes a mainport as following:

“First, they have a direct impact on the economy, for instance through the employment of
people working at the container terminals in Rotterdam or at Schiphol airport. In addition,
there is also an indirect effect as these mainports attract various economic activities for
which the presence of the mainport is conditional. The ecosystem of economic activities
related to a mainport is a source of entrepreneurship and creativity.”

By selecting the Dutch infrastructure as the third mainport the Dutch government
acknowledges the importance. There will be special conditions linked to this. Innovation will
be boosted and there might be more space for pilots and tests financed (partly) by
government bodies. This research will try to find out what these effects really are. However,
this change in policy is very recent and effects might be part of a longer-term discourse. The
policy document by the government states the following:

“samen met relevante belanghebbenden een economische visie te ontwikkelen om de positie

van de digitale mainport te versterken; • en te investeren in de uitvoering van die visie”

What this exactly entangles and who those stakeholders are will be analysed thoroughly in
the next chapter.

34
4.4 The effect oi datacenters on the real economy
Many consultancy bureaus have calculated the potential gains for companies when they
move their hardware to a datacenter. However, little research has been done to estimate
the effect of the datacenter itself on the economy. Due to multiplier effects this is hard to
do. This paragraph will mostly draw from work conducted in Sweden where an extensive
analysis has been made of a Facebook datacenter.

Lenio (2015) created an overview of potential gains for the real economy from the
construction and operations of a datacenter (shown in table 1 on the next page). Since he
did this for the U.S. market there is a slight difference with the Dutch, or European, market.
The U.S. version makes a distinction at the state level and local level.

Revenue at the state level: Revenue at the community level:

Sales taxes on construction materials Sales taxes on construction materials

Sales/use taxes on equipment purchases Sales/use taxes on equipment purchases
Sales taxes or franchise fees on power Sales taxes or franchise fees on power
consumption consumption
Personal income taxes from construction Local income taxes from construction and
and permanent jobs permanent jobs

Unemployment taxes from construction Real estate taxes on a newly constructed

and permanent or renovated building
Personal property taxes on computer
servers and furniture
Table 3 Income generation from datacenters (Lenio, 2015)

These are all short-term, direct effects of the opening of a datacenter. There are also longer
term effects which should be accounted for. Keep in mind that datacenters are part of a
larger infrastructure and a necessary tool for many businesses in their daily operations. They
provide the infrastructure which allows other businesses to develop and therefore play a key
role. They can also uplift real estate prices and the surrounding area [ CITATION Sha07 \l
1043 ].

The effect of a datacenter on the real economy has been researched before. Two
datacenters have been extensively researched in earlier work. One datacenter in Lenoir
35
(North Carolina, USA) and a datacenter in Luleå (Sweden). The results of those case studies
will be discussed and analyzed in chapter 5. The analysis will also include a case study from
the Netherlands. These two cases are characterized whereas they replaced a declined or
declining former industry. In the case of Lenoir the furniture industry [ CITATION Ric07 \l
1043 ] and in the case of Luleå the former metal industry. The consequence of this is a
power grid which is useful for datacenters. Nevertheless, the are also other factors which
might contribute to the popularity of these two regions. Therefore an analysis of these
regions will create a better understanding of this research.

By researching the effect that a datacenter has on the real economy, an analysis can
be made on whether or not this is part of the decision-making process of governments to
create a policy to attract or retain datacenters. The next chapter will focus on the linkages
between datacenters and geographical concepts.

36
4.5 Datacenter sector; a rapidly changing industry, a short insight into global
processes that shape the datacenter landscape:
30 years ago, there were no colocation datacenters, only in-house datacenters. Nowadays,
there is a (some argue rapid) shift towards the cloud. There are multiple forms of data
storage in the cloud; public cloud, private cloud, and hybrid cloud. All of them require the
storage of data in datacenters or other locations. Important here is that the hybrid cloud
requires a constant connection between data in different places. For private cloud, a
business only needs a fraction of this connectivity.

Larger amounts of data are transferred every day. Streaming services such as
YouTube (Google) and Netflix require a high speed, constant connection. Preferably located
as near as possible to the end user. This gives local datacenters the opportunity to become
involved, get more direct links to the digital economy and become hyper-relevant. The rise
of the proximity datacenters is a key subject throughout this research and will be explained
further in the analytical chapters.

Another upcoming issue is the storage of data and the privacy consequences. The
storage of data in the cloud is still housed within a datacenter. Governments order
businesses to store the data on known locations. The exit of the United Kingdom from the
European Union might offer a new opportunity taking this process into account.

37
4.6 Conclusion
The main goal of this chapter was to give an insight into the datacenter industry and the role
datacenters play as part of the digital economy. The subquestion is:
What (global) processes have led to the development of the datacenter industry and what
role do datacenters play in the economy?
Multiple regional and global processes have been discussed. Afterward, several processes
that are likely to occur in the future have been highlighted. The effects of datacenters are
hard to measure. Their direct effect is not as large as one would expect to look at the
investment. Indirect effects, however, should be considered when addressing the business
climate and incentives to attract the datacenter industry.

38
5. Analyses of the Dutch datacenter business climate
This chapter will describe the Dutch datacenter industry and the actors that play a key role in
creating it. How did the datacenter industry become so important for the Netherlands?
What is the importance of the organizations that are becoming more mature for the
datacenter industry? Furthermore, an analysis will be made of important factors that have
or will play a role in the attracting of foreign capital and influence the digital infrastructure.

A distinction can be made between two types of factors that play a role in investment
climate of datacenters; generic and sector specific factors. The generic factors are applicable
for an entire country or region whereas the sector specific factors only play a role for the
datacenter industry. This research will take into account the first type of factors. However,
the focus will lie upon the specific factors that apply within a region or country.

5.1 Early days of the datacenter industry

The datacenter industry is relatively new, it only exists for about 30 years. Before it was
common to have the IT equipment on premise, at the company site. These so-called in-
house datacenters still play a role in the datacenter landscape. Not all businesses have
moved their IT infrastructure to a datacenter. Long term processes as the way to the cloud
and the internet of things contribute to a shift. However, in order to understand the
consequences of these processes, it is necessary to understand the creation of the strong
Dutch datacenter climate.

5.1.2 Competition from London

The most important competitor for AMS-IX was the London Internet Exchange LINX.
Established in 1994 LINX was the biggest internet exchange in Europe by the number of
members and the speed.

‘London was the go-to-market for American datacenters’ (Witteman, personal

communication, 21-06-2016). It was perceived as the gateway to Europe. Despite this
favorable competitive position the situation has changed and Amsterdam has grown to be
one of the leading countries. There are multiple explanations for this. First, the ground price
around London is higher. Second, the 2012 Olympic games have an impact on the power
supply in and around London. London has been a no-go area for datacenters for this

39
particular reason. This is an important part of the explanation why Amsterdam is doing so
well.

5.2 Important stakeholders in the Dutch digital infrastructure

The paragraphs beneath will discuss stakeholder that play an important role in the decision-
making process of datacenter site location. By having a clear overview who is doing what in
the Dutch datacenter landscape this part aims to select what actors are aware of the
decision-making process and in what way they influence the decision. Some of them are part
of the related and supporting industries from the diamond. However, this short overview is
just to give a good idea about the existence of these organizations.

5.2.1 Dutch Datacenter Association (DDA)

The DDA has been founded two years back, acting as the trade organization for Dutch
datacenters. It´s goal is to connect datacenters and to improve the understanding of the role
of datacenters in society. They connect existing businesses for to create inventions but also
play a role in foreign markets where they go to fairs. Besides, they have a code of conduct
and stimulate government policy when it comes to datacenter management. There is a close
link to the NFIA.

5.2.2 Netherlands Foreign Investment Agency (NFIA)

The goals of the NFIA is to attract FDI to the Netherlands, creating employment and GDP
(van Pelt, personal communication, 20-01-2016). Another sub-goal is to attract businesses
that innovate, in its broadest since. Recently the datacenter industry has been marked as
one of the primary targets. Before, it was considered as one of the main purposes for
businesses to come to the Netherlands but left out of the primary focuses.

The NFIA focuses on all kind of datacenters but most profitable are the Colocation
datacenters and the single tenant datacenters. Examples of these single tenant datacenters
in the Netherlands are Microsoft (Agriport A7, Middenmeer) and Google (Eemshaven). The
construction of the Google datacenter has provided 500 FTE for a time period of 2 years, not
taking into consideration the improvements for the region (van Pelt, personal
communication, 20-01-2016).

40
 According to the NFIA datacenters attract other businesses as well (personal
communication, van Pelt, 20-01-2016). Cloud-based services, cyber security firms, and
innovative companies all need a good digital infrastructure in order to be successful.

