Is the Amazon War Machine bringing the war to New Zealand?


Blink and you’d miss it on LinkedIn today, Amazon are looking for an Auckland based Enterprise Architect. This could be the first solid sign that the AWS War Machine is landing in New Zealand, which has a huge impact on Cloud services and the fledgling industry in New Zealand.

The AWS War Machine is the Genghis Khan of the modern ICT industry. When you match its market penetration it is anywhere up to ten times bigger than its next largest rivals, Google, MS, and Rackspace. It has lowered its prices since it started delivering services, over seventy five times. Unlike petrol, it has never increased.

There has been plenty of insider gossip over the past six months on what Amazon is, and isn’t doing. They’ve told people that they don’t intend to land in New Zealand, however we now have a public sign that they are heading our way.

My inside sources also tell me that at least one large New Zealand Cloud Provider (part of the Government IaaS conglomerate) has been talking about reselling the AWS Glacier product. I know Amazon has been talking directly to other companies and government departments as well. Courting them as it were. Not just the big ones either, I know they’ve been talking to the sub-500 FTE set of agencies as well.

We also have one local Cloud broker making a good living out of managing Cloud services from planning to delivery that have a direct relationship with Amazon. Fronde has been doing it for a while and its a solid service. Which, AWS need, because its interface is raw, it is not SaaS with its glossy front-end, it is absolute raw computing power that you need engineers to configure and manage.

So like it or not, Amazon is moving in, while they haven’t bought a datacentre (yet) or a local Cloud provider (yet), the move to employ and have an onshore office is definitely a beach head. Clearly, they’d rather we bought their service from Sydney as opposed to having to invest in something inside our borders.

While the Government has a distinct nervousness about data being offshore, the pricing is probably too compelling to turn down, against a risk profile that is less that than onshore delivered Cloud.

It works on these kind of ratios. If I buy a GB of disk and put it in my own datacentre, that will cost me $2. If I buy a GB of disk from a local Cloud Provider it will cost me about 90 cents. If I am part of the Government “IaaS” procurement, I might pay about 40 cents. If I buy from Amazon, it is free up to a certain level or somewhere in the region of one cent if I want a little more service. By that calculation buying disk in New Zealand is forty to ninety times more expensive.

So what’s the AWS War Machine strategy? Let’s have a guess.

First rule of Cloud War is that there is no Cloud War. So I’d deny I was moving to New Zealand as well. Because, well, right now I’m not (not buying a data centre) and it could cause problems for my second strategy rule.

Get the enemy to sell my product. Work with the local Cloud providers to get them to sell my services. They can clip the ticket, and I am picking up a slew of customers with little sales overhead.

Penetrate the high-end market but don’t get caught. Go direct for government, large business, financial institutions, and scientific organisations. Turn some of those over to the local Cloud providers to keep my goodwill up.

Softly softly catchy monkey. Keep all of this quiet, particularly Government (because the SIS and GCSB hate offshore Cloud, even though surveys show 75% of Government are already using some kind of Cloud), until it is too late. Then, pop the cork and show the country that 50% of them are using their services out of Sydney already and hey, the world didn’t end.

Be prepared to move in. At some point in the ongoing Cloud war, the first large ICT global Cloud provider to land in New Zealand will win. The market itself is likely worth at least 250 million. Being here is everything. People make an argument that New Zealand is too small in the scheme of things, but for the AWS War Machine, its about war and winning. Sooner or later every market will be contested. We’ve seen Amazon and MS go head to head in Victoria in the last six months. New Zealand won’t be far away.

For the locals, as I’ve commented before, they face a very tough adversary. The only thing that they have going for them is that a) they are in New Zealand and b) central government is very nervous about offshore data.

The New Zealand ICT Industry needs a differentiator, and fast.

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