Apple signs up to Google Cloud services

Apple & Google ink cloud deal: Report
Apple & Google ink cloud deal: Report   

Apple has moved some of its iCloud services onto the Google Cloud, marking one of the most high-profile wins for Alphabet's rival to Amazon Web Services since it came under new leadership last fall.

Google has been a distant third in its race with Amazon and Microsoft's Azure as the trio vie for market share in cloud computing, but it has made strides since the appointment of industry veteran Diane Greene as head of that business in November.

Google also scored a victory with Spotify last month, when the music streaming service announced it would shift away from Amazon Web Services and move most of its services onto the Google Cloud platform.

Apple's move to Google comes as part of a broader diversification for its wide range of internet services, which include iCloud backups such as photo storage, music streaming and video downloads. Apple already uses cloud services from Amazon and Microsoft, as well as its own data centers, according to people familiar with the matter.

The second act for top tech talent
The second act for top tech talent   

Apple could eventually take more of these services in-house, and it has disclosed plans to build three new data centres over the next two years, in addition to the four it already has.

As one of the world's biggest companies with rapidly growing needs for storage and computing, Apple is a prize customer for cloud service providers. Analysts suggested that it may be playing providers off of each other at a time of high competition.

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Apple's move to Google also represents a rare cooperation between two companies that are locked in fierce competition in other areas of their business. However, such a dynamic is not unusual in internet infrastructure: despite having been owned by Google for two years, smarthome device maker Nest still uses Amazon Web Services for its cloud needs.

Google's cloud business has long lagged behind those of Microsoft and Amazon. A recent survey by Rightscale, a cloud management provider, found that just 6 per cent of respondents used Google's cloud infrastructure, versus 17 per cent for Microsoft and 57 per cent for Amazon.

However, the search engine has put more muscle behind its cloud business with the appointment of Ms Greene, a co-founder of VMware.

"One thing we've been hearing from customers is that they are being more aggressive in terms of negotiating with people on commercial terms," said Kim Weins, head of marketing at RightScale, referring to Google. "They are really trying to bend over backwards as needed to win these early enterprise customers."

The move will raise questions for Amazon Web Services, the market leader in cloud computing. Analysts at Morgan Stanley estimate that Apple will spend $1bn on AWS services this year, about a tenth of AWS's revenues."

In addition to losing Spotify, AWS also suffered a blow this week when Dropbox, a longtime client, revealed that it had moved most of its data to its own servers to save money and improve efficiency.

After launching its first service a decade ago, AWS has dominated by virtue of being a first mover, but competition has toughened recently as Microsoft and Google strengthen their offerings.

"Clearly AWS is still in the lead in the vast breadth of their services," said Ms Weins, adding that Google's increased number of services had helped it win new business. All three companies have been cutting prices over time.

As Apple shifts its cloud strategy, a range of companies is being impacted. Akamai, another internet infrastructure provider, which is believed to count big tech and media companies such as Apple, Microsoft and Facebook as customers, has warned in recent months that its largest customers are bringing more of their data centre requirements in-house.

Frank Thomson Leighton, Akamai chief executive, said on February's earnings call that sales from its two largest customers were likely to fall from 13 per cent of overall revenues to 6 per cent this year as a result of the unnamed companies' "increased do-it-yourself efforts". Analysts have suggested that Apple is probably one of those two companies.

Apple's iCloud move was first reported by tech industry news site CRN.