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Cloud Apple

Apple Spends More Than $30 Million on Amazon's Cloud Every Month, Making It One of the Biggest AWS Customers (cnbc.com) 52

Posted by msmash from the how-about-that dept.
As Apple and Amazon compete for a greater share of consumer dollars and attention, they also have a particularly intimate business relationship: Apple is spending more than $30 million a month on Amazon's cloud, CNBC reported Monday, citing citing people familiar with the matter. From the report: Apple's cloud expenditure reflects the company's determination to deliver online services like iCloud quickly and reliably, even if it must depend on a rival to do so. [...] In a February job posting, Apple said it was looking for someone who could "lead and architect our growing AWS footprint." Indeed, that expenditure is on track to expand. At the end of March, Apple's spending was on track to average more than $30 million per month in the first quarter of 2019. That would be more than 10 percent higher than a year earlier, according to two people familiar with the spending. If Apple's AWS use stays at those levels for the rest of 2019, its annual spending would exceed $360 million. Apple spent approximately $350 million in 2018, one of these people said.
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Apple Spends More Than $30 Million on Amazon's Cloud Every Month, Making It One of the Biggest AWS Customers More

Apple Spends More Than $30 Million on Amazon's Cloud Every Month, Making It One of the Biggest AWS Customers

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  • Some of their products or services overlap but how does that make them rivals? Just because they are both big "tech" companies they actually don't have too much that competes with each other. It's not like Amazon makes phones or Apple sells third party goods. Sure some of their smaller businesses compete but not their primary businesses.

    • I agree with you, more or less. One could make the case that they are competitors when it comes to streaming music and video, although in both cases that seems to be more a matter of adding functionality to keep existing customers happy - side hustles versus their main business.

    • Re: (Score:3)

      by Junta ( 36770 )

      It's not like Amazon makes phones

      Well, not *anymore*... for now...

      However, that ignores Apple's video and music competition with Amazon. Siri v. Alexa. Fire tablets versus iPad. FireTV versus Apple TV.

      Generally speaking, both are trying to push into the same segments for growth.

    • Amazon Pay vs Apple Pay
      Amazon Fire 7/HD/TV vs Apple iPad/AppleTV
      Apps for Fire 7/HD/TV vs apps for iPads/iPhones/AppleTV
      Amazon music vs Apple music/iTunes
      Amazon Streaming vs Apple TV+ (or whatever the fuck they called it, their products names are all over the place these days)
      Amazon's TV/movies exclusives vs Apple's TV/movies exclusives

      The biggest profits are in services and entertainment (payments, apps, gaming, music, TV shows and movies) and both Amazon and Apple are the two biggest contenders with all th

      • There's so much cooperation/overlap that it seems more like a cartel than competition. How many AppleTV owners watch Amazon Prime content?

      • Re: (Score:2)

        by vlad30 ( 44644 )
        Actually it has been noted that apple even uses Microsoft's cloud platform at times or for some purposes not sure how much recently however apple lost is "Not Invented Here" fears a while ago and uses competitors products if they work and are priced right. at one stage traffic was tracked to both Amazon and Microsoft cloud services. When they feel the supplier is lagging they move or create their own replacement

    • Re: (Score:2)

      by Guspaz ( 556486 )

      Phones: Amazon's Fire Phone was a direct competitor to the iPhone, though it failed.
      Tablets: Amazon's Fire Tablets and Kindle readers compete with the iPad
      eBooks: Amazon Kindle and ComiXology directly compete with Apple iBooks as a bookstore
      Virtual Assistants: Amazon Echo/Alexa competes with HomePod/Siri
      Smart TV: Amazon's Fire TV competes with Apple TV
      Streaming: Amazon Prime Video and Twitch competes with the Apple TV+ streaming service
      Music: Apple Music competes with Amazon Music
      App Stores: Amazon Appstore

      • And it wouldn't surprise me to see an Amazon smart watch released in 2019.

      • Tablets: Amazon's Fire Tablets and Kindle readers compete with the iPad

        You are right about the Fire Tablets but Amazon's Kindle does not complete with the iPad. It's a separate niche.

        Some may well consider that for the same cost of an iPad they can get a Fire Tablet and a Kindle. But those are few and far between. The real market for the Kindle are people who love to read and want to have a book sized device that's kind on your eyes and works in direct sunlight. There are other e-Reader competitors out there, but Apple isn't one of them.

    • It's not like Amazon makes phones or Apple sells third party goods.

      Amazon made a phone, and still pushes the Fire tablets, hard. Amazon and Apple both have App Stores for their devices (although Amazon's is competing more directly with Google's). Fire Stick and Apple TV are direct competitors. As are their music/video streaming services. Hell, Apple's iTunes and Amazon are the two primary sources to buy music and movies on the internet, and both are bushing hard into newspapers and magazines. Both are

  • That's a very small amount of money for a corporation as wealthy as Apple. Rather than throw around dollar figures, how about as a percent of revenue? Is Apple making a profit on the services they buy from Amazon and resell? If so, what's the problem? If Apple can maximize their profit by going to another provider or doing it themselves, I'm sure they would, and I'm sure they're always analyzing the details.

    • For me, I think it's not really about the numbers but more about the fact that Apple is relying on a competitor's product to support their own.

