DES MOINES, Iowa -- Software giant Microsoft is setting up a data center in West Des Moines, said Gov. Chet Culver Thursday morning.

"As Governor I'm honored to announce that Microsoft, a world leader in information technology, has decided to make West Des Moines, Iowa home to their new $500 million data center. It's a great day," Gov. Chet Culver said.

"We are very proud to welcome Microsoft to Iowa," said Culver. “In making its decision, Microsoft recognized what we in Iowa have known all along – our workforce and quality of life makes Iowa the best place for business."

Culver said it's a huge investment by software giant Microsoft, and it's a giant plus for Iowa. Culver appeared with a Microsoft executive to announce the company's newest data center is going to be built on a 42 acre location in West Des Moines.

"Microsoft has a very significant site selection process of looking for the very best places in the world to site select our facilities. And, of course, it's probably no surprise to anybody here in this room, but Iowa was the top of the list for us," said Michael Manos, Microsoft Data Services General Manager.

Manos said the data center would deliver online products like Hotmail, instant messenger and online Microsoft Office products.

"We're thrilled. We're thrilled we have the spot, we're thrilled that we were able to work with them, that we could provide the infrastructure, we didn't want to lose them," said Loretta Sieman, West Des Moines City Council Member.

Officials said the first step in the process is to complete the design of the center, which typically takes 6-8 months.  The center will feature the company's latest design to conserve power usage. 

West Des Moines was selected because of its location near key power resources, Internet connections and the DMACC tech center that is dedicated to producing technology workers. 

Officials said the center will be located southwest of Booneville Road and Xavier Place in West Des Moines.  The area is west of the Grand Avenue exit off Interstate 35.

Sen. Chuck Grassley said Microsoft chose Iowa because of the work ethic, quality and productivity of Iowans.

Lawmakers said the company was drawn to central Iowa due to tax breaks approved by the Iowa Legislature.