Apple draws up a $10 billion data center investment plan
Apple (AAPL) plans to invest more than $10.0 billion to set up more data centers across the US (SPY) in the next five years. The company has already invested billions of dollars in data center projects in the US during the last decade. Apple is also setting up data centers in Europe (EFA) and China (MCHI).
Google trying to disrupt the cloud market
Although Apple has been building its own data centers, the company still relies on Amazon (AMZN), Microsoft (MSFT), and Alphabet’s (GOOGL) Google for its cloud computing needs. Amazon is the world’s top cloud vendor, followed by Microsoft.
Google, having tapped VMware (VMW) co-founder Diane Greene as head of its cloud business, has stepped up its campaigns for more cloud market share, turning itself into a disruptive force.
Apple could transform into a cloud competitor to Amazon
Apple’s (AAPL) ongoing data center investments could help the company reduce its spending on third-party cloud services, which could reduce its expenses. Apple’s total operating expenses (or opex), including the cost of revenues, totaled $167.9 billion in fiscal 2017.[1. fiscal 2017 ended September 2017]
For Amazon, Google, and Microsoft, Apple’s data center investments could not only lead to loss of business from a seemingly important cloud customer but could also lead to a customer transforming into a competitor.
To support these data center investments, Apple’s capital expenditure (capex) for 2018 is set to increase 7.5% over last year’s capex to roughly $16.0 billion.