Google Gets Apple to Jump Aboard Its Cloud Business (Though It May Not Last) – Re/code

In its bid to improve its name in cloud computing services, Google nabbed a big-name customer: Apple. The iPhone maker recently started storing parts of its iCloud and solutions data with Google’s cloud platform, according to sources familiar along with the deal.

It’s a gain for Google, which is gunning for bigger companies as cloud customers. However it could be short-lived, as it looks like Apple is additionally simultaneously building out its own system to delivering data stored on its millions of equipments in house.

Currently, considerably of Apple’s iCloud luggage sits with Amazon Web Services, the leading cloud provider by a long mile, and additionally along with Microsoft’s Azure. CRN, the publication which initial reported the news, claims that Apple is trimming its reliance on AWS by turning to Google. At minimum, Apple would certainly appear to be including Google to the mix.

Apple and Google the two declined to comment.

Amazon, which frequently doesn’t disclose the identity of its customers, issued a statement implying that Apple hadn’t defected. “It’s sort of a puzzler to us, since vendors that already know performing firm along with enterprises respect NDAs [non-disclosure agreements] along with their customers and don’t imply competitive defection where it doesn’t exist.”

For the record, Apple disclosed its reliance on AWS and on Azure in a 2014 white paper.

CRN pegged Apple’s spending along with Google between $400 million and $600 million. One source merely said it was a “significant” amount. If the CRN report is accurate and the revenue figure refers to an annual rate, that would certainly be considerable for Google: The search giant doesn’t disclose its cloud numbers, However some analysts have actually pegged its total revenue last year at about $500 million.

For Apple, though, the deal might portend a relocate to reduce costs ahead of producing its own cloud storage system. Google’s cloud group is in deal-making mode, aggressively seeking to delivering in brand-new customers to usage its cloud services, and could have actually sweetened the deal — or been a lot more willing compared to AWS and Azure to concede to Apple’s demands. (And Apple, if anything, is great at aggressive demand-making.)

Then there’s Apple’s next step. Morgan Stanley, in a note last month, laid out the tea leaves: Apple has actually announced 3 data centers opening soon and invested an estimated $1 billion last year on AWS. It’s a logical relocate for Apple if it wishes a lot more independence from its tech rivals. And it’s one Apple must make to store the growing media libraries from its mobile, TV and TBD products.

According to a source familiar along with the matter, Apple currently has actually a team functioning on this; it’s known internally as “McQueen,” as in Steve. It’s unclear if that project will certainly materialize or when. However a source tells Re/code that the codename refers to Apple’s intent, sometime in the next couple of years, to break its reliance on all of 3 outside cloud providers in favor of its own soup-to-nuts infrastructure.

Apple has actually reckoned, one source says, that provided the fees it is paying Amazon and Microsoft, it could break also along with its own data centers within concerning 3 years and not have actually the headache of negotiating along with companies it considers rivals in various other places of its business.

In the interim, the deal is an improvement for Google, which has fairly rapidly accelerated its enterprise firm after hiring industry bigwig Diane Greene to run it in November. To date, the company’s cloud has actually largely targeted startups and small businesses, However is making a concerted sales push for bigger clients. Last month, Google announced it had signed on Spotify.

Update: We added some added context on the codename “McQueen” and additionally added that Apple uses Microsoft Azure along with Amazon AWS for several of its cloud infrastructure. We additionally added a statement by Amazon and a link to an Apple white paper from 2014.

Additional reporting by Arik Hesseldahl.

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