Posted by: glennandert | 21-July-2008

Cloud Computing in New Zealand?

It’s on its way. Some call it cloud computing. This is going to have a huge impact on New Zealand. Is anybody thinking about this?

First some background:

At the most basic level you have Server Virtualization (VPS, or virtual private server). Virtualization is an abstraction layer that allows multiple virtual machines to run in isolation, side-by-side on the same physical machine. Each virtual machine can run the same or different operating systems (Linux, BSD, Unix, Solaris, Microsoft).

By decoupling the physical hardware from the operating system, virtualization allows you to:

  • Create fully configured isolated virtual machines with it’s own set of virtual hardware to run an operating system and applications
  • Rapidly save, copy and provision virtual machines that can be moved from one physical server to another for workload consolidation and zero downtime maintenance

Unlike a physical machine, a virtual machine is cheap.

Elastic Computing leverages server virtualization to deploy applications such that hardware, bandwidth and storage are used in a flexible and dynamic way. Each application can be scaled on the fly, without affecting other applications deployed on the grid (the underlying collection of physical resources).

Traditionally one would construct a web application from load balancers, web servers, application servers, database servers, etc across multiple physical machines dedicated to this application. With virtualization the machines are virtual. To retain non-stop capabilities, these virtual machines are still spread across physical machines. However, the number and distribution of virtual machines is totally flexible allowing tremendous scalability.

Similarly, in the old days, you would deploy a single operating system to a single machine. Elastic computing can run a virtualized operating system on many physical servers all at once.

We have astonishing levels of infrastructure load balancing, dynamic server configuration, automated system administration, etc.

Because virtual machines are cheap, and administration is automatic, we have the ability to deploy even relatively minor applications using enterprise level self-healing self-scaling architectures capable of recovering from and continuing in the face of disasters.

Elastic computing is data-driven, which means that no human interaction is needed to add and reduce resources applied to a given application dynamically and flexibly adjusting to meet system demand / requirements and billed on a usage basis.

The definition of “a backbone utility” is Amazon’s AWS Elastic Cloud Computing (EC2) and Simple Storage Service (S3) because they are the leader in this space at this time. But there are plenty of new players on the horizon.

With an appropriate elastic computing platform, applications can be migrated between utility backbones and private grids.

Large computer companies, like IBM and HP, are moving to this architecture internally, and reaping 10-fold cost savings. That’s right, 1/10 the cost. This is called a Virtual Private Data Center (VPD).

3Tera is a great example of how all this comes together. They provide an incredibly powerful platform and tools enabling a company or hosting provider to run a self-contained cloud on a grid of commodity-based hardware and enjoy all the rewards. And there are plenty of other players on the horizon.

You can moan all you want about security, privacy, control and all those traditional arguments against outsourcing. Cloud computing is going to happen. With an underlying ten-fold cost reduction, this is like an avalanche – you can’t stop it. We’ll just all have to pray that applications don’t become any less secure as a result.

OK, with that background in place. What does this all mean for New Zealand?

For our companies and government to be competitive we need to be using this technology. Not 10 years from now, along with the other late adopters. Now, as it matures. Otherwise, more business will go offshore to “the big guys”.

Where is the knee in the curve on grid size? It’s big. HP is replacing near 100 data centers worldwide with near 10 in the USA. Google has considerably more than that. All of New Zealand’s significant applications taken together are a small fraction of this. So, a small number of data centers can cover all of New Zealand’s needs. It is conceivable that at some point the cost part of the equation will drive the data centers offshore, but I hope not.

It is very clear you can’t do this cloud computing business without a great broadband infrastructure. What we have is way behind the USA. We need tons of bandwidth, reliable, and cheap. We need it in and between the business centers of our country.

If we don’t build our own grid and cloud, it will all go offshore. That will have a huge negative impact on local  IT business. The automation inherent in the cloud architecture will eliminate the need for a lot of current IT skills. It takes a whole new skill set to operate these kinds of data centers. And it impacts the way software developers build applications as well. We can develop those skills.

If it all goes offshore, where will your bank account and tax records be stored? In New Zealand? Or in America in the Amazon cloud somewhere? And don’t go down the protectionism route here – that never works. Let’s be good at this and compete.

Here is an example of what NOT TO DO:

In America, the iPhone 3G costs $260 with a $40/month data plan (that’s in kiwi dollars). Vodafone markets the same product here in New Zealand for $199 with a $250/month data plan – 6 times the price. That’s ludicrous. Why? It looks like complacency and lack of competition, but I confess to not really understanding. Why does it matter? Well, in just a few short years, it is likely that the mobile phone will replace the PC as the common computing platform. At the office or at home, just put your phone into a docking device where it gets charged and is connected to a nice big screen and wireless keyboard and mouse. Yippie, no more synchronization! The iPhone could very well be it. There is a whole new market for iPhone apps. Some are “silly”, like games. But many are terrific. New Zealand start up companies could be participating in this new market. All except for the fact that New Zealanders don’t own iPhones! [Yes, we could just go compete in the overseas markets, but as we all know, it’s much easier to first perfect things locally.]

One more example: Why do kiwis spend so much time sending txt messages? Because it’s too bloody expensive to use or call a mobile phone. Sorry people, this is unique to the New Zealand market and it is nuts.

So, that’s two examples of what NOT to do with the networking infrastructure.

There is lots of activity around the world looking at building these mega data centers in places that are remote, cold and near dams or other sources of electricity! Is there an opportunity for us to be a leader? Don’t we have some remote cold places around here? 🙂 And don’t we use most of our electricity melting aluminum? Note that this would entail moving lots of bits fast and cheap under the ocean. [There is an inherent time lag as a result of distance. So maybe our customers are Oceania and Asia?] Oh, and by the way, the infrastructure that connects us to Australia and the USA is way too expensive as it is currently priced.

We need a world class networking infrastructure, or else cloud computing going offshore is going to be just another nail in the coffin of the local IT business environment. And we need it now!

Comments welcome.



  1. Couldnt agree more Glenn, NZ will be limited purely based on data. another reason people dont use data here is like the txt message phenomenon, they view it as too expensive. This has to change for nz to move forward. Regarding the trialing a data app in NZ, its almost not worth it, try Australia, closer and larger audience.

  2. […] is an example: Build a cloud computing center the likes of or google. I’ve talked elsewhere about the risk to New Zealand that we are simply left behind in the wake of companies worldwide […]

  3. Long time viewer / first time poster. Really enjoying reading the blog, keep up the excellent work. Will definitely start posting more in the future.

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