April 24, 2019
In January 2018, Apple earmarked $10 billion to build its own U.S.-based data centers in the next five years. In a December update, the company added that $4.5 billion of that would be spent in 2019. For now, however, Apple is on track to spend $30+ million per month on Amazon Web Services (AWS). The companies may be rivals, but Apple has come to depend on AWS as a way to deliver competitive online services. That’s become crucial, as sales of iPhones have slowed and the company has turned to online services to pick up the slack.
CNBC reports that the company no longer reveals “unit sales for iPhones and other hardware products,” but instead discloses “the profit margin for its services business, which includes the iOS App Store, AppleCare, Apple Pay and iCloud” as well as “new subscription services for video and magazines.” In the past, Apple said it uses AWS for iCloud storage, “but has not disclosed whether any other Apple services use AWS or other third-party clouds.” In addition to AWS, Apple uses Google and, in the past, Microsoft for cloud tools.
In February, Apple posted a job search for someone to “lead and architect our growing AWS footprint.” The current spending of $30 million per month is 10 percent higher than a year ago, and sources say that Apple spent “approximately $350 million” in 2018. Apple also inked an agreement “that includes a commitment to spend at least $1.5 billion on AWS over the course of five years.”
Although AWS is a major part of Amazon’s business, delivering $25.66 billion in revenue “and nearly 59 percent of Amazon’s operating income,” Apple is responsible for only a “tiny slice” of that revenue.
In comparison, Lyft “has agreed to pay AWS at least $300 million for cloud services through the end of 2021, while Pinterest said it has committed to spending at least $750 million on AWS in a six-year period that ends in mid-2023 … [and] Snap has committed to spending $1.1 billion on AWS through the end of 2022, at least $150 million of that in 2019.”