41
5.2.3 AMS-IX (Amsterdam Internet Exchange) and NL-IX (Neutral Internet Exchange)
AMS-IX is a not-for-profit, neutral internet exchange in Amsterdam. The role of internet
exchanges has been explained in the previous chapter of this research. The internet
exchange provides connectivity for datacenters and other actors.

“Peering enables these connected networks to offer stable, fast and cost-effective
Internet services to their end-users and business customers. Peering is what makes the
Internet robust and resilient, a network of networks all linked together. “

5.3 Applying Porter´s diamond to the Dutch datacenter market

The number of competitors is extremely high in the Netherlands. This tense business climate
offers a better position for the Dutch market. The demand conditions are not as high as one
would expect. The Dutch need for datacenter space is largely over provided, the market is
saturated, even if we take into account the growing need for datacenter space.

The firm strategy, structure and rivalry is somewhat problematic if we try to explain
why the Dutch datacenter industry is doing so well. As explained, the level of
competitiveness is extremely high, generating an innovative industry. Furthermore, the
existence of a large network of datacenters has led to AMS-IX, providing connectivity to
datacenters and hosting providers. These will be discussed in the related and supporting
industries part of this chapter.

5.4 Factor conditions

The basic factors can be considered as very good for the Netherlands. Multiple reports show
this. The overall level of English, education, and infrastructure are considered amongst the
best in the world. Amsterdam has been elected one of the most favourable places to live for
expats. One of the most important basic factors; the price of land is dependent on the area.
Datacenters prefer to be on the outskirts of the city, as close as possible to the power supply
and away from the expensive inner city land prices. Furthermore, the constant noise caused
by the cooling is not an issue outside the city.

The climate in the Netherlands is very suitable for datacenters, it is not too warm. A
cool climate leads to less energy use and therefore lower operational costs. An important
measure for datacenters is the PUE (Power usage effectiveness). This measure is used by

42
potential customers to select the best datacenter. This measure however does not account
for the climate thus the climate plays an important role in the site selection of datacenters.
There is hardly any risk for environmental hazards.

Furthermore, the presence of a strong digital infrastructure is the cause for and part
of the reason why the datacenter industry is so present in the Netherlands. Two other
important factors; power supply and education will be discussed in separate paragraphs
below.

5.4.2 Power supply, reliable energy

Power supply and energy provision in the Netherlands are considered amongst the best in
the world. Prices for industrial electricity are relatively high if compared to countries such as
Sweden. More on this in the next chapter. The development of the datacenter industry has
contributed to the expansion electricity capacity of the Netherlands (Witteman, personal
communication, 21-06-2016). Newly build datacenters in the Eemshaven and Middenmeer
depend mostly on renewable energy generated by windmills.

2013 2014 2015

0.094 0.080 0.094
Table 4, prices for industrial energy in the Netherlands (source: Eurostat)

What is more important for datacenters is the reliability of energy. How often are there
power outages and is a second power grid available? The Netherlands does not have a
second power grid and therefore several certifications does not apply for Dutch datacenters.
However, the reliability is very high.

5.4.3 Education, high skilled labour availability

An important factor is the availability of sufficient, well-educated employees. As stated by
the DDA and other digital industries there is a lack of high-skilled personal. The DDA (2016)
states the following:

“Our current education system is not providing the people that our digital economy is in need
of. Although the system is not worse than most other key digital countries, it is not good
enough”

This knowledge gap is not unique and it is unlikely that issues like this get fixed anytime
soon. However, the creation of a trade organization might help to overcome this issue. Even

43
though education is generally seen as a government responsibility there are other causes for
this gap. More on this in paragraph 5.7 where related and supporting industries will be
discussed.

5.5 Demand conditions

Demand in the Netherlands is not as big as the square meters of data floor. Building a
datacenter takes around 2 years. Before the construction starts it is general practice to have
at least some customers (Witteman, personal communication, 21-06-2016). Ever since the
industry exists there has been growing demand. Not in every market segment, though,
furthermore the demand is influenced by privacy regulations and other phenomena such as
Brexit. More on this international demand in chapter seven.

It is not clear what the demand in the Netherlands is. There are no statistics
regarding the square meter of floor space used by Dutch businesses, foreign businesses.
Furthermore, due to a continuously changing environment of different datacenter investors
and takeovers, the country of many customers is unknown.

Datacenters are continuously changing and a very keen on adopting new

technologies to improve performance, lower energy use and increase efficiency. Green IT
Amsterdam is an organization to stimulate innovation by connecting the right parties. This is
part of the supporting industries which will be discussed in paragraph 7. First, firm strategy,
structure, and rivalry will be looked at closer.

5.6 Firm strategy, structure and rivalry;

The Dutch market is known for its cooperative attitude (Grove, van Pelt, personal
communication). If you are a competitor in one product it is possible to cooperate for
another reason. The industry as a whole is becoming ‘adult’. Calling your competitor to
cooperate on certain topics is very common and this is also demonstrated by the fact that
there is a trade organization for Dutch datacenters.

There are several strategies that explain the favourable position where the Dutch
datacenter market is in right now. One strategy is ‘to get connected’. This is mainly relevant
for the Amsterdam area, where colocation datacenters invest in order to be part of AMS-IX
(Witteman, personal communication, 21-06-2016). Other types of datacenters search for
different locations whereas the ground price in Amsterdam is relatively high. The strategy to

44
expand to the European market is very relevant for American, and to a lesser extent, Asian
countries. Big operators need to be able to offer datacenter connectivity in multiple
datacenters around the world, therefore opening a datacenter in Europe as well. Another,
important business strategy to invest in the Netherlands is the position when it comes to
entering cables. A relatively high number of cables enter the Netherlands.

The level of innovation in the Netherlands is not higher than in other, comparable
countries. Technological advantages are marketed worldwide. However, the government
does play a role in this, striving to create more innovation and create technological
advantages for Dutch datacenters. More on this in paragraph 5.8.

5.7 Related and supporting industries – club goods and IX’s

The most present club good is the existence of the trade organization DDA. Furthermore, the
shared interest with other trade organizations in the IT sector has led to the development of
special educational policies. Interests of datacenters are served in the Hague and to a lesser
extent in Brussels. There is a strong trend in policy making towards the large, hyper-scale
datacenters. They have the funds to have a ‘lobbyist’. A trade organization such as the DDA
can provide this for the smaller datacenters. The ecosystem which is present in the
Netherlands provides an utmost favourable competitive position. Foreign investors ‘know
where to find the right contacts’.

5.7.2 Clustering of datacenters in the Netherlands

Besides Amsterdam, it is difficult to point out clusters. Amsterdam Science Park and Schiphol
region can be seen as clusters, however, they can also be seen as a part of the larger
Amsterdam metropolitan region. Other clusters can be found at universities, yet these are a
specific type of datacenter; research datacenters. They are taken into account but will not be
thoroughly analysed. The large, mostly single tenant datacenters are located somewhere
else. A map of the Netherlands is available online and shown in the image below.

45
 Figure 3, datacenters around Amsterdam (source: DDA, 2016, retrieved on 05-10-2016 on
http://www.dutchdatacenters.nl/map.html)

‘[For single tenant datacenters such as Googles or Microsoft’ it is less important to be in

Amsterdam, other factors play a role. Ground price, availability of green energy are more
important]’. (personal communication, van Pelt, 20-01-2016).

This quote illustrates that cluster forming is highly dependent on the type of datacenter.
Colocation datacenters have a good reason to locate their facility next to other datacenters,
this can be connectivity but also other factors such as the presence of supporting services.
Another important factor for clustering is the availability of suitable facilities. This is the case
for Schiphol.

The Schiphol area has many datacenters. The first and most important explanation
for this is the centrality. Close to Amsterdam, well known to international parties. The
second, more suitable explanation as to what makes Schiphol different from other areas are
the location factors. The ground prices are relatively low and the energy is reliable. Another,
maybe more unexpected reason is the difficulty which datacenters had to build in and/or
around Amsterdam. The noise is not acceptable everywhere and it was difficult to get a
permit (personal communication, anonymous). By selecting old hangars at Schiphol the
development plan was already set, the area was a business area, which meant datacenters
could be built rather quickly (anonymous source). So despite the risk of being near an
airport, the Schiphol area became a very suitable area for datacenters. Nowadays the

46
Schiphol Area Development Group (SADG) depicts the datacenter industry as one of their
key focuses.

Other datacenters are located throughout the Netherlands. As stated before, 65% of
the datacenters are located in the metropolitan region of Amsterdam. This, however, does
not mean that 65% of the turnover comes from Amsterdam, leave alone the internet traffic
generated.

