The two properties, which weren't specified by Digital Realty inits announcement, are 2045 and 2055 LaFayette St. in Santa Clara.In a related deal, Microsoft paid Savvis $190 million for thebuilding's improvements and equipment, and for early termination ofits service contract with Savvis.

Dan Golding, a senior analyst with Tier 1 Research, which tracksthe datacenter industry, tells GlobeSt.com that everybody comes outahead in this deal. Microsoft, which was the sole tenant of thepremises, saves money by operating its own facilities and leasingdirectly from Digital Realty rather than a third-party providersuch as Savvis. Savvis, meanwhile, gets $190 million of cash to goout and buy additional datacenters--likely in partnership withDigital Realty--that it can lease out to smaller clients that willorder more of its services, which is how the company makes itsmoney.

"Microsoft doesn't use Savvis services; this was avery-low-margin pass-through deal that was created during the badtimes, after the telecom bust hit, when Savvis needed revenue andneeded to fill up its datacenters," Golding says. "Now Savvis isdoing very well and the margin on this [arrangement with Microsoft]is much less than anything else they are doing."