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Unpicking AWS’ New Zealand numbers

Amazon Web Services says it will build a Region in New Zealand. AWS plans to start operating local cloud data centres by 2024.

An official press release telling us about this runs to more than 3200 words. It’s long, wordy, poorly written and hard to understand.

Despite the torrent of words, it is light on details.

Mystery

It doesn’t answer key questions.

Such as: “Where will Amazon locate its promised data centres?”

That’s not mentioned anywhere in the 3200 plus words.

It’s an important question. New Zealand is on a fault line. That has implications.

Our biggest city, Auckland, is closest to the submarine cables piping in data from around the world. That’s handy. Yet because it sits on an active volcanic field it may not be the best site for a $7.5 billion investment.

Auckland has a large workforce, although the construction skills needed to build a data centre are in short supply. Does Amazon propose to bring that expertise in?

Electricity

There’s an undersupply of electricity in the Auckland region. In winter Huntly’s dirty old coal-based power plant kicks in to top up the power supply.

Will AWS be using that power?

Meanwhile, at the other end of the country there is, or soon will be, an oversupply of low cost, clean, green power. Is that in the plan? It should be.

New Zealand’s south has a cool climate. Cooling is a major operational cost for data centres. Locating in a cooler climate not only reduces costs, it smartens up green credentials, an important part of any cloud marketing programme.

Data transit

If Amazon locates in or around Auckland, it won’t have to pay much in the way of transit charges for data travelling up and down the nation’s backbone.

Nor will it pay for the cost of bringing in the power needed to run a hyper-scale data centre.

New Zealanders subsidise moving power around the country. There is a limit to how much of that is possible without network upgrades. Who pays for that?

AWS’ numbers look as they have been polished up for maximum press release impact.

From the press release:

AWS released an economic impact study (EIS) that estimates it will create 1,000 new jobs through investment of NZ$7.5 billion (US$5.3 billion) in the new AWS Asia Pacific (Auckland) Region with an estimated economic impact on New Zealand’s GDP of NZ$10.8 billion (US$7.7 billion) over the next 15 years.

Jobs for who?

We can assume many of the 1000 jobs will be temporary roles for people building the data centres. It’s rare for a giant data centre to employ more than a handful of people and that includes security guards.

Once the ball is rolling there won’t be many data centre jobs. There could be development work piggybacking off the data centre. AWS doesn’t say. Nor does it say where the people to fill those roles will come from.

Amazon doesn’t tell us enough about its plans for any sensible analysis of its $7.5 billion investment claim.

We know AWS is a worldwide hyper scale cloud business. Any comparison with Spark is always going to look odd. Yet, Spark operates New Zealand’s largest existing data centre at Takanini. That makes it the closest we have to a benchmark.

Spark’s original project cost $60 million. Subsequent expansion means that price will be a lot higher. It won’t be anywhere near $7.5 billion. It won’t be one tenth of that amount.

Market share

IDC Research says Spark and Datacom have a 43 percent share of New Zealand’s Infrastructure as a Service market. Amazon has a 23 percent market share. Microsoft is a touch behind on 19 percent. In other words, the four are all roughly the same size.

As a rule, the large, hyper scale cloud providers AWS and Microsoft Azure take 70 to 80 percent market share in any territory.

Their lateness to build here is one reason they have less share at the moment. The lure of winning that additional market share could be part of the reason both Microsoft and AWS have made big New Zealand cloud announcements in recent months.

Sure, there is more to cloud than IaaS. Yes, the market is expanding fast. Yes, Amazon is hyper scale. Does it need to spend 20 or 50 times as much as Spark?

Datagrid

Datagrid is a $700 million project to build what may still be New Zealand’s first hyper-scale data centre. The business is headed by Remi Galasso and Callplus founder Malcolm Dick.

The pair know a thing or two: they got the Hawaiki cable off the ground.

Datagrid has chosen a Southland site.

Interestingly, Amazon has invested in Hawaiki. It’s likely the Datagrid team has talked to AWS about potential cooperation1.

Part of Datagrid’s plan is to build a new submarine cable connecting Invercargill to Australia. There will also be a domestic submarine cable linking the site to major New Zealand cities.