Image 4, datacenters in the Netherlands (source: DDA, 2016, retrieved on 05-10-2016 on

http://www.dutchdatacenters.nl/map.html)

Large, single tenant datacenters have no need to cluster. Connectivity, which is the main
reason to cluster, is not as important as the ground price. Or the energy price for that
matter. There is only a number of hyper scale, single tenant datacenters. It is unclear for
what exact reasons they have chosen for certain locations. Google and Microsoft have
chosen for the Netherlands. Facebook prefers Ireland and Sweden and Amazon has its
datacenters in Frankfurt. Netflix has a different strategy which is interesting: put your server
as close to the end user as possible and therefore minimize the traffic distance. It is
important for those involved in the IT industry and those responsible for the attraction and
retention of datacenters to understand specific motivations. Therefore, in chapter 7, there
will be a more specialized distinction between the different types of datacenters. Thus giving
47
a framework to better understand the different needs they have. The distinction which is
made in chapter 4 does not provide enough context to understand the business climate.

Multiple clusters can be pointed out. They exist in the metropolitan region of
Amsterdam and at the universities where research datacenters are located. Whether the
patterns found can be seen as a reason for datacenters to choose the Netherlands will be
discussed in chapter 7.

5.8 Government - analysis of the main hub policy

There has been no active participation of the government. The continuous growth of the
industry can be seen as a reason for that (Bouricius, personal communication, 20-04-2016).
Besides, the top of the market knows where to get their information (Bouricius, van Pelt,
personal communication).

The government is an important influencer of the business climate for datacenters.

As stated before, the decision by the London administration to shut off investment previous
to the Olympic games in order to guarantee power supply has influenced the position of
London overall. Continuation of set policy is important. A stable government leads to more
investments.

Another way in which the government might play a role in the datacenter industry is
the creation of factor conditions. One of the ways they are trying to do this is by developing
a framework where the Dutch digital infrastructure is selected to be one of the Dutch
mainports. The Dutch government has recently selected the digital infrastructure as ‘the
third mainport’. What exactly does this policy entangle? Who are the involved actors? What
is the importance of this policy and what are possible implications? Defining the digital
infrastructure as one of the mainports is one thing, but will this lead to a better competitive
position of the Dutch datacenter industry?

‘Foreign investors and companies don’t have any reason to invest based on a 50/50
document which might or might not be implemented at all, there are no incentives linked to
this document yet’ (van Pelt, personal communication, 20-01-2016). On the other hand, if
this document generates extra funds for the digital mainport it could offer extra
opportunities for the datacenter industry. Besides, the concept of the mainport can be
perceived as a very strong marketing tool for foreign businesses. Everyone understands,

48
without knowing the details, what a mainport means. Therefore, it is a great marketing tool
for active policy aimed at the attraction of foreign datacenters.

From a broader perspective; there is a shift in policy towards acknowledging the

existence of datacenters and understanding their specific needs. Founding Green IT
Amsterdam by the municipality can be seen as part of this shift. The public domain
acknowledges that there is a specific need. By giving a strong focus on the durable
development of the datacenter industry the Dutch economy as a whole can profit.

This chapter has given an overview of the different indicators that are present in the
Netherlands. The next chapter will discuss several outlier cases that might shine a light on
different reasons and explain variables for the strong presence of datacenters in the
Netherlands. The chapter that follows comparative analyses will then further argue which
variables can and cannot explain the leading position of the Netherlands in Europe.

49
6. Comparative analyses
To fully comprehend why the Netherlands has become a leading datacenter hub this chapter
will compare the Netherlands to four other, European, countries. Iceland and Sweden will be
discussed together as they share many characteristics. Luxembourg will be discussed
whereas it has a unique position when it comes to banking and financial clientele.

6.1 Iceland & Sweden

Iceland and Sweden are trying to acquire new businesses to their countries, mostly based on
the availability of cheap, green energy. The energy provision is their strongest characteristic.
They have an active policy to attract datacenters. However, the industry is not as present as
in Londen, Frankfurt or Amsterdam.

The two main organization in Iceland that try to attract and retain datacenters are
Invest in Iceland and Promote Island. Where the first tries to lure investors into Iceland the
second tries to improve the reputation of Iceland. Iceland’s presence on fairs can be seen as
quite aggressive. There trade missions involve many parties aimed to influence the decision-
making process in favour of Iceland. Their main selling points; a cold climate and lots of
green energy and the entrance of an Atlantic cable from the U.S. Currently Iceland has an
oversupply of hydro and geothermal power.

50
 Research by BroadGroup (2016) provides us with 6 reasons why datacenters should
invest in Iceland;

-All the basic factors in place

-Iceland is highly attractive in terms of differentiating factors, such as power costs,

availability and the government support.

-There is a high education level in Iceland and strong availability of highly skilled
technical staff

-Iceland is rapidly developing as a global datacenter location

-Iceland also offers two of the other key requirements of many datacenter users –
space and flexibility

-Major cost advantage

This research provides a diagram with the operational costs for every 10 years. This diagram
is analyzed in Appendix VIII. The factors that are, according to the research, present in
Iceland give us an insight into what is relevant for datacenters everywhere.

Sweden has the Node Pole, the Swedish counterpart of AMS-IX, NFIA and other
important organizations combined. The Facebook datacenter in Lulea has been most
researched, mostly the effects it had on the surrounding area and businesses.

6.2 Luxembourg
There are multiple reasons. Every datacenter has their own reasons but from our experience
many choose for the facility and also the financial environment in Luxembourg (personal
communication, anonymous). Another very important reason is the license for banking.
Once obtained in Luxembourg it is relevant for all other European countries.

51
6.3 Energy prices
2013 2014 2015
Iceland - - -
Luxembourg 0.100 0.099 0.089
Netherlands 0.094 0.080 0.094
Sweden 0.075 0.067 0.059
United Kingdom 0.120 0.134 0.152
Table 5, prices for industrial energy in the discussed countries (source: Eurostat)

Energy prices are generally seen as one of the main indicators for datacenter investment.
According to Iceland (2016): ‘power pricing is very important here, as it can contribute up to
40% of annual operating expenditure’. However, if we take a look at the table above we see
a negative correlation between the number of datacenters and the energy price. There are a
number of remarks that must be made here. First of all, the energy prices mentioned above
are general prices, not including any ‘deals’ or arrangements that have been made.
Furthermore, countries such as Sweden have a special policy for datacenters. For the
datacenter in the north, there is a special arrangement, the large surplus of energy from the
dams is the reason for this discrepancy. Besides, these are national numbers, not taking into
account regional differences. Furthermore, the source of the energy is not taken into
account. Green energy might be a reason for a datacenter to invest at location A rather than
location B.

52
7. Factors that play a role in the datacenter climate
The datacenter industry is heavily dependent on location factors. The competitive position of
the Dutch datacenter industry could be considered as very strong. However, different types
of datacenters have different needs. The distinction as was provided in chapter four does
not provide a wide enough framework to understand the industry.

7.1 Data privacy as an upcoming concern

Data storage is an important part of the business cycles. Increasingly, companies are
outsourcing their own infrastructure to an external partner. The most well-known shift is
towards ´the cloud´. By doing so, internet safety and privacy have become a growing
concern for those businesses but also for local, regional, national and international
governmental organization. Physical storage of personal data outside Europe is no longer
allowed. Data leakages must be reported to the government. Several initiatives have started
to make the internet a safer place. End users and governments continue their efforts to
privatize data. New policy on data leakages forces companies to report even the smallest
leakages. An e-mail sent to users on CC instead of BCC needs to be reported to a (new)
Dutch authority by law. New rules set by the European government concerning privacy force
companies such as Facebook and Amazon to store data about their European clientele in
datacenters within the European Union. This will be an extremely important factor when
large companies decide to locate a datacenter on the European mainland.

7.2 Secrecy and behind the door deals

As stated in the methodological chapter there is a lack of available data to analyze
thoroughly where customers come from. Furthermore, the factors that play a role in the
decision-making process of datacenter investment lack in a sense that they cannot by
themselves explain the leading position of the Netherlands as a country. There is an
unknown factor that contributes and that factor is, solely based on experiences gained
outside of the official interviews and just a hunch, the negotiation process that takes places
behind closed doors. It is crucial to understand that there is a network of high-level
executives that make a decision based on information which is not available for researchers.
It is a business environment. To understand the factors that play a role does not necessarily
mean we understand the entire process, furthermore, growth in the market might not
53
always lead to good returns on investment. Many cases can be discussed in which a new
datacenter did not get permission to start or did not get enough customers to engage in
actually building the datacenter. These cases are unknown and may also not be relevant for
the datacenter climate in the future.

