An analyst at Morgan Stanley, reading the tea leaves of recent financial disclosures from Apple, has predicted that the company could be transitioning away from using Amazon Web Service’s cloud, which if true could represent a blow to the leading IaaS cloud vendor.
In its first quarter earnings call last week Apple executives noted plans to build three new data centres in the next two years. Morgan Stanley analyst Brian Nowak says that could be a sign that the company is looking to decrease its reliance on AWS’s cloud.
Nowak predicts that Apple spends upwards of $1 billion annually on AWS, which is about 9% of AWS’s predicted 2016 revenue. “The loss of Apple’s +/- $1 bn annual spend could materially impact AWS’s revenue growth (and potential overall profitability),” Nowak writes.
Apple is increasing its capital expenditures 30% this year to build out 232,258 square metres (2.5 million sq ft) of data centre space, Nowak says. That includes a data “command centre” in Arizona opening this year and data centres in Ireland and Denmark to power iCloud, iTunes and the App Store next year. “We believe this build is a signal that Apple is increasingly likely to move away from AWS in the next 18 to 24 months,” Nowak wrote in a note with colleagues. Nowak predicts that Apple’s data centre build out represents about 40% of the size of Amazon’s data centre footprint of 622,450 square metres (6.7 million sq ft).
Neither company has ever publicly acknowledged they do business together but in 2011 reports surfaced that Apple uses AWS, and perhaps even Microsoft Azure, for its iCloud and iTunes services.
There are many reasons Apple could be looking to transition away from using AWS, if Nowak’s predictions are true. The two companies are increasingly competing with one another across a variety of industries. Amazon has its own iTunes competitor in Prime Video and its own consumer-grade cloud storage service in Cloud Drive.
There could be technical reasons for Apple to move away from AWS too. At a certain scale, Apple could believe that it can run its own data centres more efficiently than using the public cloud. Data sovereignty issues could be influencing the decision as well.
Nowak notes that the impact of Apple building its own data centres on AWS is unknown. It is unclear how much of its cloud usage, if any, Apple will be moving into its own data centres.
AWS’s growth could absorb some of the loss of a major customer too, if that were to happen. AWS reported last week that its revenue grew 69% in the fourth quarter of 2015 compared to a year earlier. AWS said it’s on a $10 billion (€9.16 billion) annual revenue run rate. Morgan Stanley predicts the overall IaaS spending will reach $240 billion (€220 billion).
Amazon Web Services had no comment.
Brandon Butler, IDG News Service
Subscribers 0
Fans 0
Followers 0
Followers