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Cost-cutting Microsoft postpones new data centre

Software giant also cuts marketing outlay

Microsoft has revealed that it is postponing construction of a data centre in Iowa, as part of cost-cutting measures.

The move follows the tech company's announcement last week that it is cutting up to 5,000 jobs and lowering marketing spending in a bid to survive the economic downturn.

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Microsoft will continue construction of its new data centres in Chicago and Dublin and open them based on the level of demand for its online services. The company will revisit its data centre plans quarterly, said Arne Josefsberg, general manager of infrastructure services, and Michael Manos, general manager of data centres, in a blog.

They referenced Microsoft's cost-cutting efforts, but optimistically described the postponement in Iowa as being a result of successful efforts to improve the efficiency of data centre operations elsewhere. "Thanks to the efficiencies we've gained through these ongoing efforts, we will be able to delay the construction and opening of some of our facilities," they said.

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Josefsberg and Manos said they expect more businesses to rely on hosted services from companies such as Microsoft to save money, and that despite the economic downturn, Microsoft's online services businesses are growing. That's just barely true. Revenue from its online services in the quarter ending December 31 was $866m (£631m), up just a hair from $863m (£629m) in the same period in 2007.

Microsoft revealed in August that it would build the facility in a suburb of Des Moines and use it to host consumer services such as Hotmail, Live Search and Windows Live applications. Like its Chicago data centre, the facility would use shipping containers to house servers, the company said at the time.

Microsoft is not alone in reigning back its data centre expansion plans. Google late last year decided to delay building a facility it planned in Oklahoma.

See also: Microsoft to pay £8.5bn in 'Vista Capable' case

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