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Microsoft delays plans for Iowa data center

The project, announced only five months ago, is now on hold as the software maker looks to trim its capital expenses.

The fallout from Thursday's cost-cutting moves by Microsoft continues. On Friday, Microsoft announced that it is delaying its plans for a massive data center to be built in West Des Moines, Iowa.

It is an abrupt reversal for Microsoft, which announced its plans for Iowa just five months ago as part of its massive push into the data center business. By October, though, the software maker was already detailing plans to cut its data center spending by $300 million. Now Microsoft is looking to cut things even further.

"We are still continuing construction of our facilities in Chicago and Dublin, and are planning to open them as customer demand warrants, Microsoft's Mike Manos and Arne Josefsberg said in a blog posting on Friday. "But given the current economic climate we're going to do the right thing for our business and shareholders and revisit our plans on a quarter-by-quarter basis."

Microsoft tried to put its best spin on the move, saying that long-term the cash crunch will help drive customers to turn to Microsoft rather than building out pricey data centers themselves. Josefsberg and Manos also said that Microsoft will find less expensive ways to have the capacity it needs to run Windows Live Hotmail, Windows Live Messenger, and all of Microsoft's other online services.

"We've been preparing for lean times for a while," the pair said. "This recession is the ideal backdrop to implement small changes that target big needs. Frugality drives innovation, and limited resources are just another forcing function to develop creative solutions to infrastructure needs. For our industry, this means more reasons to identify the small tweaks to products or operational approaches that can unlock big opportunities."

An aerial view of the site in West Des Moines, Iowa, where Microsoft is now delaying plans to build a massive data center. Microsoft