Amazon adds to its $7.5 billion northwest Auckland data centre plans

Technology Editor/Senior Business Writer·NZ Herald·

17 Feb, 2022 04:32 AM5 mins to read

Amazon's new Auckland office, opened last May. Photo / Chris Keall

Auckland's multibillion-dollar data centre boom keeps getting bigger.

Amazon today said it will launch a new AWS (Amazon Web Services) Local Zone in Auckland, with Netflix and potentially TVNZ and Spark as anchor customers.

The Jeff Bezos-founded firm says its new Local Zones - first launched in 2019 - allow the likes of Netflix and TVNZ to stream video with less latency (or lag) by bringing Amazon infrastructure physically closer to large population centres.

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AWS NZ country manager Tiffany Bloomquist told the Herald that Spark and other local telcos were also potential customers.

Bloomquist said the Local Zone will complement Amazon's plan, announced in September last year, to build three giant "Availability Zones" in Auckland, which are slated to open in 2024.

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An Availability Zone is AWS' top-tier of cloud infrastructure.

Amazon says it will spend $7.5 billion on the Availability Zones over 15 years, including the cost of building at least three data centres and stocking them with hardware, plus operating costs including utilities, and salaries. The tech giant says the project will create 1000 jobs.

Bloomquist said the Local Zone will go live at some point before 2024. Amazon won't comment on its budget (other than it's in addition to the previously allocated $7.5b) or location. Initially, it will connect to an AWS Availability Zone (the nearest is in Sydney) for some high-end functions like AI and machine learning.

Although only billed as potential customers, both TVNZ and Spark supported Amazon's launch announcement.

TVVZ technology GM Louis Acafrao said the AWS local zone "Will help us provide the best possible quality streaming experience for our TVNZ OnDemand viewers."

Heather Graham, an executive with Spark's cloud business, said, "As part of our hybrid cloud portfolio, we look forward to helping our customers take advantage of the low-latency and performance benefits the new service offers."

AWS NZ country manager Tiffany Bloomquist. Photo / Supplied

The Local Zone will be a potential boon for Spark's AI and big data unit, Qrious, plus Spark Sport, which uses AWS.

AWS is also a partner on several Crown projects, including the NZ Covid Tracer app and the new online vaccine register.

Bloomquist said Amazon now has around 150 staff in NZ between its Auckland and Wellington offices. Local staff numbers have doubled over the past couple of years and in 2021 the firm has moved its headquarters to larger digs at Commercial Bay (pictured in the tweet below). But so far the focus is on AWS, with no plans for a local warehouse for the tech giant's e-tail operation.

pic.twitter.com/v4eLMSTr1r
— Chris Keall (@ChrisKeall) May 10, 2021

Amazon's announcement today was part of a flurry of cloud-related infrastructure news for NZ - mainly centred on Auckland, and specifically the city's northwest.

Earlier this week, Orcon Group (whose Australian parent has bought 2degrees, pending approval) said it had reached a deal to host a Google Cloud point-of-presence in its local data centre.

A data what?

While "the cloud" is often used as a metaphor, online services and online storage involve giant data centres or "server farms" filled with thousands or tens of thousands of computers, all of which need to be cooled.

Keeping data centres local is better for performance, and means that the likes of banks and government departments don't have to worry about the data sovereignty issues that can complicate life if files are stored in server farms overseas, where different privacy and security laws can apply.

"Edge" services can sometimes be hosted in a local partner's data centre.

Famine to feast

New Zealand currently has no data centres in the top-tier "hyperscale" class.

But suddenly, many are on the way. In May 2020, half Infratil-owned Canberra Data Centres (CDC) announced plans for two hyperscale data centres: a 7000sqm facility in Hobsonville and an 11,000sq m server farm in Silverdale in a $300m-plus project that now has construction under way.

Microsoft soon followed, breaking ground in February 2021 on the first of three hyperscale data centres in northwest Auckland. The tech giant has not put a price tag on the project, other than to confirm that it is something more than the $100m threshold for Overseas Investment Office approval. Early customers will include Fonterra, BNZ and Spark.

In August, Spark said it would upgrade its Takanini data centre to a 10 megawatt hyperscale facility in a project that would - at least for a while - be New Zealand's largest server farm (giant data centres are described in megawatts, based on their peak power consumption as they run thousands of servers plus air conditioning to keep them cool).

In the complex cloud wars, Spark co-operates with the multinationals for some services, and uses its in-house infrastructure for others - hence Graham's reference to its "hybrid" strategy.

An artist's impression of "AKL02", which will be build on Auckland's North Shore. Image / Supplied

And last month, Australian firm DCI - which already has a hyperscale data centre under construction at Westgate (opening in 2023) - said it would add now add a second server farm at Rosedale (opening in 2024), taking its total investment around Auckland's northwest to around $600m.

Startup Datagrid - whose backers include rich-lister Malcolm Dick and Singapore's BW Group - is planning a $530m, 60MW hyperscale facility in Southland.

The plan, first revealed in 2020, sees Datagrid taking up some of the slack from Meridian's 572MW Manapouri Power Station after the Tiwai smelter is taken offline.

The scheme depends on funding being found for a new international fibre cable that would link Invercargill, Dunedin and Christchurch with Los Angeles, Singapore and Jakarta - which would become the South Island's first major broadband link with the outside world. The funding effort is still in progress.