Amazon plans to spend $7.5 billion building a cluster of huge data centres in Auckland, due to open in 2024.
The tech giant says the Amazon Web Services build will create 1000 jobs, and add $10.8 billion to New Zealand's GDP over a decade and a half.
AWS New Zealand head, Tim Dacombe-Bird told the Herald that the $7.5 billion was calculated over 15 years, and included the cost of building at least three data centre zones and stocking them with hardware, plus operating costs including utilities and salaries.
"It will be a full 'AWS Region, which will include three 'availability zones'. An availability zone is defined as one or more data centers," Dacombe-Bird said.
The Auckland build will become one of 25 AWS data centre regions worldwide.
The company has yet to reveal specific locations, among other details, but a wave of data centre building by Microsoft, half Infratil-owned CDC and others is currently underway in Auckland's northwest - which offers both land newly opened for development and proximity to international fibre cables and NZ's largest internet peering exchange.
A rep for Amazon told the Herald that the sites would not be revealed, "as this is part of our secure design approach. "
Overseas Investment Office is required. Amazon says it's in discussions with the OIO, but the Auckland build has already received approving noises from higher up the political food chain.
"Amazon is the second major global tech provider to invest heavily in establishing a Cloud Region in New Zealand [after Microsoft], bringing with it new jobs, exciting new opportunities for the digital sector, and further acceleration to our economic recovery from Covid-19," Digital Economy Ministery David Clark said this morning.
"This investment demonstrates the high level of confidence the international business community has in backing New Zealand's economy."
Clark added, "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.
"Cloud-based technologies are generally accepted now as being the way to work and innovate digitally; an example of this is the NZ Covid Tracer app."
With its cloud storage and on-demand computing services, AWS is one of the vendors involved with both the NZ Covid Tracer app and the $38m drive to create a new online vaccination management system.
Local data centres will make both easier in terms of potential data sovereignty issues.
"Protecting Kiwis' data and privacy is critically important to the Government. Onshore Cloud facilities give us stronger control of New Zealand's data because it is held here, where our laws and protections apply," Clark said.
AWS' decision to establish a New Zealand cloud region was made through the company's independent due diligence and is not a government procurement, Clark added.
Inside Amazon’s new Auckland digs - across two floors of the new PwC Tower at Commercial Bay (also home to local game studio Rocketwerkz) pic.twitter.com/FKfGVxkKXW
— Chris Keall (@ChrisKeall) May 11, 2021
AWS currently serves customers from its data centres on Australia's east coast. Bird, said the local server farms would serve local customers like TVNZ , ANZ, Vector and Education Perfect, "even faster" and address concerns for those with data sovereignty issues who needed data stored locally.
AWS has doubled its NZ staff to 100 over the past year, and in May opened a larger office in Auckland in the new PwC Tower at Commercial Bay.
AWS is separate to Amazon's online shopping operation, which has built warehouses across the Tasman and recently opened Amazon.com.au to Kiwi shoppers. AWS' expansion into NZ is unrelated to any e-tail developments that may or may not happen here.
AWS is the largest of the big three in cloud computing services backed by a series of massive data centres. The Big Three also includes Microsoft and Google.
All three were already expanding their cloud computing arms quickly, but the pandemic surge in working from home has turbocharged growth.
Last year, Microsoft announced a plan to build three data centres in New Zealand and, with construction of the first under way at Westgate in northwest Auckland, is the first of the Big Three to break ground locally. Microsoft has not put a price on its build, but it did require Overseas Investment Office approval, putting it north of the agency's $100m threshold.
Half Infratil-owned Canberra Data Centres (CDC) also has two "hyper-scale" data centres under construction, one in Hobsonville in northwest Auckland and the other north of the city in Silverdale. The ASX-listed CDC told shareholders its NZ build would cost more than $300m.
A second Australian contender, DCI Data Centres applied for OIA permission to build two data centres in Auckland. The first, also in the northwest, is budgeted at $70m.
— Chris Keall (@ChrisKeall) May 10, 2021
And in August, Spark unveiled plans to supersize its Takanini data centre into a 10 megawatt giant (data centres are classed by power consumption) which will, at least for a time, make it New Zealand's largest server farm.
The telco did not put a price on the project, but said it was accommodated in its existing capex, which forecasts a rise in spending from $354m to $400m in FY2022.
Spark consumer director Grant McBeath welcomed today's Amazon news, emphasising that his company offered its customers a mix of cloud services, from its inhouse offerings to those sold via partnerships with Amazon, Microsoft and Google (while it has not yet revealed any data centre plans for NZ, Google did recently announce a local point-of-presence, with an option for larger organisations to take advantage of dedicated bandwidth on a submarine fibre link to its Aussie server farms).
"We know that the uptake of cloud is growing exponentially internationally, so it is important that Kiwi businesses have access to digital infrastructure that competes on the global stage. With Microsoft, AWS, and Google now all developing local cloud points of presence, New Zealand will be well served," McBeath said.
Spark shares were trading flat at $4.75 this morning for an $8.7b market cap.
Amazon shares closed up 1 per cent today to US$3380.05 for a US$1.71 trillion market cap, consolidatiing the Jeff Bezos-founded company's position as the world's fifth most valuable.
Economists expect the recovery continued during the first quarter of the year.