7.3 Towards a broader datacenter perspective

In chapter four this research has mentioned multiple types of datacenter. Different
datacenters have a different reason to look preferably upon certain areas. It is impossible to
see the Netherlands as one area. Amsterdam can be seen as the main hub but even there
one should be careful with the distinction.

The most discussed type of datacenter in this research is the multi-tenant, colocation
datacenter. Other types and their different needs based on this research can be found in the
table below. The four types of datacenter as discussed in chapter four were -public cloud
providers (Amazon, Google), in this table the hyper scale datacenter. Scientific computing
centers (national laboratories), in this table supercomputer. Co-location centers (private
‘clouds’ where servers are housed together), in this table colocation, multi-tenant
datacenters and ‘in-house’ datacenters (facilities owned and operated by company using the
servers), in this table as in-house datacenters. Added to this categorization are cold storage,
long term data storage in a datacenter. The proximity datacenter, nearby the end user, the
customers are local, small and medium sized, businesses. The edge datacenter is even closer
to the end-user, based on availability this would be a movable datacenter.

Energy Importance of Importance Size

efficiency Connectivity of a good
location
Supercomputer + - + +
Cold storage + -- -- -
Colo, multi- + ++ ++ _
tenant
Proximity + ++ + +
Edge - - ++ -
Hyperscale ++ ++ -- ++
In-house -- -- --
Eco-systeem + + + +

54
55
7.4 The role of the government
The government can take different roles. Enable datacenter activity, cooperate where
necessary. Have an active policy to attract new datacenters or stay on the side and impose
new laws on energy efficiency/noise etcetera. So far the Dutch government has taken a
passive role. The industries growth and self-reliance have so far not lead to any problems.
However, in order to maintain this leading position, it would not seem impossible for the
government to take up an active role such as the governments of Iceland, Sweden and
Luxembourg.

7.5 The importance of clustering – or can it be explained by the IX’s?

The theoretical role of clusters has been explained thoroughly in the theoretical chapter. It is
undisputed that we see a cluster in the Amsterdam metropolitan region. Question is
whether clustering is the reason for datacenters to invest. It might just be the presence of
AMS-IX, or the Dutch location factors all together. The cluster as it exists today draws a lot of
other businesses to the Netherlands. It is important, not only for the digital infrastructure
but also for the investment climate as a whole to keep attracting foreign investments.

56
8. Conclusion
The datacenter industry is part of the digital infrastructure, currently one of the best
performing industries in the Netherlands. The datacenter industry has been on the rise for
the last 10 years. Ever since they are omnipresent in the Netherlands. However, the
datacenter industry is rather unknown and operates under the radar, especially before the
government decided to depict it as ‘the third mainport’. This provides a framework from
where the digital infrastructure can boost its performance.

Little research has been done from a geographical perspective. Technical

requirements and incentives are known and have been researched extensively. This research
focused on how the Netherlands has become a leading datacenter hub and what factors
have contributed to this position. What factors, part of the ecosystem, can be depicted as
relevant. Furthermore, it explained why we cannot talk about ‘a datacenter’ but should
make a distinction between multiple types, each having their own requirements.

To revisit the primary question of this research:

Which processes have made the Netherlands a leading datacenter country and how are
datacenters spatially manifested within the Netherlands?
To comprehend the landscape and to understand the different processes that play a role this
research has used Porter’s diamond, the best-known framework to consistently analyse the
competitive advantage that nation A has over nation B. The location factors that have been
mentioned throughout this research are possible factors that could have created the
advantage that the Netherlands has nowadays. However, without factual data, it is not
scientifically proven that the given explanations are the actual reasons. The provided
qualitative reasoning is based on participation of the researcher within the industry. Multiple
events, from different actors playing a different role, have been visited to construct this
framework. The second reason why this approach was chosen is the speed at which the
ecosystem is changing.

65% of the datacenters are in or around Amsterdam, one could argue that clustering
factors play an important role in this, also suggesting that the strong presence of the
industry can be explained by this. An important addition: two of the world’s largest internet
exchanges, AMS-IX and NL-IX are present. They provide connectivity which is crucial for
57
datacenters. It is no coincidence they are based in the Netherlands. In the early days of the
internet multiple founders came from Amsterdam. Furthermore, it is the gateway to Europe
and physical factors play a role.

` Not only the Dutch market has been analyzed thoroughly, the strategies of Iceland,
Sweden and Luxembourg have been discussed as they have a unique proposition. Iceland
and Sweden promote themselves with a strong power supply and lower energy prices.
Luxembourg uses its banking system as a gateway to Europe. The lack of quantitative data is
shown in the international comparison. For instance, the energy prices show a negative
correlation, despite every relevant actor acknowledging that this is a very important
indicator. It is widely accepted that energy prices are one of the main reasons for
datacenters to invest, they are responsible for a sizeable portion of the costs. An explanation
for this can be given not only for this variable but more generalized to all variables; there is
no insight into deals that are made behind closed doors. The explaining power of this
argument is based on chance, one of Porter’s factors.

Datacenters are not one single entity, there are many different types of datacenters,
different strategies, and different reasons. To understand their different needs this research
has brought forth a distinction between 8 datacenters, namely; supercomputers, cold
storage, colocation/multi-tenant, proximity, edge, hyper-scale, eco-system and in-house
datacenters. These datacenters all require a different approach and, even though they have
mutual interest when it comes to policy, require a different approach.

58
9. Policy recommendations
A key recommendation is to create awareness about the digital infrastructure. Not for the
industry but for governmental organizations and the Dutch society. Furthermore, emphasize
its importance for other, related businesses. This recommendation has been put into action
already. Key organizations on the national level that are responsible for this promotion are
the DDA (when it comes to the promotion of the datacenter industry) and DINL (when it
comes to the promotion of the digital infrastructure in its broadest sense.

For fellow geographers; further research of this topic is required. More data is
available and this research provides a framework from where further research can be carried
out. This research has only briefly touched on the possibilities this industry offer for urban
design and redevelopment of regions. The question of what influence a datacenter has on its
surrounding or more specific at the digital infrastructure has barely been touched in this
research where it could have been a thesis by itself.

Involve third parties in their search for suitable locations. Clarify who takes up what
role to make it as easy as possible for datacenters. As stated in the last chapter it is
impossible to talk about ‘the’ datacenter industry. Large datacenters such as Googles
location in Eemshaven and Microsofts location in Middenmeer require a different approach
from colocation in the area around Amsterdam or regionally orientated datacenters.

One way to keep this leading position is to attract foreign knowledge and capital.
Foreign actors, theoretically (also interesting for further research) contribute to the
innovativeness of the industry. Therefore, side conditions must be optimal. A more
pragmatic approach would be to setup an area around Amsterdam where datacenters can
start without too much fuzz. Based on many conversations, this area should leave room for
quick datacenter investment without too many problems concerning noise and other
regulations. The area should largely decrease the building time of a datacenter which is now
approximately 2 years. This way datacenters that are being built have less risk and can more
rapidly act on the changing market.

59
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Appendix I List of indicators
Factor conditions:

Basic factors;

 Labour cost
 Regulatory infrastructure
 Knowledge in English
 Land costs and availability
 Availability of funds
 Infrastructure
 Living conditions

Advanced factors;

 Climate
The climate heavily influences the amount of energy a datacenter uses. Especially on
a European scale this might be an important factor.
 Risk of environmental hazards
Uptime is the most important measurement for a datacenter. Downtime means
compensation for customers and less reliability in a very rapidly moving market.
Downtime of a datacenter has big consequences, the average costs of 1 minute
downtime are estimated to be €7900 [ CITATION Mul15 \l 1043 ].
 Energy costs
Energy costs are extremely important for datacenters and besides technology and
land are the most pressing on their balance.
 Energy (price) reliability
Where environmental hazards can damage a datacenter, unreliable energy is also a
cause for downtime. Furthermore, sudden changes in energy prices cause disruption
of the business model and are therefore unwanted.
 Availability of high skilled labour
High skilled employees are key to keep a datacenter up and running but also to
construct an efficient datacenter.

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  Digital Infrastructure
The latency and connectivity are important for datacenters. The functioning of a
datacenter is heavily dependent on the presence of a strong digital infrastructure in
the surrounding.

Demand conditions;

 Domestic and foreign demand for datacenter space

To understand the nature of the demand is to understand why there are so many
datacenter in certain areas. Where is demand coming from, is it from domestic
businesses or international businesses. The demand conditions are closely linked to
innovation and might correlate with a firms strategy.

