The making of Microsoft’s New Zealand data centre

United States technology behemoth Microsoft is the first hyperscaler to open a data centre in New Zealand and has acquired more land to build more.

The cloud service provider opened its Auckland centre at the end of last year and had begun transitioning customer information and workloads into it, such as bank applications, Fonterra’s data and information held by Auckland Transport and the Accident Compensation Corporation.

Its bet on New Zealand’s economy was already paying off, Microsoft New Zealand managing director Vanessa Sorenson told Markets with Madison.

“We’re actually seeing the scale grow even faster, even with that economy, with what we’re in, because of the access it gives you, that ability to use technology to help us get out of this [downturn].

“We need more productivity now, more than ever.

“The best way to do it is through tech, and certainly with this AI movement, we are 100% seeing that.”

She said the business case for the data centre region in New Zealand was based off “net new workloads” from its anchor customers.

Demand was still predominantly coming from the private sector, Sorenson said.

“We are seeing some phenomenal work within the public sector as well, it’s just a little bit slower.”

Microsoft had 61 Azure (the name of its cloud computing platform) data centre regions globally.

“I can’t even keep up anymore,” Sorenson laughed.

“It’s amazing to see so many opening across Asia. Asia is so important for Microsoft.”

Microsoft New Zealand managing director Vanessa Sorenson.

Microsoft had more than a first-mover advantage Down Under - it could also benefit from a large number of organisations in New Zealand already using Microsoft cloud services offshore and its productivity suite products online, such as Outlook, Word, Excel, PowerPoint & OneDrive.

It announced plans to build a data centre region here during the pandemic in May 2020.

It could not reveal its exact spend here but it was expected to be in the hundreds of millions.

As an example, competitor Amazon Web Services had committed $7.5 billion to build its data centre region here, which it expects to open later this year.

Microsoft’s domestic data centre took about four years to build, because of construction challenges with Covid-19 restrictions.

Sorenson had to get Microsoft’s chief executive Satya Nadella to sign the investment off directly.

He agreed after visiting Auckland in 2016, she said.

“Truly that’s where it started. Him just meeting Kiwis, seeing the number eight wire, the ingenuity, the innovation.”

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Madison Malone (nee Reidy) is host and executive producer of the NZ Herald’s investment show Markets with Madison. She joined the Herald in 2022 after working in investment, and has covered business and economics for television and radio broadcasters.