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Peter Griffin: tech commentator on the new Amazon data centres set to go up in Auckland · Best of Business

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  Speaker 1: You're listening to a podcast from News Talk ZEDB. Follow
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  Speaker 2: What do we make of the Amazon Web services announcements
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  Speaker 2: and the data centers? Peter Griffin is a Wellington based
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  Speaker 2: science and technology journalist with twenty years experience in the
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  Speaker 2: New Zealand media covering science, technology and media and he
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  Speaker 2: joins us on the line now and he's been all
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  Speaker 2: over the story. Peter, A very good afternoon to you.
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  Speaker 3: Good afternoon, Hey, let's go right back to basics. A.
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  Speaker 3: What are we talking about here? What is a data center?
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  Speaker 3: And what are they looking at building aws?
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  Speaker 4: Well, you know, we've all moved into the digital world
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  Speaker 4: over the last twenty years, and it used to be
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  Speaker 4: that a lot of those computer service they sat all
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  Speaker 4: over the place and businesses all over our major cities.
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  Speaker 4: And it's become a lot more efficient over the last
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  Speaker 4: ten to fifteen years to move all of that computer
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  Speaker 4: equipment into centralized facilities called data centers, where there are
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  Speaker 4: racks and racks and racks of this equipment. It's more
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  Speaker 4: efficient to power these facilities, easier to secure them, and
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  Speaker 4: to have lots of computer capacity in one place. So
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  Speaker 4: that's not a new thing, but we've sort of missed
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  Speaker 4: out until recently on the big data center boom that's
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  Speaker 4: happened overseas, where the likes of Amazon, Microsoft, and Google
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  Speaker 4: have been spending billions and billions on these data centers.
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  Speaker 4: About four years ago, Amazon said it was actually going
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  Speaker 4: to start building these data centers in New Zealand. It's
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  Speaker 4: been a long process since then. The economy has sort
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  Speaker 4: of tanked since they made this announcement. But just today
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  Speaker 4: they announced they're open for business finally for these data
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  Speaker 4: centers in the Auckland region and the investment they claim
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  Speaker 4: will be seven and a half billion over fifteen years
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  Speaker 4: between building the things, staffing them, and the training that
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  Speaker 4: goes along with encouraging kiwis to use them.
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  Speaker 3: So they are actually going to build the centers, and
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  Speaker 3: there's talk about three availability zones, so they have committed
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  Speaker 3: to actually building these three physical structures in New Zealand.
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  Speaker 4: Well it's interesting because they I think at one point
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  Speaker 4: they set out to physically build at least one data center,
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  Speaker 4: but they ran into trouble in West Auckland with the
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  Speaker 4: site that they chose with drainage there, so all works
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  Speaker 4: stopped on that and it hasn't continued. What they've pivoted
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  Speaker 4: to is basically using co location, which is putting all
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  Speaker 4: of your equipment and infrastructure into other people's data centers. Now,
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  Speaker 4: they won't say who those companies are. I've got my
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  Speaker 4: suspicions because there's only a small number of companies in
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  Speaker 4: the Auckland region doing it. Aws Amazon say, it doesn't
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  Speaker 4: really matter who it is. We can tell you from
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  Speaker 4: a security point of view, but we have three facilities
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  Speaker 4: that if there's an emergency, like one of them is
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  Speaker 4: knocked out, there's always going to be backup capacity. They
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  Speaker 4: will automatically switch over to these other two that are
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  Speaker 4: within one hundred kilometers of the other one.
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  Speaker 3: So is that just going to be a temporary situation
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  Speaker 3: cookooing and on those other centers and they're eventually going
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  Speaker 3: to continue to build they actually build these things because
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  Speaker 3: I say that that drainage issue has been solved now
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  Speaker 3: or is that just going to be it? Are they
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  Speaker 3: just are they going to slide them in with existing
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  Speaker 3: data centers?
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  Speaker 4: Well, for the moment that they're saying they've got the
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  Speaker 4: three data centers they're co locating at the moment, But look,
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  Speaker 4: you know, this is a very fast growing area, particularly
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  Speaker 4: with the advent of artificial intelligence, the likes of chat,
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  Speaker 4: GPT type services. Amazon service up its own services and
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  Speaker 4: allows any New Zealand business to do that. So the
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  Speaker 4: growth is pretty much exponential in the data and the
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  Speaker 4: computing power that you need to run all of this
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  Speaker 4: artificial intelligence stuff. So there's a good chance they do
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  Speaker 4: own that patch of land. If they can remediate that proper,
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  Speaker 4: properly in the coming years, they will have space to
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  Speaker 4: build another one, and I think we'll see Microsoft, Google
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  Speaker 4: and others doing that as well.
