Underwater Internet
We have long owned Microsoft Corp (US:MSFT), initiating a position in 2012 with the fallout of Windows 8 and subsequently enjoying its evolution to a world leading “cloud first” company. Microsoft is a huge organization with a number of moving parts. We recently found a new, particularly interesting “moving part” and thought that we would write about it this week.
As analysts, everyone on the investment team has screens for all of the companies that we own that zip news releases and stories right into our inboxes. I remember 2 years ago “watching the tape” and saw a news release from Microsoft that they were going to put data centers underwater. At the time, I remember thinking that was a bit of a crazy idea but I moved on until I eventually noticed another post mid-September this year that the study had been completed. I thought it was interesting and would like to share it with you this week. MSFT builds data centers all over the world that route cloud traffic for many of the applications and services that we use in our daily lives. In 2018, they put a data center (864 servers) inside a waterproof container, removed all of the oxygen (replaced it with dry nitrogen), started it up and dropped it 117ft to the bottom of the ocean in the hostile North Sea off the coast of Scotland.
- Figure 1 presents the data center after it had been removed from the ocean upon completion of the two-year study. MSFT used heat exchange plumbing from submarine technology to provide natural cooling from the sea water. They had to wait for abnormally calm seas to deploy and retrieve the center, effectively dancing with the ocean to keep the center stable.
- Some of the interesting points: the environment that we live in is hostile to computer components, servers were more than 8 times as reliable at the bottom of the ocean, the data centers are modular and can be put on ships & trucks and deployed close to the communities where the cloud infrastructure is needed, most computers will last 5 years untouched and engineers monitor the system and turn off and abandon servers that degrade after initial deployment. If you can spare 2 minutes and 16 seconds please follow the link here to watch the video.
“This means that” while it is easy to get distracted with news headlines, as investors, we should remain focused on the businesses that we own and hopefully the innovation and sustainable projects that management teams develop on behalf of the customers and shareholders (i.e. us!). The real value comes from companies that innovate new technology, products and services and this should be the underlying focus of our investment management process.
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Pathfinder Real Fund are presented based on the masters series of each fund. The Pathfinder North American Equity Portfolio and The Pathfinder North American Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder North American Equity Portfolio (January 2011), Pathfinder North American High-Income Portfolio (October 2012) Pathfinder Partners’ Fund (April 2011), Pathfinder Real Fund (April, 2013), and Pathfinder International Fund (November 2014).
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