Apple Preps for Cloud Battle With Microsoft, Google, Amazon

In a move that could impact the general consumer and business users alike, Apple is said to be building its own high-speed data network in a move that could give the Silicon Valley giant even more control over the end-to-end experience.

The company is setting aside billions of dollars to build a stronger cloud infrastructure. That would include implementing a faster private network and upgrading the company’s largest data centers, Bloomberg reported. The article cites “people familiar with the matter” who say it’s all part of a move to become more competitive with Google, Amazon and Microsoft in the cloud.

The plans reportedly involve Apple deploying its own long-haul pipes to link four data centers in Oregon, California, Nevada and North Carolina. The goal is to get content closer to Internet hubs in major cities with large populations; then, Apple would hand off the traffic to traditional network operators or cable companies, meaning it will keep using most of its current vendors, the report said. In addition, Apple will build its own customer network and servers to replace the hardware from vendors that it uses now.

The news comes amid reports that the iPhone behemoth will debut a streaming music service at its developer conference next week.

“During a week when Apple essentially copied its new music service from streaming rivals, it seems to be doing much the same with its cloud/network strategy – right down to apparently building its own custom-built hardware,” noted Rich Karpinski, principal analyst with 451 Research. “Google and Amazon, among other big cloud/data center owners, have already gone down this path – and for the same reason. The economics make sense and the ability for large-scale content providers to manage and control their data center and network backbone is essential. Apple will still rely on last mile providers – from fixed broadband carriers to mobile operators to even Wi-Fi providers – to get to the customer, and that’s OK, too.”

Apple did not comment formally on the Bloomberg report.

“Google may be dabbling in MVNO services, but dabbling is all it is, Karpinski added. “In the end, there are two ways for Apple to maintain its massive margins: release great products that justify its high prices and/or find new ways to cut costs. Its cloud/network strategy is clearly and likely very effectively aimed at the latter.”

Follow senior online managing editor Craig Galbraith on Twitter.

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