Apple wants to break up with Amazon and self-center its own data center

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In a report by Morgan Stanley announced in early February, said Apple was showing some signs they would stop using the services of Amazon Web Services, instead, Apple was building their own data centers to offer online content for users.

The report said that Apple was planning to open three new data centers in the next two years, bringing the total number of its data centers around the globe to figure 7. The total area of ​​ Apple’s data centers will be up to approximately 2.5 million square feet (230,000 m2), equivalent to 40% of 6.7 million square feet (about 622,000 m2) which AWS is using at the end of 2015.

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“We believe that this building is a sign that Apple is likely to leave out of AWS in the next 18 to 24 months.” The statement said.

The report also found that the fact Apple would have to bear the increasing costs for the data centers in the coming years as its service revenue increased. According to the latest earnings announcement, Apple’s revenue from iTunes and the App Store has reached 31 billion US dollars last year, entailing huge costs for data storage and transmission. Thus, this is even increasingly promoting the company to invest more strongly in the cloud infrastructure of their own.

If this becomes reality, it will cause a significant impact on the revenue of AWS. The report said, in 2016, it was expected Apple would contribute nearly $ 1 billion in revenue for AWS, accounting for nearly 9% of expected revenue of this cloud computing segment. In the income statement the most recent quarter, AWS has brought $ 2.4 billion in revenue, up nearly 69% over the same period last year. For the whole year, AWS has generated $ 7.8 billion in revenue, and expected this figure to rise to nearly 10 billion dollars in 2016.

Morgan Stanley has not given clear reasons for Apple’s ability to leave AWS, but more likely due to the increased competition between the two companies in the market of online content and applications. Maybe Apple believes that it will be safe and more effective to have a data center by itself.

However, this decision also goes against the trend of most companies today. More and more large companies like Netflix, General Electric, Capital One, are shifting their work to AWS and closing data centers of their own. This is also the reason that many investors believe there will be a kind of “Amazon tax” formed in the future, as more and more companies rely on AWS to run their services.

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