Firm strategy, structure and rivalry;

 Connectivity
Connectivity as such might be a reason for datacenters to invest in certain areas. The
connectivity advantages which it brings along can be part of the firm strategic goals.
 Market structure – innovation
The level of innovation in a market might be a reason to invest, granting access to
innovational products and/or processes.
 Scalability – economies of scale
If business is going well expansion is very profitable since most expensive
infrastructure is already there. Whether or not a datacenter is scalable might bring
preference for a certain area.

Related and supporting industries;

 Presence of club goods

Public goods make an industry strong and as explained in the theoretical part. Club
goods include but are not limited to: specific education, news websites for a
particular field and the presence of a trade organization. A trade organization can
serve interests for the industry where they are not able to do it themselves.

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 Connectivity and latency
In order to optimize internet speed the connectivity of a datacenter is important.
Connectivity is provided by internet exchanges and direct land/sea cables.
 Availability of clusters
As stated before clusters tend to boost innovation and increase the chances of an
area doing well.

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Government;

 Stability
A stable government can be a good reason to invest in country A rather than in
country B. Long term stability is essential for long term investments such as
datacenters.
 Government regulation on privacy
Privacy regulations are an upcoming concern for storage of personalized data. The
regulations per country differ and are thus important for the datacenter industry in a
particular country.
 Factor creation
The extent to which a government is capable to create the right investment climate.

Chance:

 Entrepreneurial insight
 Other unforeseen factors that play a role

The basic factors are based on the literature. The advanced factors only partly, furthermore
they are based on conducted interviews. Precise methodological reasoning and data
gathering will be discussed in the next chapter. An example interview guide is shown in
appendix VII. A more elaborate argument on why these indicators have been selected will
follow in the upcoming chapters. By focusing on the different indicators listed above it
should get clear how the Netherlands has become a datacenter hub.

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Appendix II Interview Maikel Bouricius (Green IT Amsterdam)
Green IT Amsterdam probeert sinds 6 jaar

Gevraagd vanuit de gemeente, specifiek voor datacenters. Als zijnde gesprekpartner en

kennishub.

3 kernthema’s:

Greening of IT

Greening by IT, het verduurzamen van de stedelijke regio

Green colour economy, alles ondersteunen vanuit een breed perspectief.

Nieuwe technologie  piloting  showcasing

Zichtbaar maken voor het grote publiek. Is het interessant voor andere partijen?

Vestigingsbeleid bevatte een visie met duurzame visie.

Richting geven aan het ecosysteem met duurzaamheid en innovatie door middel van beleid.

Bij het maken van regels, zodra ze op papier staan loop je eigenlijk al weer een jaar achter.

Er is geen taak voor de overheid omtrent certificering. Ieder bedrijf moet aan een bepaalde
standaard voor doen.

Amsterdam richt zich vooral op Frankfurt, maar ook op Scandinavië, zeker op het gebied van
subsidies interessant. Heel hoge ambities, ook als het gaat om duurzaamheid, energie is er
aan overvloed. In Amsterdam is er echter heel veel kennis aanwezig. Je kunt in het
Amsterdamse ecosysteem een datacenter bouwen. In Scandinavische landen is dat iets
lastiger.

Er is geen behoefte geweest aan actief beleid, die groei was er al.

Amsterdam lijkt al verder op het gebied van dit ecosysteem maar dat is nog wel nieuw.

Het besef komt er nu ook vanuit de overheid.

Amsterdam gaat vooral om de colo datacenters. Plus minus 60 grote datacenters. De meeste
spelers hebben meerdere locaties.

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De top van de markt heeft de gebieden op de kaart en gaan overal langs wanneer ze een
aanvraag doen.

Datacenters passen de ambitie van Smart City van Amsterdam.

Steeds stabielere industrie. Specialiteit. Bewezen kracht.

Subsidies voor energie zijn op dit moment niet apart beschikbaar voor datacenters. Terwijl
dit juist wel interessant is. Singapore doet dit bijvoorbeeld wel heel veel.

Nu worden dingen vanuit de industrie zelf geregeld. Overheidshulp kan wel handig zijn.

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Appendix III interview transcript Eric van Pelt (NFIA)
Interview Eric van Pelt

Attendees:

K = Koen Molenaar

E = Eric van Pelt

K: ik had van tevoren de vragen ook al opgestuurd

E: ik heb het heel snel ingezien

K: is geen enkel probleem, ik wijk er ook van af, het is meer een algemene interesse die ik
heb, ik zie dat er heel veel gedaan wordt omrent datacenters en dat het een redelijk snelle
markt is, er zijn heel snel veranderingen dus daar wil ik ook constant op kunnen blijven
inspelen. Zoals 2 weken geleden is de gemeente Amsterdam terug gefloten omdat ze een
datacenter hadden verplicht de koeling te vervangen. Nou dat wil ik ook gelijk in mijn
verhaal kunnen verwerken. Kunt u misschien beginnen door de rol van het NFIA binnen het
Nederlandse IT-landschap uit te leggen?

E: dan moet ik helemaal vooraan beginnen, de missie van het NFIA is het aantrekken en
behouden van buitenlandse investeringen in Nederland. Ik doe dat voor de ICT sector. Het
einddoel is; meer werknemers, meer omzet in Nederland. En wij proberen ook meer
bedrijven met extra kennis en kunde naar Nederland te halen, dat is wat wij doen. Daarbij
hebben wij een postennetwerk in de wereld, we zitten op 25 locaties met name de grote
economieen, dan heb je het over de Verenigde Staten, China, India, Japan en wat kleinere
landen als Turkije, Dubai, Londen, dat kun je ook op onze website zien. Ik weet niet exact het
percentage maar de meeste buitenlandse IT bedrijven die een vestiging in Nederland willen
openen komen langs het NFIA. En wij doen dat ook in samenwerking met regionale
ontwikkelingspartijen grofweg iedere provincie of grote stad heet zo’n maatschappij.

K: ja, ik ken ze, ze zitten hier ook op de 2de verdieping begreep ik. Die van Zuid-Holland

E: 1 gebouw verder

K: Ah ok. Dan zat ik net verkeerd.

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E: maar jouw vraag was?

K: Wat doet het NFIA precies, hoe staan jullie bijvoorbeeld in verhouding ten opzichte van
een vereniging als de DDA, wat hebben jullie te maken met het project van Digital Gateway
to Europe? Wat si jullie rol daarbij?

E: Wij zijn wel partners, wat wij doen is het scouten van bedrijven dus proberen bedrijven op
te sporen die naar Europa willen komen, die het liefst allemaal naar Nederland komen. We
voorzien ze van allerlei informatie die nodig zijn om een beslissing te nemen of ze voor
Nederland kiezen en als ze min of meer voor Nederland hebben gekozen dan nodigen we ze
uit voor een fact-finding trip en dan in Nederland maken we een tailor-made programma
waarin ze alle informatie en mensen kunnen ontmoeten die ze nodig hebben om zich hier in
Nederland te vestigen. Meestal is dat belastingconsultants, immigration offfices kan ook
universiteiten zijn als ze willen samenwerken met universiteiten, het bekijken van
kantoorgebouwen, alles wat nodig is om een soft landing in Nederland te kunnen realiseren.
Samenwerking met bijvoorbeeld de DDA is een aantal dingen, we hopen echt op leads. Dus
buitenlandse bedrijven waar zij mee in contact komen dat ze die aan ons laten weten zodat
we die bedrijven kunnen servicen. Dat is 1. 2 is om buitenlandse IT bedrijven van juist
informatie te voorzien. Hebben we ook sector technische kennis nodig, up to date facts and
figures, op het gebied van datacenters is dat bijvoorbeeld een DDA, ISP, of een the Hague
security delta hier in Den Haag, dat is de bron.

K: aha, want inderdaad bij het CBS kun je de date in het algemeen niet vandaan halen. Zien
jullie dat er hier veel datacenters met een aanvraag komen?

E: ja, ik kan geen exacte aantallen noemen maar het is echt, binnen het IT landschap een
belangrijk focus gebied. En dat heeft er ook mee te maken, de factoren waarom datacenters
naar Nederland komen, dat zijn een aantal generieke, dus geld voor meerdere sectoren en
een aantal specifieke. Generieke is, kwaliteit van het leven, meertaligheid, we spreken goed
Engels en ook andere talen, de logistieke infrastructuur, je zit hier in het hart van West-
Europa. Je kunt zo in een uitvliegen naar Schiphol. Wat ook speelt is een aantal incentives,
bijvoorbeeld de 30% ruling, dat is een incentive voor kenniswerkers die in Nederland komen
werken, dan betaal je iets minder belasting. Dat zijn de generieke redenen. De sectorale
redenen zijn met name de infrastructuur. We hebben met AMS-IX de grootste internet hub,

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een hoge energiezekerheid, relatief veel groene stroom, hoge breedbandpenetratie in
Nederland en voor datacenters gewoon een hele goede infrastructuur, lage latency. En dat
zijn factoren waarom voor datacenters die zich in Europa willen vestigen Nederland altijd op
de shortlist staat.

