AWS in Oz to boost competition: analysts

Summary:Analysts have weighed in on Amazon Web Services' (AWS) purported plans to have a datacentre in Australia by 2012, saying that the move would bring lower prices and greater competition to the local market, but may open up Australian data to the long arm of the US Patriot Act.

Analysts have weighed in on Amazon Web Services' (AWS) purported plans to have a datacentre in Australia by 2012, saying that the move would bring lower prices and greater competition to the local market, but may open up Australian data to the long arm of the US Patriot Act.

Gary Burgess, senior vice president of Research for Ideas International, told ZDNet Australia that AWS's move into the Australian market would bring with it greater competition on price and place an imperative on the local mid-range cloud market to deliver better quality services.

Customers who had avoided AWS due to high latency and concerns over data sovereignty would jump at the chance to sign up if the company set up shop in Australia, Burgess said.

"Obviously they have datacentres in APAC like in Singapore, but there's probably two issues they're looking to address with [an Australian datacentre]. Data sovereignty is clearly a big issue as well as latency. I'm sure they've got a lot of people who want to use them today but don't for those reasons. For the Australian market, it will also increase the interest in public cloud bringing by its datacentre to Australia and, of course, it's really going to up the ante for competition.

"The increased competition would put pressure on price and the quality of service for everybody," Burgess said.

Scott Stewart, research director for analyst firm Longhaus, also believes that if AWS arrives down under it would force the local mid-range cloud market to price their services differently, and more competitively.

Stewart said that local cloud providers are caught in a middle ground between an upfront and ongoing pricing structure seen in traditional hosting providers, and the pay-as-you-use model offered by Amazon Web Services. He said that the entry of AWS into the local market would pull local vendors out of the no man's land and into a cheaper, more competitive pay-as-you-use model.

"We always thought AWS were closer to the true consumption-based pricing model that other vendors haven't been able to achieve. We have found that almost all local vendors ask customers to pay for some infrastructure upfront. AWS are the closest we've come across in relation to that. You only pay for what you use on an hourly basis for compute and storage. It'd be welcome to have that competitive difference to drive other vendors to implement a similar pricing model," he said.

However, Stewart added that those who jump at Amazon's local flavour may open themselves and their data up to scrutiny from US authorities under the guise of the infamous Patriot Act.

US-based data faces exposure to the Patriot Act and Foreign Intelligence and Surveillance Act, meaning that data stored in an offshore cloud environment may be accessed by US federal law enforcement agencies, regardless of who owns the data. According to Stewart, data stored in an AWS datacentre in Australia would also face scrutiny under the Act as Amazon's home country is the United States.

"US regulators will be able to access that data at any time because [AWS] is a US-company on Australian soil. It's a bit of a myth there that having onshore data is going to reduce the risk profile," Stewart said.

Microsoft recently faced a similar problem when it was asked at the UK launch of Office 365 whether or not it could guarantee that the data stored in the cloud-based program would leave the European Union under any circumstances. Managing director of Microsoft UK, Gordon Frazer, said that he couldn't provide such an assurance. Microsoft responded to a similar question put to its local team by ZDNet Australia and responded in a similar fashion.

This is what Microsoft said:

Any company with a presence in the US is legally required to respond to a valid demand from the US Government for information if the company retains custody or control over the data. This is the case, regardless of where the data is stored or the existence of any conflicting obligations under the laws where the data is located. Microsoft will only respond to government requests for enterprise customer data when legally required, and, understanding general customer concerns in this area, we will use commercially reasonable efforts to notify those customers in advance, unless we are legally prohibited from doing so.

Stewart said today, however, that IT managers would eventually stop worrying about the implications of the Patriot Act and treat it as just another law to be complied with when managing company data.

Topics: Cloud, Amazon, Government : AU, Legal, Security


A fresh recruit onto the tech journalism battlefield, Luke Hopewell is eager to see some action. After a tour of duty in the belly of the Telstra beast, he is keen to report big stories on the enterprise beat. Drawing on past experience in radio, print and magazine, he plans to ask all the tough questions you want answered.

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.