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  Speaker 3: So the seven point five billion dollar figure that we've
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  Speaker 3: been hearing in the one thousand jobs, is that still
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  Speaker 3: a thing. Is that still going to happen even if
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  Speaker 3: there isn't just yet any construction.
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  Speaker 4: Yeah, well, they've committed again today to all of those figures.
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  Speaker 4: So the thousand staff, they've been pretty clear from the
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  Speaker 4: start that most of those staff will not be in
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  Speaker 4: construction or in aws own workforce. The thousands, the thousand
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  Speaker 4: jobs that are going to be created come downstream, so
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  Speaker 4: all the startups that it's easier for them to spin
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  Speaker 4: up a company and use all of these AI tools
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  Speaker 4: in the cloud in this local data center. They're saying
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  Speaker 4: that there's going to be more economic development as a
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  Speaker 4: result of more companies using the cloud. So that's where
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  Speaker 4: the bulk of the job numbers come from. One hundred
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  Speaker 4: thousand ki We's trained sounds really impressive. They've already done
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  Speaker 4: fifty thousand, but it's hard to know exactly. You know,
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  Speaker 4: it's that a free sort of two hour course you
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  Speaker 4: can do an internet Yeah, you kind of.
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  Speaker 3: I use cloud storage every day. Does that mean I'm trained?
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  Speaker 4: Well, you'd probably have to go onto a ws's website
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  Speaker 4: and do a tutorial or something like that. So there'll
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  Speaker 4: be a lot of people in that boat. But the
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  Speaker 4: reality is, you know, we've got a bit of a
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  Speaker 4: crisis in our education system at the moment. But the
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  Speaker 4: reality is if you can go now out of high school,
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  Speaker 4: you can do an eight week or twelve week course
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  Speaker 4: and become proficient in the entry level stuff to work
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  Speaker 4: on cloud platforms, and that potentially is a pathway to
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  Speaker 4: a seventy or eighty thousand dollars job. So I think
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  Speaker 4: there is something in this that we get hung up
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  Speaker 4: about tertiary qualifications and that when actually know these sorts
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  Speaker 4: of companies salesforces, a lot of them offering free qualifications
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  Speaker 4: and certifications that you can get. The flip side of
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  Speaker 4: that is that they want you tied to their platform.
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  Speaker 4: They want you an expert in Salesforce or SAP or Amazon.
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  Speaker 4: They don't care about giving you general artificial intelligence skills.
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  Speaker 4: It's really about building a workforce for their platform. Yeah.
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  Speaker 2: Interesting, there's been a lot of concern about this deal
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  Speaker 2: when the energy consumption and whether we've got the energy
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  Speaker 2: infrastructure to supply the likes of these data centers. Is
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  Speaker 2: that a fair criticism and could that be why the
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  Speaker 2: infrastructure of these data centers has been holded.
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  Speaker 4: Yeah. I don't think it's altered them or led to
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  Speaker 4: any delays, but it is a valid issue because the
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  Speaker 4: government is basically when they look at the future energy
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  Speaker 4: makeup of New Zealand and usage, they're saying by twenty thirty,
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  Speaker 4: potentially up to seven percent off energy use could be
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  Speaker 4: for data centers. That shows just how this digital economy
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  Speaker 4: is growing for quickly. There is a lot of renewable
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  Speaker 4: energy coming online and it's sort of notable that AWS
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  Speaker 4: has done a specific deal with Mercury to use wind
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  Speaker 4: energy from the Turretia South wind farm. So they've done
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  Speaker 4: a long term deal to get guaranteed access to energy.
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  Speaker 4: Contact Energy did a similar deal with Microsoft, a ten
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  Speaker 4: year deal. So these big tech companies have come in here,
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  Speaker 4: they've locked up deals with these energy companies, and the
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  Speaker 4: energy companies are basically saying this is essential to us
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  Speaker 4: commissioning new wind farms solar farms. If we have big
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  Speaker 4: anchor tenants in the form of these tech companies, that
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  Speaker 4: gives us the confidence to raise investment and build more
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  Speaker 4: of these. The question is we're already very strained in
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  Speaker 4: our energy capacity. If we have a winter where the
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  Speaker 4: lake levels are very low, where there is much wind
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  Speaker 4: and people are using energy in the evening during the winter,
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  Speaker 4: is this going to put pressure on our overall grid
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  Speaker 4: And potentially that is the case. Unless we can get
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  Speaker 4: enough capacity that's going to be coming online in the
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  Speaker 4: next five to ten years to absorb this new demand
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  Speaker 4: from data.