K: hebben jullie een actief beleid ten opzichte van die datacenters? Proberen jullie ze echt te
vinden ook?

E: Ja, uhm, ja. Je moet het zo zien Als het NFIA bedienen we eigenlijk alle bedrijven die zich
in Nederland willen vestigen, een paar gebieden niet, bijvoorbeeld online gambling doen we
niks aan. Hotelketens, winkels, dat doen we niet. Sorry, wat was je vraag.

K: nou, ik ben een aantal weken geleden ben ik in Duitsland geweest, naar de WHD en daar
viel mij heel erg op dat een land als IJsland een heel actief beleid heeft om datacenters aan
te trekken. Ik vroeg me af of jullie ook dat actieve beleid hebben, dat jullie bijvoorbeeld in
het buiteland naar beurzen gaan, dat soort dingen.

E: ja, dat doen wij wel maar mondjesmatig. We zijn een redelijk kleine club, we kunnen niet
alle congressen af dus het is niet zo dat wij specifiek voor datacenters naar specifieke
beurzen gaan. Dat proberen we eigenlijk ook meer op te pakken met bijvoorbeeld een DDA.
Om die als een soort voorpost te gebruiken want zij gaan heel veel naar dit soort beurzen
gaan. Zij vangen de eerste signalen ook op van bedrijven die naar Nederland kijken.

K: en komt dit misschien ook omdat… nou uuhm, kunt u misschien omschrijven wat het
effect is van een datacenter op de economie? Welke rol zij daar in spelen.

E: peo, nou ik weet niet of ik de persoon ben om dat helemaal, om dat te speiciferen. Wat
wij wel zien is dat a, Nederland is een heel aantrekkelijk land voor datacenters, wat ik net
omschreef, maar goeie datacenters trekt weer klanten van datacenters aan. Bijvoorbeeld
cloud based services, bedrijven die dat aanbieden. Cyber security aanbieders, vanwege die
goede datacenterstructuur zie je dus de klanten ook naar Nederland komen.

K: ja, dat scheelt wel een hoop. En daar, want datacenters zelf verschaffen niet heel veel
werk?

E: nou, dat wordt vaak vergeten als het datacenter er eenmaal staat dan heb je niet zo heel
erg veel werkgelegenheid je hebt een control met een aantal beheerder die het allemaal in

71
de gaten houden maar vergeet nioet de voorfase, de bouw van datacenters kost heel veel
werkgelegenheid en grote datacenters zoals Google in Groningen, de mensen die daar
werken die moeten ook weer voorzien worden van huisvesting en eten en drinken. Die
afgeleide economie, daar is het ook goed voor.

K: ja, dat is een effect dat vaak vergeten wordt. Ik weet nu van een student die onderzoek
doet naar het datacenter van Google in de Eemshaven om te kijken wat daar de effecten van
zijn die komt ook tot de conclusie dat de bouw, die duurt zo’n twee jaar, dat levert heel veel
werkgelegenheid op.

E: Bijna 500 FTE. Vergis je niet.

K: afgelopen jaar is er een beslissing genomen in de Tweede Kamer om de Nederlandse

digitale infrastructuur te verkiezen tot de derde Mainport, zien jullie daar al effect van?

E: niet door deze politieke beleidskeuze omdat zeg maar daar nog geen incentives
aanhangen om of dat er extra geld voor vrij wordt gemaakt, dat zien wij nog niet. Het heeft
alles te maken gewoon met die digitale infrastructuur.

K: er staat bijvoorbeeld dat er een werkgroep wordt opgericht die beleid gaan maken; daar
zijn jullie niet actief bij betrokken?

E: nee, we volgen, ik wordt wel eens geconfronteerd met dit soort onderwerp maar dit is iets
voor de toekomst. Het moet eerst zeg maar concreet worden voordat dit een factor is waar
wij buitenlandse bedrijven op kunnen triggeren. Het moet eerst concreet worden.

K: want je hebt ook niet het gevoel dat buitenlandse bedrijven het al hebben opgepikt en dat
ze hier naartoe komen? Dat effect duurt nog langer.

E: bedrijven hebben niks aan dingen die 50/50 misschien een keer worden
geimplementeerd. Ze maken hun investeringskeuze op harde cijfers.

K: het moet al gebeurd zijn en dan gaan ze beslissen. Mijn volgende vraag gaat er over, hoe
is jullie samenwerking met regionale partijen, stel er komt een buitenlands datacenter dat
zich hier in Nederland wil vestigen, je zegt net, dan gaan we op een fact-finding mission, als
ik kijk naar beleid zie ik eigenlijk dat de enige gemeente in Nederland die beleid heeft is

72
Amsterdam, omtrent datacentrums. Overheidsinstanties, Schiphol heeft bijvoorbeeld ook
we beleid maar dat is dan misschien

E: nou in zoverre dat verschillende steden, voor zover ik het weet, in hun bestemmingsplan
ruimte voor datacenters. Bijvoorbeeld Almere heeft dat en Groningen ook. En natuurlijk
Agriport, als je dat kent. Agriport zit, de autobaan van Amsterdam naar Den Hoorn, dat is
waar Microsoft nu aan het bouwen is.

K Ah, Middenmeer enzo

E: ja, dat heet Agriport.

K: oh, ik ken de naam niet maar ik weet wel dat ze inderdaad daar bezig zijn.

E: het is een aparte gemeente tegenwoordig.

K: Vooral interessant daar vind ik de samenwekring die ze hebben met lokale boeren met de
windmolens. Hebben jullie daarin een rol gespeeld toevallig? Hebben jullie dat bemiddeld
of?

E: dat hebben collega’s van mijn gedaan. Onze rol is vaak het koppelen van partners en het
zorgen voor de juiste informatie, zorgen dat ze met het juiste talent en recruiters in contact
komen, daarin hebben wij een rol gespeeld.

K: dus op die manier zijn jullie daar dus ook bij betrokken geraakt. En bijvoorbeeld het
datacenter in de Eemshaven dan, zijn jullie daar ook bij betrokken?

E: ja, op dezelfde manier.

K: Zijn dat dan partijen die hier aan komen kloppen, wij willen een datacenter openen, en
jullie helpen ze dan helemaal verder?

E: ja, maar je moet je niet vergissen die grote datacenters van google en Microsoft is een
proces van jaren he. `En op het begin gaat het heel langzaam en op het eind gaat het heel
snel. Op het begin is het echt het aanknopen van contacten op het hoogste niveau en dan
kan het ook een hele tijd stil liggen omdat bijvoorbeeld in de port van Microsoft over wordt
gesproken. Die grote jongens zijn echt lange trajecten.

73
K: je ziet ook dat Facebook er bijvoorbeeld voor heeft gekozen om het te doen in Zweden.
Hebben jullie enig idee waarom zij voor Zweden hebben gekozen en niet voor Nederland?

E: ja maar daar kan ik geen uitspraak over doen. Sorry.

K: nee dat is prima hoor. Wij zien heel erg, of, ik zie heel erg een opkomst van lokale
datacenters. Kleinere datacenters zeer in opkomst en ook. Hoe zou je dat kunnen verklaren?

E: ik zie het ook. Je hebt natuurlijk interaxion en Equinex dat zijn de grote spelers in
Nederland en je ziet ook wat kleinere datacenters zie je ontstaan. Dan moet ik gissen. Ik heb
het idee dat veel lokale overheden en bedrijven het wel prettig vinden als datacenters dicht
bij hun in de buurt zit.

K: ja, ook bij bedrijven zie je het veel, dat ze de IT wel willen wegdoen maar wel het liefst
lokaal zodat, mocht er iets mis zijn dat ze er snel naartoe kunnen gaan.

E: precies; het is dichtbij, Wat veel mensen vergeten is, die denken dat een datacenter, dat
ze alles van je overnemen maar dat is niet zo. Je bent nog steeds verantwoordelijk voor je
eigen servers en als er met dat ding iets aan de hand is moet jouw monteur daar naartoe om
het te herstellen, dat is geen monteur van het datacenter

K: nou je ziet tegelijkertijd wel een opkomst van het managed hosting. Het komt er wel aan,
het duurt wat langer. Merken jullie dat er andere partijen zijn, uit andere sectoren die naar
Nederland willen komen en echt de vraag stellen van; we willen wel naar Nederland komen
maar wat hebben jullie voor datacenters beschikbaar, dus vanaf de bedrijfskant gezien?

