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More in store for NZ data centre landscape after Microsoft investment

By Nick Forrester
Wed 20 May 2020
FYI, this story is more than a year old

New Zealand may be the target for more data center infrastructure development following Microsoft’s bombshell announcement revealing its intention to launch its own data center region in Aotearoa. 

The country’s successful fight against COVID-19, and its status as a ‘standout nation’ as characterised by the Fletcher School’s Digital Evolution Index, means New Zealand remains an ‘attractive market’ for continued investment, according to GlobalData.

“Microsoft’s data center investment in New Zealand comes against the backdrop of fast-paced digital transformation efforts currently being seen, not just in the country but across the globe as the pandemic compels enterprises to make rapid transition to cloud with operations now spread out and run from remote locations,” says GlobalData technology analyst Saurabh Daga.

The establishment of its first hyper-scale facility in the country solidifies Microsoft’s intentions to bring its cloud services to increasingly local markets.

The NZ$80-100 million investment will be extremely beneficial for businesses and government sectors, says GlobalData, as they require high performance and data sovereignty – especially now as isolation measures in response to COVID-19 has pushed demand for cloud services to levels not seen before.

The data and analytics company also says that the proposed data center will hasten the country’s digital transformation journey as businesses of all sizes gain access to enterprise-grade cloud services.

This will obviously include Microsoft Azure, as well as Microsoft 365, Dynamics 365, and Power Platform, and meet their data hosting, security and compliance requirements.

“By enabling seamless access to enterprise-grade public cloud services the proposed data center investment by Microsoft will empower business enterprises and other organisations in the country to build their digital capabilities and most importantly ensure that their critical and sensitive data is stored locally,” adds Daga.

Not only will organisations around the country benefit from the vastly improved accessibility to increasingly essential cloud services, but the new development is also expected to increase competition in the market, according to GlobalData.

Prior to Microsoft’s announcement, the data center landscape was dominated by local data center operators – Datacom has invested $52 million into upgrading its own data centers in the country. 

“Once completed, Microsoft’s data center project in New Zealand will be the first major local data center operator from an international player, since IBM opened its data center in Auckland’s East Tamaki back in 2013,” concludes Daga. 

“While that may be of concern to the incumbents, the benefits of multimillion investments prove to be a major boost to the country’s digital economy.”

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