Will Amazon build a similar cable to distribute its data?

Scale

At first Datagrid will be a 60 megawatt, 25,000 square metre data centre. Over time it will grow to 100 megawatts and 40,000 square metres. That’s a lot of data centre.

Assuming data centre costs scale better than linearly and Amazon can call on its worldwide economies of scale, its project will build more than ten times Datagrid’s capacity.

Which brings us to another question. How big is New Zealand’s cloud market?

In March Spark told Computerworld’s Sarah Putt it estimates total cloud revenue at around $730 million.

That figure doesn’t square with AWS’s $7.5 billion build budget over 15 years unless AWS anticipates the market continuing to grow at a fast rate.

Assuming AWS doesn’t capture the entire market and intends its New Zealand operation to be profitable, either the local market would need to grow at about 40 percent a year for the next decade or the company expects to host a huge amount of international business here.

Unknowns

There are plenty of unknowns. Too many unknowns to make a careful analysis of AWS’s plans. Yet there are four possible conclusions one could make about the $7.5 billion announcement.

The first is the most cynical: that it is pure public relations hype.

Mentioning a big enough number and promising lots of jobs is a sure fire way of seeing off any resistance and buying-in political good will. AWS can rest assured no-one is going to look back in 15 years to check it spent $7.5 billion.

Big technology companies like AWS have plenty of form when it comes to talking things up.

Efficient

A second conclusion, is that Amazon throws money around like water and is hugely inefficient. It overpays for everything.

This is implausible. It doesn’t square with anything we know about Amazon which is famous for trimming costs to the bone. Operational efficiency is key to making money from the cloud.

The third possibility is that AWS expects to scythe through the local cloud market. It has done this before. It’s possible, but wise cloud customers are wary of dealing with a single international ecosystem. Many will seek alternative service providers as a back-up.

That’s going to limit AWS’ potential market share. And even 100 percent share of a $730 million market doesn’t justify spending $7.5 billion even with heroic growth rates.

A more likely story is that AWS has bigger plans for New Zealand that serving local markets. It has hinted at this without explicitly saying anything. New Zealand gives, say, Australian AWS users a viable alternative location with, if not always similar, at least readily understood local conditions.

One last point. Until now, the big global cloud companies stayed away from New Zealand. They didn’t like it when there was only one submarine cable network. They didn’t like what they saw as a hostile and monopolistic telecommunications market. It took ten years of industry reform.

As far as technology is concerned, no-one thinks of us as a smug hermit kingdom.


  1. A speculating person might wonder if Datagrid will become part of AWS. ↩︎

Software’s mysterious productivity gap

Almost every business software company sells the idea of productivity. Yet there’s evidence that it does not deliver on that promise.

This graph shows US total factor productivity from 1947 until 2020. The last 20 years are the flattest part of the graph.

total factor productivity chart USA 1947-2020

It’s a time that has seen the rise of cloud computing, mobile apps and agile thinking. None of which appear to have moved the productivity dial.

Until 1970 there is a sharp rise. Then, around the time business computers became commonplace, the productivity rise tapers off. We see a burst in the late 1990s and the start of the 20020s, then it flattens.

Austin Vernon writes at length about software’s negligible impact on productivity. It’s worth a read if you can divert yourself from your own productivity for five minutes.

Software a management technology

He gets into economic concepts. His key point is that software is not a general purpose technology but a management technology.

General purpose technologies drive productivity growth in ways that are easy to understand. That term covers technologies like electricity, railways and steam engines.

Software has more in common with assembly lines.

These have a slower, plodding effect on productivity. In part that’s because they deal with high levels of complexity. In comparison building railway networks is straightforward and easy to repeat.

He says their benefits don’t show up in society at large until the companies using them have a significant market share.

“The current status quo means we don’t get productivity growth until these software-driven companies become behemoths.

Amazon was founded in 1994, almost thirty years ago. In 2020, it was still less than 10 percent of total retail sales 1. Is it any wonder that we haven’t seen robust productivity gains? Amazon is still mapping and digitising processes at prodigious rates.

In other words, Vernon thinks we’re just getting started with software productivity gains. If he is right, then we can expect more productivity as the world’s technology giants grow larger. Of course, that brings another set of problems.