E: dat is een moeilijke vraag, ja maar ik zie dat de meeste bedrijven, met name in de IT sector
zelf, die weten wel de datacenters in Nederland te vinden. Sterker nog, wij krijgen best wel
wat leads uit het datacenters die in contact komen met interessant buitenlandse partijen.

K: ja dat kan ik me ook voorstellen inderdaad. Dat ze heel graag hier hun data opslaan. Is er
al wat, je ziet constant nieuwe privacywetgeving, vanuit de EU, vanuit Nederland, is dat voor
partijen een rede om zich in Nederland te vestigen?

E: dit is echt een cruciale en waarom, wij zien dat bedrijven altijd vragen, hoe is de
dataprivacy geregeld in Nederland omdat dat een heel belangrijke investeringsfactor is.
Waar ze met name naar zoeken is gewoon een duidelijk beleid. Hoe is het nu geregeld met

74
data privacy in Nederland. Gewoon klip en klaar, hoe zit dat. En je ziet nu dat, heel veel
bedrijven weten het niet hoe het er in Europa voor staat. En met die safe harbour Waar
moet ik, wat is de beste plek in Europa wat data privacy betreft. De meeste bedrijven weten
het niet.

K: en jullie linken ze dan bijvoorbeeld weer aan juridische partijen die ze daarin verder
helpen.

E: Ja dat doen we. Hoe die Europese verordering uitpakt en ook in die nieuwe wetten van de
informatie en veiligheidsdiensten dat is wel een cruciale.

K: merken jullie dat mensen die met een datacenter hier naartoe willen komen om wat voor
reden dan ook halverwege het proces afhaken. Dat ze voor een ander land kiezen of om een
andere reden besluiten om niet door te gaan.

E: bijna nooit. als ze hun huiswerk hebben gedaan en ze hebben de beslissing genomen om
naar Nederland te komen gaat bijna altijd door.

K: ah oke, want ik kan me voorstellen dat ze bij meerdere landen informeren, dat ze naar
IJsland gaan, dat ze naar Luxemburg gaan. Niet het gevoel dat dat echt concurenten zijn
dan?

(korte onderbreking)

E: de belangrijkste concurrenten op het gebied van datacenters dat is met name de U.K.,
Ierland. We zien dat IJsland en Luxemburg, die zijn ook heel actief aan het acquireren.
Nederland staat bijna altijd op de shortlist vanwege de digitale infrastructuur en generieke
voorwaarden het hangt er een beetje van af welke investeringsfactor het meest belangrijke
is voor welk land ze kiezen. Als het echt belastingvoordelen zijn dan zie je ze vaak naar
Ierland vertrekken. Bijvoorbeeld IJsland daar is de stroom wat goedkoper.

K: stroom is goedkoper en daar komt de kabel ook langs

E: maar IJsland is niet echt een grote concurrent

K: en Zweden dan?

E: niet voor Colocation datacenters. Dat is meer voor single tenant datacenters

75
K: aha, daar zie je ook nog wel een groot verschil in.

E: ja, zeker

K: en is AMS-IX daar een belangrijke reden voor?

E: ja, dé

K: hebben jullie het gevoel dat datacenters, ze willen natuurlijk graag bij elkaar zitten. Met
AMS-IX als voornaamste reden, hebben jullie andere clusters waar dat ook gebeurd?

E: Nou je ziet de meeste wel in Amsterdam belanden. Nou laat ik het anders zeggen. Die
single tenant datacenters als Google en Microsoft daar is het minder van belang om in
Amsterdam te zitten dan spelen ook andere factoren een rol. De grondprijs, beschikbaarheid
van duurzame energie. Vandaar ook dat die niet in Amsterdam zitten. Co locations zie je toch
dat ze meestal naar Amsterdam kijken omdat ze dichter bij AMS-IX willen zitten.

K: volgens mij zijn er zelfs partijen die alleen voor de connectiviteit richting Nederland
komen.

E: ja exact.

K: dan heb ik mijn vragen eigenlijk wel gesteld. Heeft u nog dingen die u wilt toeveogen,
dingen die ik mogelijk ben vergeten?

76
Appendix IV interview Job Witteman (AMS-IX)
J = Job Witteman

K = Koen Molenaar

J: Ik merk dat we ooit eens een folder hebben uitgegeven 8 jaar geleden en die ligt nog in
een la. En als mensen dan zeggen; ówja AMS-IX, daar heb ik nog een folder van’ en dan
hebben ze informatie van 8 jaar geleden.

K: Ja, dat schiet niet op nee. Wat mij ook opviel, ik was op WHD in Duitsland en daar, met
name IJsland, hadden daar een gigantische stand met presentatie ook. En als je gaat kijken
wat Nederland doet wat betreft beleid omtrent het aantrekken van datacenters; helemaal
niks. Er staat helemaal niks op papier. Er is niet een document dat zegt; invest in the
Netherlands en kom hier met je datacenter.

J: nee klopt maar het gebeurd wel.

K: het gebeurt heel veel, het is wel het grootste land, de meeste datacenters komen nog
altijd naar Nederland toe. Als je spreekt met het NFIA, of de DDA dan zeggen die, die
datacenters weten ons toch wel te vinden en wij hebben zo’n beursstand niet nodig. Vraag is
of dat houdbaar is, grote partijen uit de V.S. die in Nederland komen investeren. Hoe zou u
de verschuiving op de datacentermarkt omschrijven?

J: deels consolidatie, de datacenters zijn niet meer dat 1 partij 1 datacenter heeft en dat er
dus 30 partijen in Amsterdam zijn maar Equinex/Telecity heeft nu het grootste deel van de
markt, althans qua m2 en stroom in handen en die vinden het dus belangrijk om een groter
marktaandeel te pakken. Deels economy of scale maar vooral grip op de markt. Het is
duidelijk een profitable markt voor ze. Niet alleen in Nederland maar in heel Europa. Dus dat
is consolidatie maar verder wordt er heel veel nieuw gebouwd. Er wordt ook veel gebouwd
voor specifieke partijen. Je moet een onderscheid in de datacenters maken, de colo, zeg
maar de multi-tenant datacenters en de single tenant. En er wordt heel veel single tenant
gebouwd die helemaal niet relevant voor ons zijn, waar wij ook geen rol in spelen. Kijk naar
wat Microsoft, Google, enzovoorts bouwen

Consolidatie op de markt. Ook heel veel nieuwbouw, ook voor specifieke partijen.

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Een single tenant datacenter bouw je niet in Amsterdam, hoge grondprijs en een
waarschijnlijk iets hogere stroomprijs.

Londen was traditioneel de markt waar Amerika landde. Pas later krijgen ze door dit
Engeland niet centraal in Europa ligt.

Londen heeft een paar jaar geleden de deur op slot gedaan voor nieuwe datacenters naar
aanloop van de Olympische spelen.

Angst voor een tekort aan stroom.

AMS-IX maakt zich sterk voor een actiever beleid. DINL en DDA hebben daarmee te maken.
Die beweging is er in Engeland niet.

Je moet een continue aanwas krijgen om interessant te blijven.

Het is een uitwerking die vanuit de markt en niet vanuit de overheid wordt opgepakt. Beter
dan de traditionele telcom wereld.

Elkaars belangen onderkennen. Samen de sterkste eruit halen.

Datacenters worden zuiniger, dus niet ieder datacenter erbij gebruikt evenredig stroom.
Gemeente Amsterdam heeft geen gebrek aan stroom.

Vanuit de overheid is er een totaal gebrek aan inzicht op die markt van wat er gewenst is.
Daar treed wel een verandering in op.

Snel bouwen in bepaalde gebieden. Hierbij de stroom voor de komende 30 jaar garanderen.

De bouwtijd van een datacenter is niet heel erg lang, pak em beet 9 maanden. Er moeten
van tevoren al wel genoeg klanten zijn.

Het belangrijkste effect is dat de industrie serieus wordt genomen.

Riolering is iets waar mensen rekening mee houden. Waarom niet met internetverbinding?
De eerste erkenning nu maar het moet nu onderdeel worden van het beleid.

Amsterdam is op dit moment de magneet voor Nederland.

Veel buitenlandse partijen komen bij AMS-IX terecht, ook wel via het NFIA.

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Voor een financiële instelling of datacenter is een AMS-IX niet interessant. Een onderscheid
tussen de verschillende type datacenter is gewenst om te begrijpen waarom ze op een
bepaalde plek zitten.

Telecomregulatie van 1992. Connectivity by meerdere partijen. KPN moest zijn netwerk
openstellen voor derden. Daarnaast licenties om te gaan graven. Nieuwe partijen met
nieuwe infrastructuur.

