Infrastructure and ‘talent’ why Amazon selected Auckland for $7.5b investment – Stuff.co.nz

Amazon Web Services decided to base cloud computing data centres in Auckland because of the citys telecommunications connections and skilled workforce, its country manager says.

Amazons cloud computing arm, Amazon Web Services (AWS), will spend $7.5 billion over 15 years building world class computing infrastructure in Auckland, the company announced on Thursday.

AWS New Zealand country manager Tim Dacombe-Bird said the country would join 25 other territories in which the company had established cloud computing data centres.

The company would build a cluster of at least three data centres in the city, he said.

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Explaining the decision to locate all the infrastructure in Auckland, rather than elsewhere in the country, Dacombe-Bird said AWS took a number of factors into consideration when picking sites.

Its three availability zones needed to be geographically isolated with separate infrastructure connections but still close enough together that there wasnt a lot of latency between them, he said.

So we need internet transfer points and we need the networking or telecommunications infrastructure and we were able to find that in Auckland.

The other thing we need is the availability of talent, he said. Auckland has a large pool of top quality technology talent.

The $7.5b investment would cover the construction and fitting out of the data centres and salaries, Dacombe-Bird said.

A proportion of the spending will be on imported computer equipment.

But AWS estimated the investment would create 1000 jobs and contribute $10.8b to New Zealands GDP over the next 15 years.

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Digital Economy and Communications Minister David Clark said AWS investment would bring long-term benefits.

Microsoft is also investing in cloud computing data centres in New Zealand, although there is no indication that will be on the same scale.

AWS other major global cloud-computing rival Google has instead elected to continue servicing customers in the region from Sydney and Melbourne.

Remi Galasso, co-founder of Datagrid, which plans to build a large data centre with associated subsea cable infrastructure near Invercargill at a cost of about $700m, said AWS investment was great news for the country.

New Zealand is definitely becoming attractive to cloud providers, he said.

Auckland is obviously the first chosen location, but I am sure other data centre locations will flourish in the near future especially the ones with access to renewable energy.

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Datagrid co-founder Remi Galasso said NZ was becoming more attractive as a base for cloud computing and he expected investment to also go into other regions.

Dacombe-Bird said AWS had not sought or been offered any government incentives for its investment.

Minister for the Digital Economy and Communications David Clark said the investment demonstrated the high level of confidence the international business community has in backing New Zealands economy.

Cloud-based technologies are generally accepted now as being the way to work and innovate digitally, he said.

This will create job opportunities for industries like our construction sector, and bring long term benefits as we see the ICT sector and local innovators significantly grow into the future.

National Party digital economy and communications spokeswoman Melissa Lee also welcomed the investment, describing it as a massive confidence boost to our digital economy.

Cloud computing data centres are used in part to house the computers running common software applications, for example by Google to run its Google Apps and by Microsoft for Office 365.

In AWS case, its data centres are used by thousands of third-party software companies such as Xero to provide their services to customers.

They are also used by businesses to run their own particular software applications and by technology start-ups and others to develop new IT services, for example by training machine-learning algorithms.

The Auckland data centres will also be available for companies outside the country who wanted to use them as a back-up, Dacombe-Bird said.

Aside from the injection into the economy provided by the construction of the facilities, they can also have benefits in making software applications slightly faster to run in the countries where they are built, by shortening the distance between computer users and the online services they are accessing.

Dacombe-Bird said some AWS customers also wanted to have the facilities locally for privacy reasons, so that their customers data need not leave the country.

AWS nearest data-centre facilities at the moment are in Sydney.

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Lines company Vector says the AWS investment will have spin-offs beyond the technology sector.

Dacombe-Bird said the facilities AWS was building would start to come online from 2024.

The investment would unleash further innovation, drive greater productivity, increase our skilled workforce, and truly position New Zealand at the forefront of digital commerce for generations of Kiwis to come, he said.

Discussions with power companies for the electricity to supply the data centres were well-advanced, he said.

AWS has committed to power all its operations, including its data centres, with 100 per cent renewable energy by 2025.

Simon McKenzie, chief executive of Auckland lines company Vector, which has a partnership with AWS, said the investment was excellent news for AWS but more importantly New Zealand.

The scale and nature of this AWS investment and commitment to New Zealand will encourage and build confidence for increased levels of innovation across all sectors, he said.

A thriving tech sector benefits us all. It adds diversity to our economy, job opportunities, and keeps talent on our shores, while allowing companies to scale globally from New Zealand.

ALDEN WILLIAMS/STUFF/Stuff

AWS investment would appear to have mixed implications for some local technology infrastructure firms such as Spark, but it welcomed the development.

Alex Burke, chief executive of Dunedin-based education technology company Education Perfect, which uses AWS to host its cloud software, said AWS investment would help it attract top tech talent to New Zealand and encourage young people to pursue careers in technology.

We will look to build on the 200 people we have in the business already by hiring an additional 100-plus engineers over this upcoming year, he said.

It's important to state that this investment, whilst in Auckland, will positively impact the whole country, he said.

But AWS investment would appear to have mixed implications for some local companies that already play in the technology infrastructure space, including Spark.

Spark chief financial officer Stefan Knight said in April that its revenues from providing IT and managed services grew 10 per cent last year to $1.1b, making up 31 per cent of its overall sales.

Spark customer director Grant McBeath welcomed AWS investment, saying Spark was well-positioned to support customers with their cloud, security, and managed service needs as AWS grew its offering in New Zealand.

We believe that hybrid cloud private and public options serve businesses well and we can work with our customers to identify the optimal mix and manage migrations, he said.

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