GE's $500M bet on data center consolidation and cloud computing

General Electric's energy division has agreed to acquire Lineage Power Holdings in a $520 million deal that will get the company into the cloud computing and data center game.

General Electric's energy division has agreed to acquire Lineage Power Holdings, a data center and telecom power conversion gear company, in a $520 million deal.

The agreement opens the floodgates for GE technology to be deployed in a $20 billion per year power conversion space -- bringing its energy conversion equipment to the burgeoning telecom, data center and cloud computing markets, writes Larry Dignan on his ZDNet blog.

Lower energy costs is one of the drivers behind the push for consolidating data centers by the government and private sector entities. Data centers are responsible for 1.5 percent of all power use in the U.S., reports Fast

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"Every new mobile device plugs into an infrastructure that requires an ever-increasing amount of high-quality power," said Dan Heintzelman, GE Energy Services president & CEO, in a statement. "The growth in high-bandwidth mobile Internet applications and cloud computing is accelerating that demand. A globally networked planet needs a lot of power to keep spinning," he added.

The agreement is expected to close the first quarter of 2011, subject to regulatory approval.

Lineage Power sells energy-efficient AC-DC power supplies, DC-DC circuit board mounted power modules, telecom energy systems, DC data centers and custom power products. AT&T, Verizon Wireless, Cisco, Ericsson, Oracle and Hewlett Packard are among its customers.

This latest deal highlights GE's play to expand its $40 billion energy portfolio. In October, it announced a contract signing to acquire Dresser Inc., an energy infrastructure company. Last month it revealed its intent to make an offer for oil pipe manufacturer Wellstream Holdings.