Niet het sterkste land op het gebied van privacy. Wel net neutraliteit.

De voordelen ten opzichte van andere landen; sterk internationaal karakter van Nederland

Multi culti samenleving waarin iedereen welkom is. Daarnaast is Amsterdam een van de
beste steden om in te leven.

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Appendix V interview Luxembourg (unknown)
You have mentioned that the banking sector from China is moving more towards
Luxembourg than to the Netherlands. Could you explain why?

There are multiple reasons. Of course every bank has its own reasons but from our
experience many choose for the facility. The facilities are very good. And also the financial
environment in Luxembourg is very beneficial. But also very important is the Luxembourg
license. When you have the license you have less trouble to open branches in other
countries. Once you are compliant with the Luxembourg bank law you can combine with
other countries. In Luxembourg it is very strict, so once you get the licence your image is
very reliable, you comply with all the banking law.

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Appendix VI observation ‘Hostingcon Europe Amsterdam´
Observation 1-10-2015: HostingCon

Hostingcon is a fair where hosters come together to discuss the new trend in the hosting and
storage market. An panel discussion on tax advantages in the Netherlands have given insight
in why datacenters (and, with hindsight mostly the hyperscale) chose the Netherlands to
become connected to Europe.

Appendix VII observation ‘de rol van het lokale datacenter’

Observation 1-10-2015: ‘De veranderende rol van het datacenter’

Ongeveer 70 aanwezigen vanuit de datacenter en hostingindustrie in een lokaal datacenter

bij Haarlem.

Central this event is the role local datacenters play in the future. Should they, besides carrier
neutral, also become vendor neutral? Or play a role which is more like that of an internet
exchange, connecting people to optimize connectivity?

Appendix VIII observation opening nieuw datacenter (omgeving Haarlem)

Observation 1-10-2015: opening of a new datacenter near Amsterdam

A small datacenter has opened its doors near Amsterdam. Exemplary for this type of
datacenter it is located in the Netherlands for its presence near the Amsterdam Internet
Exchange AMS-IX. The American company

Appendix IX observation World Hosting Days

Observation 14-3-2016 – 18-3-2016 World Hosting Days Local

Multiple days in Rust (Germany) where the hosting industry comes together to discuss the
future of the industry. Presentations and stands on a broad range of topics have contributed
to the general knowledge of the researcher. Furthermore, several informal interviews have
been held during the informals of the vent.

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Appendix X observation ‘Amsterdam als Digitale Hotspot van Europa’
Observation 27-5-2016: Metropoolregio Amsterdam – Digitale connectiviteit

Ongeveer 25 aanwezigen waaronder Amsterdam Science Park, Green IT Amsterdam,

Deloitte en de gemeente Almere. Onderwerp was de metropoolregio Amsterdam en de rol
die datacenters hier spelen.

Amsterdam heeft op dit moment een leidende rol als het gaat om datacenters en andere
onderdelen van de digitale infrastructuur. Allereerst de vraag; hoe is dit gekomen?

Vanuit de wetenschap was er zo’n 30 jaar geleden de behoefte om te communiceren. Om dit

te doen is er een TCP IP protocol gestart wat ertoe heeft geleid dat AMS-IX is opgericht. De
belangrijkste concurrent was LINX, de internet exchange van Londen. Door de hoge
grondprijs in Londen was Amsterdam echter een meer voor de hand liggende plek om naar
toe te komen. Ondanks dat AMS-IX iets minder connecties had dan de internet exchange in
Londen bleek dit toch de meest voor de hand liggende locatie.

Vraag is nu, hoe kan deze leidende positie worden behouden?

Een belangrijk aspect voor datacenters is nog altijd duurzaamheid. Elektriciteitskosten zijn
nog altijd de grootste kostenpost. Er moet een betere samenwerking komen tussen (1)
datacenters, (2) elektriciteitsgeneratoren en (3) kassen of andere warmte afnemers. Vraag
blijft echter in hoeverre duurzaamheid onderscheidend genoeg is voor Nederland om voorop
te blijven lopen.

De overheid heeft geen vooraanstaande rol gespeeld bij het ontstaan van de leidende
positie. Vraag is in hoeverre dat nu wel kan, daadkrachtig optreden door overheden mist. Dit
is niet het gevolg van het gebrek aan kennis.

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Appendix XI observation More-IP – Peering into the future
Observation 16-6-2016: event with multiple presentations about connectivity and the
(future) role of internet exchanges.

Peering will become more localized whereas transferability of data becomes higher. The
amount of data that has to be transferred to the end user will become higher, the most lively
example is Netflix. In order to deliver the best service to the customer it is important for
businesses

Appendix XII observation ‘Presentatie mainport voorbij RLI’

Observation 1-7-2016: presentatie van het rapport van het RLI over het mainportbeleid van
Nederland

Ongeveer 50 aanwezigen vanuit de politiek, afgevaardigden van Schiphol, de haven van

Rotterdam, Agriport en de Brainport.

Thema van het debat was het mainportbeleid van Nederland.

De raad voor de leefomgeving presenteert een onderzoek naar het mainportbeleid in

Nederland. Hierbij staat centraal dat de mainportgedachte moet worden losgelaten en dat
Nederland moet gaan investeren in haar vestigingsklimaat.

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Appendix XIII observation ‘opkomst van het lokale datacenter’
Observation 22-9-2016: presentatie over de opkomst van het lokale datacenter.

Ongeveer 120 aanwezigen

Op deze dag heb ik vroegtijdige bevindingen van mijn onderzoek mogen presenteren. Hierbij
was er de mogelijkheid om vragen te stellen en heb ik achteraf een aantal goede,
inhoudelijke gesprekken gevoerd.

Appendix XIV observation ‘Hostingcon Europe Amsterdam’

Observation 12&13-11-2016: Hostingcon Europe Amsterdam

Same as the previous year. This year there was a presentation from the Dutch secret service
about upcoming privacy concerns. Afterwards I’ve had several conversation with hosters and
people from the industry that were astonished by the fact that a Dutch government agent
showed interest in what’s happening in the industry, Furthermore, they were surprised by
the level of the talk.

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Appendix XV Interviewguide
Datacenters en de invloed op de economie

Impact van het datacenter op de ‘real economy’.

Hoe is de datacenter industry hier zo groot geworden? Welke rol heeft AMS-IX daarbij
gespeeld?

De veranderende rol van het datancenter

Hoe gaan datacenters in de komende jaren veranderen, komt er een andere rol, hoe staat
datacenters tegenover de overgang richting de cloud?

Gaan we een opkomst zien van proximity datacenters?

Heeft het besluit van de Nederlandse overheid om de digitale infrastructuur als derde
mainport (zie Verhoeven) te bestempelen effect op de beleidsvoering, gaat er meer
aandacht komen en zo ja, vanuit welke hoeken?

Wat is precies de rol van innovatie hierin, waar moet deze vandaan komen of moet dit
worden gezien als een externe factor? Amsterdam als pilotgebied waar proeven kunnen
worden gedaan bijvoorbeeld? ‘mix van sector en gebruikers binnen een gebied en rondom
een datacenter’

Welke behoeften zijn er nog voor datacenters, op welke gebieden is er meer aandacht nodig
van bijvoorbeeld AMS-IX?

Vestigingsfactoren

-In hoeverre gaan privacy maatregelen vanuit de EU / Nederlandse overheid een bepalende
rol spelen bij het besluit om een datacenter te vestigen

-Is er voor datacenters sprake van clustervorming, welke voordelen kan dit bieden op het
gebied van connectiviteit of misschien zelfs op het gebied van stroomvoorziening. Is het
bijvoorbeeld denkbaar dat er een tweede powergrid wordt aangelegd om datacenters beter
te beschermen?

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-Wat zijn veelgestelde vragen bij het NFIA over vestiging van datacenters? Zijn er mogelijke
barrières waar datacenters tegenaan lopen?

Wat zijn overeenkomsten en verschillen tussen het beleid van het NFIA, Zweden Luxemburg
en IJsland, speelt het NFIA een meer faciliterende rol of is er ook een actieve rol weggelegd?

86
Appendix XVI: 10 year cost of data centre operations

Figure 2 Source: Broadgroup 2016

Assumptions made in order to create this diagram (Broadgroup, 2016):

• Large corporate

• 400 rack deployment

• Each rack at 3kW

• Own build

• Central urban location in each country

• Power costs at 40% annual opex

• Power usage consistent throughout 10 year

• Telecoms costs at 6% annual opex

• Telecoms includes international connectivity to New York (or London, in case of Virginia)

• Does not include impact taxes, inflation, currency risks

• 10 year cost of data centre operation compared, with Iceland at 100.

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