  1. I think Vernon is referring to US sales here. If you know otherwise please help me correct this footnote. ↩︎

Xero iPad app – small business accounting

When it comes to reports and intensive work, Xero’s cloud-based small business accounting works best in a web browser. The Xero iPad app is great for updating information while on the run.

Xero is modern, yet mature accounting software for small business. It lives in the cloud, has a crisp clear user interface and integrates with hundreds of other financial or business management apps.

It gives small business owners or operators the tools needed to stay on top of paperwork, GST returns and annual tax filing.

You could do everything yourself. Or you can use Xero for day-to-day bookkeeping then give your accountant access to the files where they can add their professional value to your data.

Living in the cloud

Living in the cloud means you can use Xero in a web browser on your computer, phone or tablet. That’s a huge advantage over more traditional accounts software.

Xero is a classic example of software-as-a-service or SaaS. You don’t buy an application with a one-off purchase, you pay Xero a monthly fee to use the service.

Other examples of SaaS that small businesses will encounter are Gmail, Google Docs and the web version of Microsoft 365.

The browser version of Xero works fine on any computer and can be good on a large screen tablet. It works fine on a 12.9 inch iPad Pro.

Away from the browser

Things get tricky with smaller screens. That’s where the iPhone and iPad apps are essential for anyone wanting to check or update Xero while on the move.

Here we’re looking at the iPad app, but Xero’s apps work much the same on iPadOS and iOS.

The Xero iPad app allows you to track important information, enter data and reconcile transactions. It’s fast and easy, but you don’t get all the Xero functionality.

That means you’ll still need to tackle more complex reports and reviews using the browser software. Yet you can do most things with the app.

Logging in on an iPad

Accounting software needs security. The last thing you want is for crooks to get their hands on your books.

Xero takes security seriously. It insists on a two-factor authentication – sometimes you’ll see this referred to as 2FA.

Two-factor authentication is a way of checking you are who you say you are when you log-on to the service.

With the browser version of Xero that means typing a name and password, then using an authenticator app – most likely on your phone – to enter a one-off security code.

Remember me

You can set the software to remember your log-in details for 30 days, but after that it resets.

In practice, it is best to accept the process when logging in as it means no-one can jump on your computer and get control of your money.

iPads handle two-factor authentication much better than most computers. You’ll still need to get an authenticator code the first time you load the app.

After that, iPadOS’s built-in face recognition system acts as your second factor. Look at the camera and you are away.

Older iPads do much the same with Apple’s Touch ID fingerprint reader. Your fingerprint becomes your second identification factor.

Xero iPad 1

Made for touch screen

One problem you’ll come across using the browser version of Xero on a small mobile screen is the touch buttons can be tiny and hard to navigate.

This is not an issue with the iPad app. The buttons are big, easy to see and hard to miss even when you have sausage fingers.

Xero has done a fine job of making the mobile app work sensibly in both portrait and landscape modes. That is you can use whichever way around you hold your iPad.

Simplified Xero

As mentioned, the functionality is simplified. There are four activity areas in a menu ranged across the bottom of the display: dashboard; sales; purchases and contacts.

Dashboard

Dashboard shows your bank accounts and the balance in each of them. You can see what invoices are unpaid and those overdue.

Likewise you can see what you owe and your unpaid invoices. There’s an indication of this month’s profit and a bar chart showing cash in and cash out over the last four months.

You can click on each of these to get a fuller report. Click on Profit this Year and you can chose from a chart showing the year-to-date, the quarter-to-date on the month-to-date.

Xero ipad 2

Going deeper

In some cases you can go down a level. Clicking on unpaid invoices tells you who owns money and lets you click through to the invoice details in case you need to answer a customer query while you are out and about.

You can’t dive deeper from all screens. For a full analysis you’ll need to use the browser app.

In effect the Sales takes you to the same information as the invoices section of the dashboard. It’s more a shortcut to the data.

The Purchases option gives more information, including an overview of recent spending. Again you can click through to get a fuller list of spending.

