Apple could soon ditch Amazon Web Services after it's expected to spend roughly $1 billion on it, says analyst
Justin Sullivan/Getty Images
The note said that Apple is planning to open three new data centers over the next two years, bringing its total to seven worldwide. That would be roughly 2.5 million square feet of data centers, or nearly 40% of the 6.7 million square feet AWS used by the end of 2015.
"We believe this build is a signal that Apple is increasingly likely to move away from AWS in the next 18-24 months," the report said.
It also pointed to the fact that Apple indicated higher data-center expenditures for the upcoming year, and the size of Apple's services revenue, which includes iTunes and App Store purchases, growing to $31 billion last year as evidence of a stronger push toward its own cloud infrastructure.
If true, this move could have a pretty sizable impact on AWS's revenue, as Apple is expected to spend roughly $1 billion on AWS this year, accounting for almost 9% of the cloud-computing service's 2016 sales estimates, the note said.
In the most recent quarter, AWS had $2.4 billion in revenue, up 69% from the same period of last year. For the full year, it generated $7.8 billion in revenue, and said it's expected to generate roughly $10 billion in 2016.
Morgan Stanley didn't give a clear reason for Apple's possible departure from AWS, but it could be because of the two companies' increasingly competing nature across the app market and content-streaming business. Apple might think it's safer and more efficient to run its own data center, too.
But it would also be a decision that runs in contrast to what a lot of other big companies are doing lately. In addition to the smaller startups that accelerated AWS's growth, more big companies - like Netflix, General Electric, and Capital One - are moving their workload to AWS and shuttering their own data centers.
It's why some investors believe there will be an "Amazon tax" in the future, where companies will be expected to pay AWS a fixed fee every year, as they increasingly rely on AWS to run their services.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
- A centenarian who starts her day with gentle exercise and loves walks shares 5 longevity tips, including staying single
- A couple accidentally shipped their cat in an Amazon return package. It arrived safely 6 days later, hundreds of miles away.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Having an regional accent can be bad for your interviews, especially an Indian one: study
- Dirty laundry? Major clothing companies like Zara and H&M under scrutiny for allegedly fuelling deforestation in Brazil
- 5 Best places to visit near Darjeeling
- Climate change could become main driver of biodiversity decline by mid-century: Study
- RBI initiates transition plan: Small finance banks to ascend to universal banking status
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market