Why are the world’s cloud giants flocking to Northern Europe?

The icy countries of Northern Europe are going through an exciting technology revolution at the moment, particularly when it comes to cloud and data center infrastructure. Industry giants such as Microsoft, Google and Amazon Web Services have mounted major investment campaigns in the region over the past few months.

Just a few weeks ago, Microsoft unveiled plans to build two new data centers in the Oslo and Greater Stavanger regions of Norway. The American tech firm is to kickstart the initiative by rolling out support for Azure, before moving on to Office 365 and Dynamics 365. Its cloud services will be in full operation by the end of 2019.

Similarly, two of Microsoft’s biggest competitors are working on similar projects. Last year, Google bought 109 hectares of land in Sweden with the intention of building a data center in the future. Meanwhile, Amazon is planning to build a data center in Scandinavia, and it’s looking to launch a Swedish version of AWS later this year.

Clearly, this is a unique opportunity for Norway, Sweden and other neighbouring countries. Such investment could easily lead to job and financial growth. But the question is, why are these companies so attracted to Northern Europe, and what does this trend mean for the local and global tech industry?

Cloud push
Microsoft has a long history with Norway, having operated in the country since 1990. More than 600 of its employees work across sales, marketing and development there, and it has a network of over 1,700 partners. But in June 2018, the American tech giant took the decision to expand its presence in the country by detailing plans to build a data center in the Stavanger region and another in Oslo.

Through these facilities, Microsoft plans to roll out Azure, Office 365 and Dynamics 365 across Norway over the next few years. Eventually, customers will be able to access to Azure Stack through regional service providers. At the time, the firm said it wants to “accelerate digital transformation and innovation” in lucrative industries such as oil, gas and public sector. And, to coincide with the new data centers, Microsoft has formed a seven-year partnership with international energy company Equinor to kickstart a digital transformation and cloud journey.

Jason Zander, executive vice president of Microsoft Azure, says the move will allow businesses in Norway to leverage the benefits of “cloud-scale innovation while meeting their data residency, security and compliance needs”. And Kimberly Lein-Mathisen, general manager of Microsoft Norway, explains that the new data centers will “pave the way for growth and transformation” in the country.

Steve Thair, co-founder of IT consultancy DevOpsGroup and an independent Microsoft regional director, expects that the investment will result in a cloud infrastructure and employment boost for the region. “There’s no doubt you’ll see an acceleration of cloud adoption in those regions, and that’ll result in an increase in demand for cloud skills and Azure skills. This investment will also have a significant impact on the local community. Many of these data centres are built in rural areas that don’t have high employment, so there’ll no doubt be an influx of high-tech jobs,” he says.

To him, Microsoft’s decision to expand its cloud services in the country makes sense. “There are a couple of reasons why Microsoft is building data centres in Scandinavia, the first of which is that the region is cold. This makes cooling them much cheaper. But countries like Norway also have stable economies and highly skilled workforces. And for those organisations that have data sovereignty concerns, having regional data centres assures that their data isn’t moving. That overcomes massive objections from regulatory authorities,” he adds.

Cloud invasion
Amazon is another technology giant that’s investing significantly in Northern Europe. In the past year or so, the company has been setting up a cloud infrastructure region in Sweden. It currently operates data centers in Eskilstuna, Västerås and Katrineholm, with the aim being to provide AWS partners and customers in Scandinavia with low-latency connectivity and the ability to store their data locally.

Eric Morales, head of games industry and start-ups at AWS Nordics, says the firm decided to expand its cloud offerings in Sweden because it is a technologically-advanced and well-connected nation. “When we decided the first AWS Nordic region was going to be in Sweden, we looked at a number of factors to choose the location within the country like proximity to internet exchange points, access to technical talent, access to renewable energy sources, and others,” he says.

“We also looked at how much geographic area we can cover and have the right kind of low latency because most applications perform best with the lowest possible response times. In the Nordics, infrastructure around the Stockholm area provides low latency for virtually all of the capital cities across the region.”

In June, Google opened a new cloud region in Finland as part of an ongoing investment push in Europe. Called Europe North 1, the facility joins existing European locations in the Netherlands, Belgium, London and Frankfurt. Kirill Tropin, product manager of Google Cloud, claims that the data center will improve latencies by up to 65 per cent for Nordic citizens.

“The new region is located in our existing data center in Hamina. This facility is one of the most advanced and efficient data centers in the Google fleet. Our high-tech cooling system, which uses sea water from the Gulf of Finland, reduces energy use and is the first of its kind anywhere in the world,” explains Tropin.

Good value for money
Penny Jones, an analyst at 451 Research, says these companies are flocking to Scandinavia as a result of low power prices, access to renewable energy and the support of governments seeking inward investment. She expects that they’ll continue to expand their cloud services there.

“Globally, the Nordics will continue to be a location that will serve largely local requirements in future for latency sensitive workloads (we expect latency-sensitive workloads will eventually be delivered from in country and in region on a global basis), but could become ideal for cold storage, bitcoin and other use cases, drawing this business away from other European locations due to lower build and operating costs,” she tells us.

“We have heard that energy prices in some Nordic locations could be rising and constituents could place some pressure on the industry to be more energy efficient in time as data center investment in Northern Europe increases but for now, opportunity still abounds for those seeking to invest in cloud and supporting services across the Nordic locations.”

Clearly, the Nordic countries present cloud providers with a unique opportunity to scale their operations and reach even more customers globally. But at the same time, this is also helping to expand the economies of this region, and it’s likely that this trend will continue to gain momentum.

 

Source: IDG Connect
Article: https://www.idgconnect.com/abstract/31011/why-world-cloud-giants-flocking-northern-europe?region=asia