Much of the data is presented in Xero’s crisp, spacious design making it easy to read and navigate. A couple of options take you to an iPadOS style dialogue box – the reconciliations option does this.

The contacts option takes you through to a list of everyone you have transacted with. Where appropriate you can click through and find details of transactions and notes. It’ll tell you how long a customer takes to pay their bills on average.

Xero updates

At the time of writing the Xero iPad app is on version 9.4.0. You can set your iPad for automatic upgrades, which can be a smart move if there is ever a security issue that needs addressing fast.

Xero makes a lot of changes to the software. The 9.4.0 version is upgrade 16 for 2021 and we are at the start of August. That’s an update every two weeks on average, which tells you the software is maintained.

Verdict – Xero iPad app

There’s no charge for the Xero iPad app. Apart from a demonstration company, the only way you can use it is with a full subscription to the Xero service.

If you run a business and use Xero, the iPad app is a great tool for handling enquiries, entering data and checking information while you are on the move.

The iPad user experience is as good as you’ll find in a small business application.

Please note: This is a review of the iPad app, not the full Xero product. If you’re interested there is an earlier review of this software written soon after it was first launched in 2015.  

Cloud computing more energy efficient than we thought 

 

The digital services churned out by the world’s computer centres are multiplying. Their energy use is not, thanks to cloud computing, a new study says.

Source: Cloud Computing Is Not the Energy Hog That Had Been Feared – The New York Times

The New York Times story refers to a study published in the journal Science: Recalibrating global data centre energy use estimates.

It starts:

Data centres represent the information backbone of an increasingly digitalised world. Demand for their services has been rising rapidly. Data-intensive technologies such as artificial intelligence, smart and connected energy systems, distributed manufacturing systems, and autonomous vehicles promise to increase demand further.

Given that data centres are energy-intensive enterprises, estimated to account for around 1 percent of worldwide electricity use, these trends have clear implications for global energy demand and must be analysed rigorously.

Efficient cloud computing

There’s a common belief that accelerating data processing means the energy used to power data centres is rising fast. It turns out it is not.

Data centres did six times as much computing work in 2018 as in 2010. Yet their power consumption increased only six percent.

There’s also evidence cloud computing means less pollution and greenhouse gas than we feared.

The reason for the new optimism is the amount of work that has shifted to the cloud. And not just any old cloud. Most has moved to the bigger and more energy efficient services.

Low carbon

Cloud giants like AWS and Microsoft run huge data centres. Many place their data centres where they can use low carbon energy. Hydroelectricity and solar power are favourites. Some are located in naturally cold places. This means less need for air conditioning.

There is a trend towards green data centres. It is an opportunity for New Zealand. 

Big cloud companies use technologies that pack more computing and storage into ever smaller hardware. Small hardware is usually more efficient.

Energy efficiency is good for the environment. It’s also good for the cloud companies. Energy is often a significant cost. Cloud companies love to boast about their clean energy. It also helps them win business.

Schools moving to the cloud

Network for Learning, N4L, says ‘moving to the cloud’ is on the to-do list for many New Zealand schools.

It makes sense. Schools often don’t have the skills or resources to manage servers and other computer infrastructure. Moving to the cloud leaves teachers free to concentrate on doing what they do best: teaching. 

Here’s the first of a series of posts written for the N4L blog that aim to demystify the cloud and how to make use of it. It’s written for a non-technical audience.

“Cloud computing is using remote computers for jobs that were once done by local machines.

We call it cloud because the computers are somewhere else on the internet. Most of the time you don’t need to know where they are.

When the idea was first developed, people would draw diagrams to illustrate how it worked. They used pictures of clouds to show the remote computers could be anywhere. The image and the metaphor stuck.”

Cloud means network computers

Cloud replaces servers. These were, in some cases still are, the computers that organise network traffic, store data and parcel out work to devices like printers. It may help to think of them as hubs.

Because servers are computers, they can also run applications. This lightens the load on desktop or laptop computers. Today, cloud servers handle so much everyday computer processing that you can often get away with less powerful hardware on your desktop or in your hand. This explains the rising popularity of less expensive devices like Chromebook or tablets. They leave cloud computers to do their heavy lifting.

 

Read more at The Cloud on the N4L website.