QUINCY, Wash. – In the heart of potato country, a high-tech boom is taking place. Technology giants Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO) are planning to build massive data storage centers amid the sagebrush and potato fields of rural central Washington.
The draw appears to be the region's relatively cheap land, inexpensive hydropower and wide-open space, and although neither agreement has been finalized, local officials are hopeful that Grant County will become more than the nation's leading supplier of spuds.
"This could be a real boon to Quincy and to Grant County," said Curt Morris, Port of Quincy board president. "It's bringing renewed optimism to the people of the town, especially the business owners. We're interested to see where it takes us."
The developments come as Microsoft, Yahoo, Google Inc. (GOOG) and Time Warner Inc.'s (TWX) America Online, as part of efforts to compete for customer loyalty, are boosting e-mail, video and other services that require lots of storage space.
"Data centers like this are what contains the family jewels," analyst Rob Enderle said. "They're looking for low-cost real estate and stable sites in terms of weather and geographic activity. It means they've done some work and determined it's one of the least-expensive, safest places they can build."
Quincy, population 5,300, has long been an agricultural hub in Washington. Trains carry railcars loaded with apples, potatoes, onions and hay to points both east and west, and food processors and packing sheds comprise most of the city's industrial base.
The city sits hundreds of miles from Microsoft's lush Redmond headquarters near Seattle, yet the Fortune 500 company has signed a tentative agreement to buy 74 acres in one of Quincy's five rapidly filling industrial parks. The price: $1 million.
"The Quincy area is attractive to Microsoft for a number of reasons: space available, the land, the access to power, and the close proximity to our headquarters here, which is always good for us," Microsoft spokesman Lou Gellos said by telephone from Redmond.
As tech companies take work as far afield as India and China, the company clearly sees an advantage to boasting of local expansion.
"Washington state is our home. It's where the bulk of our employees reside and work, and here's another example of Microsoft in our state. We're very excited about that, and the folks in Quincy are very excited, too," he said.
Microsoft hasn't released many details about the deal, which could be completed any day.
Documents filed with the city show plans for up to six buildings, totaling nearly 1.5 million square feet, to house racks of computers to store data.
The plans include an electrical substation and a diesel-powered generator for backup power "because they can't afford to let it go down for a minute," said Tim Snead, city administrator.
"My understanding is their objective is to increase their capacity for the Internet, search engines," Snead said. "All I know is there's a lot of computers."
Still unknown is whether those computers will hold consumer information, miles of code or backups for data stored on servers elsewhere. Gellos declined to provide further details, saying company officials were still finishing plans for the site.
But Gellos did say that Microsoft will likely start small in Quincy, then potentially grow to reach the size proposed in plans filed with the city. He added that Microsoft has data centers around the world, and the Quincy site is just another in that plan.
One of Microsoft's rivals, Yahoo, also has signed a tentative agreement to purchase 50 acres in another industrial park in Quincy. The company, based in Sunnyvale, Calif., has until the end of April to seal the deal for $500,000.
The company also has signed a 10-year, roughly $6 million lease to set up a separate data center in Wenatchee, about 30 miles away.
Morris estimates the two companies could double Quincy's tax base, currently at some $800 million — providing valuable money to local schools and the city's hospital. And that doesn't include high-tech suppliers that might choose to relocate there, too, he said.
Snead, the city administrator, wants more details before estimating the impact to the city's tax base, but he believes the boost could be huge.
"It's been a quiet little town for many, many years, but it's going to be very exciting," Snead said. "Now, we can just diversify our economy a little, which was badly needed."
Already, residential developers who have heard the news about Microsoft and Yahoo are clamoring to put up homes in and around the city. And when Microsoft officials asked about housing in the area, they were stunned to see an exclusive condominium development going up on the banks of the Columbia River outside of town, tucked from view away from the highway, Morris said.
"Quincy will always, I think, have the roots of being an ag town, because of the industries that are already here," Morris said. "It's going to be interesting to see how Quincy changes from what has been a straight ag, ag industry town, to see what it can become in the next five years."