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  Speaker 3: Centers, well, surely all hands should be the will to
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  Speaker 3: do that. We should be a nation within all our
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  Speaker 3: assets of the hydropower, etc. That we can build further
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  Speaker 3: support to the grid such that huge companies can come
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  Speaker 3: in here and invest. If we don't do that, then
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  Speaker 3: we're kind of stuck in a cycle of nothing big
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  Speaker 3: ever happening. When it comes to the data, Peter, is
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  Speaker 3: it just New Zealand data that they're looking at storing
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  Speaker 3: here or is it data from all around the world.
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  Speaker 3: And if that's the case, what is our capacity for
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  Speaker 3: bringing data in and out of the country.
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  Speaker 4: Yeah, Look, I think the actual physical types that transfer
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  Speaker 4: data in and out of the country is an issue.
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  Speaker 4: There's lots of capacity there. You've got a new players
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  Speaker 4: that have plans for even more subse cable, so I
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  Speaker 4: don't think that's an issue. If you're a New Zealand company.
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  Speaker 4: One of the big pitches here is not only are
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  Speaker 4: you closer to a data center, so if you're doing
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  Speaker 4: a real time service like a chatbot, you know the
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  Speaker 4: delay or lag in getting an answer back will be
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  Speaker 4: lower because it's just going to Auckland for it rather
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  Speaker 4: than Silicon Valley or Australia. So that's a pitch. But
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  Speaker 4: also you can keep all of your data within New
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  Speaker 4: Zealand's borders. So a lot of companies and government departments
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  Speaker 4: are a bit leary about sending a lot of sensitive
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  Speaker 4: data overseas to other jurisdictions. So aws is saying, we
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  Speaker 4: can guarantee all the data if you want it to
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  Speaker 4: stay within New Zealand, we can guarantee that you will
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  Speaker 4: do that.
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  Speaker 3: Why do you think there's everyone's lining up to be
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  Speaker 3: negative about this thing across the media. There's a lot
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  Speaker 3: of stones being thrown at the thing. Do you think
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  Speaker 3: it's it's a positive thing and what do you think
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  Speaker 3: people are being negative about it?
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  Speaker 4: I think overall, you know, we're in an environment where
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  Speaker 4: and we've just seen discussion of this with the you know,
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  Speaker 4: the five million dollar home threshold that Winston Peters has
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  Speaker 4: has struck a deal around. It's really difficult to get
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  Speaker 4: companies and high net worth individuals to invest in New
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  Speaker 4: Zealand where a developed country, but we just don't fit
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  Speaker 4: their investment profile a lot of them. So anything where
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  Speaker 4: we're seeing literally billions of dollars come in an investment,
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  Speaker 4: that is a really good thing. But the worm has
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  Speaker 4: turned a little bit on on big tech when it
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  Speaker 4: comes to these data centers because it really is shoring
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  Speaker 4: up that's sort of cozy duopoly or you know, oligopoly
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  Speaker 4: that these companies have over our data and increasingly over
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  Speaker 4: our energy supply as well, and a lot of people
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  Speaker 4: are like, where is the sovereignty. How do we steer
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  Speaker 4: our own destiny rather than just give all of our
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  Speaker 4: valuable data to these three or four big American companies.
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  Speaker 3: Yeah, yeah, interesting. So just to clarify, this will primarily
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  Speaker 3: be New Zealand data as opposed to you know, just
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  Speaker 3: increasing capacity for Amazon's data storage around the world and usage.
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  Speaker 4: Yeah, well, it's not efficient for them to be sending
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  Speaker 4: you loads of data from other parts of the world here.
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  Speaker 4: This will be primarily for New Zealand users, and that's
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  Speaker 4: going to be the big question. You know, Amazon did
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  Speaker 4: four hundred and twenty odd million in revenue in New
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  Speaker 4: Zealand last year. Is there actually, given this sluggish economy,
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  Speaker 4: enough growth for them to make a decent return on
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  Speaker 4: this in the next few years. That's going to be
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  Speaker 4: the question.
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  Speaker 2: Yeah, Peter, really good to get your analysis and thoughts.
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  Speaker 2: Thanks so much for joining us.
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  Speaker 4: Thanks very much.
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  Speaker 2: That is Peter Griffin, tech commentator and some interesting thoughts there.
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  Speaker 2: So ken you hear from you.
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