      We've heard rumours about Apple planning to ditch both Qualcomm and Intel to use their own in-house 5G chips and ARM-based CPUs, for example.

    • Is Apple making a profit on the services they buy from Amazon and resell?

      Not directly, I'm sure. iCloud has always been a loss leader to keep people on the Apple ecosystem and paid for by selling more Apple hardware.

  • Oracle Cloud Quote (Score:1)

    by Anonymous Coward

    Sounds like they need to get a quote from Oracle!!!!

    • Re: (Score:2)

      by gtall ( 79522 )

      Ya, they just need to get pass the sign the Oracle gate: Abandon all hope ye who enter here.

  • So what (Score:5, Insightful)

    by DarkOx ( 621550 ) on Monday April 22, 2019 @10:40AM (#58471630) Journal

    So What
      $30 million per month a month in cloud hosting costs is meaningless with out context like:

    How much revenue do the activities it supports generate?

    What would the alternatives cost. If Apple need to run data-centers across the world with the availability and connectivity amazon delivers - what would that cost? I would be surprised if at the scale Apple does things, plus amortizing capital expenditures like future hardware refreshes etc it would be much cheaper to do as well as Amazon does it (which is far from perfect).

    Now consider the flexibility Amazon offers Apple as well. They can commit to rolling a service to millions of customers, letting Amazon provide all the hardware to do that. If things don't pan out Apple can just shut it down and the expense goes away. In the old model Apple would have to do something like very limited market test on minimal hardware and then scale up if people like it or risk being left with a lot of rapidly depreciating infrastructure and no immediate application for it they go big with something that flops. Given Apple's love of dropping major features etc at their conferences cloud services make all kinds of sense.

  • It's fairly common practice that tech rivals spend money with each other. Cross-licensing technology is the most common way. Buying chips from a rival is another; Apple has long used Samsung chips.

  • Makes a lot of sense (Score:3)

    by izzo nizzo ( 731042 ) on Monday April 22, 2019 @01:27PM (#58472564) Homepage Journal
    Apple probably diversifies their traffic onto multiple service providers such as Azure and whatever else is available. They must have their own stacks of technology as well, but to achieve uptime and discourage attention from hackers or state actors, they will clearly keep things redundant.

    They know how to obfuscate their data so that even in the worst-case scenarios, there are no single points of access to personal information.

    It's awkward to suggest that Amazon is a rival. Yes, Amazon makes a $30 version of HomePod. Yes, Amazon produces a similar amount of TV content. And, lots of people who have a Kindle do not purchase iPads. Ultimately, while these comparisons are very obvious, the products do not directly compete with one another (at least not in Apple's perspective).

    Additionally, I would speculate that on the basis of Amazon's profit statements, they run AWS at such tiny margins that spending millions on these services doesn't really strengthen Amazon's balance sheet very much.

    • Additionally, I would speculate that on the basis of Amazon's profit statements, they run AWS at such tiny margins that spending millions on these services doesn't really strengthen Amazon's balance sheet very much.

      Actually, it's the exact opposite. AWS is hugely profitable, and it's the other parts of Amazon that are scraping by. According to Forbes [forbes.com], "The internet giant derives over 50% of its total value from Amazon Web Services, per Trefis estimates, despite generating an estimated 10% of net revenues in 2017. This is largely due to the fact that AWS is a high margin business (30-35% EBITDA margin) while non-AWS business streams operate at thin margins."

    • Re: (Score:2)

      by kriston ( 7886 )

      Apple does have its own datacenters including that secretive one called "Pillar" in the High Desert, taking advantage of high bandwidth but high latency data lines with all of it powered by 100% renewable hydroelectric power.

      Not to mention that the High Desert features a year-round climate that God himself seemed to have designed for datacenters, except for the fact that water wells can be more than one mile deep because the scarce surface water is reserved for agriculture and human consumption.

  • GDPR (Score:4, Informative)

    by ledow ( 319597 ) on Monday April 22, 2019 @01:32PM (#58472588) Homepage

    iCloud is nothing more than Azure and AWS storage and servers.

    The Reg had an article on it ages ago. It's one of the reasons that Apple *STILL* do not properly state they are compliant with GDPR, because they can't, even when the underlying cloud servers can, because they just buy everything from everyone and mix it all over the place.

    Might be "resilient" but for damn sure isn't good "privacy".

    Honestly... find a GDPR compliance statement from Apple. Even when asked they couldn't provide me with one. There's a reason my employer ditched and banned all Apple services. They were never properly DPA-compliant either, same reason.

    Oh, sure, they make the right noises, but you literally cannot get a GDPR-compliance statement out of them. Everybody else literally emailled it to their customers months before GDPR came in, and you can pick one up from their control panels any time you like.

    Apple don't run cloud services. They let others do it, and then destroy all their privacy and location guarantees.

    • Re: (Score:3)

      by guruevi ( 827432 )

      I am surprised anyone can produce a GDPR compliance statement. The law is full of contradictory, self-serving compliance bullshit that can't possibly be technically attained, nobody is at this point compliant with the GDPR, not FaceBook, not Microsoft, not Amazon, if they were, you'd be able to port your data between the various systems which in a strict reading is one of the requirements. Blockchain (BitCoin exchanges in particular) and banks can't exist with GDPR because they have to comply with competing

  • Surely we need another stupid buzzword for a cloud service running on a cloud service. List them!

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