Microsoft is planning to expand the Windows Azure regional datacentres to Australia. There are plans to add two new “sub-regions”, in Victoria and NSW.

This is exciting, because there have been an number of businesses and scenarios where due to regulator requirements on data sovereignty, they were unable to use the Azure locations hosted in other countries.
It is interesting to look at *why* Microsoft is deploying 2 new centres (Victoria & NSW), and not just in NSW. This comes down for the need to provide geo-redundancy, while still giving users data sovereignty in Australia.

This bodes well for any Australian start-up what wants to create a local service. The latency from US servers can cause a slight lag in requests, having their applications servers hosted locally will be great.
There is also the potential for some big name USA companies to start hosting geo-located edge servers here, so that their Australian customers get a more responsive experience. This could easily be done by using the Windows Azure Traffic Manager to manage multiple geo-located computer instances

The official announcement is up on the Australian MSDN blog