Despite Apple and Amazon rivalling for the same share of the pie, they also reportedly share a close business relationship with more than $30 million a month being spent by Apple for using Amazon’s cloud facilities, according to reports quoting sources.
Reports state that this heavy expenditure by Apple on iCloud also shows its intention of delivering online services like iCloud quickly and reliably, even if it has to take the help from a rival company to do so.
The flagship product of Apple – iPhones, is nearing market saturation and this has forced the company to seek more revenues from its online services. In a recent move, Apple has stopped reporting unit sales of iPhones and other hardware products and has instead begun to focus on the profit margins achieved for its various services business – including the iOS App Store, AppleCare, Apple Pay and iCloud.
Every month, over 1 billion Apple devices are used by people and therefore significant computing and storage is required by Apple. It is making huge investments to augment its own hardware for storage and computing. For example, the company announced in January last year of its plans of making investment in its data centers in the U.S in a time span of five years to the tune of $10 billion. And $4.5 billion of that amount is planned to be spent in 2019, the company announced in December last year. Services of smaller third-party cloud providers are also availed by Apple. But there is also reliance on large cloud providers such as Amazon Web Services and Alphabet subsidiary Google. It has also made use of Microsoft’s cloud tools.
While confirmed its usage of AWS for iCloud storage in the past, Apple had never disclosed whether AWS or other third-party clouds were used for any of its services.
The company in February was looking for who could “lead and architect our growing AWS footprint” according to a job posting then.
The expenditure made by Apple till the end of March was enough to put it on track of spending more than $30 million a month in the first quarter of 2019. And according to reports quoting sources, compared to a year earlier, that would be more than 10 percent higher.
It was estimated that the annual spending by Apple would be more than $360 million if the current pace of expenditure for its AWS is maintained for the rest of the year.
Experts believe that Apple would be making those expenditures in the foreseeable future.
On the other hand, AWS forms a very important component of Amazon’s business. 11 percent of Amazon’s total annual revenue, amounting to $25.66 billion, was accounted for by its AWS in 2018. The business also accounted for almost 59 per cent of the operating income of the company in the same period. But the business that Amazon gets from Apple accounts for just a tiny bit of the total revenues of Amaozn.com even though the iPhone makers is one of the top AWS customers for the company.
(Adapted from CNBC.com)