Tag Archives: aapl

Apple May Push Into Corporate Cloud Computing Vs. Amazon, Microsoft

Will Apple ( AAPL ) muscle in on Amazon Web Services? Apple’s huge data center build-out might be setting the stage for a jump into cloud computing services for enterprise customers, speculates Oppenheimer. Apple’s capital spending is expected to jump some 34% in 2016 to $15 billion, with about $4 billion going to warehouse-sized data centers packed with computer servers. Morgan Stanley this week said Apple might shift some cloud business away from AWS as competition in consumer products  intensifies with parent Amazon.com ( AMZN ). Oppenheimer analyst Tim Horan, in a research report, goes a step further, saying Apple might start its own infrastructure as a service (IaaS) business as it targets the corporate market. IBM ( IBM ) and Apple have partnered for enterprise marketing. “Looking at Apple’s capex trajectory and recent continued data center builds, we believe there is a possibility the company is setting up an infrastructure as a service offering,” wrote Horan.  “While we realize this is not Apple’s core competency, it is obvious it has built out its own CDN network and will continue to expand it. “It is also apparent to us that by building out an IaaS offering to businesses, Apple may be able to drive its hardware business into the enterprise. This would be an interesting development and is certainly a wild card.” Apple plans to open a massive data center in Mesa, Ariz. It also wants to expand a large data center in Reno, Nev. Amazon expanded into cloud computing by leveraging the massive Internet infrastructure that it had built to support its e-commerce business. Apple launched iCloud for consumers, but additional server capacity could be used for corporate cloud services. Aside from Amazon’s AWS, Microsoft ( MSFT ) and  Alphabet ‘s ( GOOGL ) Google are the biggest providers of IaaS services. The other big investor in data centers is Facebook ( FB ), as it whisks more video to mobile devices. “From (Facebook-owned) Instagram/WhatsApp to Google Hangouts, Web-scale consumer-facing companies are leveraging cloud computing and superior network architectures to become de facto communications companies, and they are spending the capital to do so,” Horan said. Apple has also built its own content delivery network, making it less dependent on  Akamai Technologies ( AKAM ), the leading provider of CDN services. Horan sees upside in data center expansion for companies such as Level 3 Communications ( LVLT ) and Zayo Group ( ZAYO ).

Morgan Stanley Says Apple Stock Ripe For Picking

Apple ( AAPL ) stock has been knocked down by growth concerns in recent months. But it’s reached a level where the risk-reward balance looks attractive, Morgan Stanley analyst Katy Huberty said in a research report “Growth headwinds won’t subside in the near term,” Huberty said in a note Wednesday. “But risk/reward is attractive with upcoming iPhone refreshes, steady margins and low valuation.” She rates Apple as overweight with a price target of 135. Apple stock barely budged, closing up 0.03% at 96.38, on the stock market today . With iPhone sales poised to fall for the first time on a year-over-year basis this quarter, investors are debating the future of the business. Apple’s iPhone business faces headwinds, including a slowing China economy, price increases abroad as the U.S. dollar strengthens, fewer carrier subsidies and tough year-over-year comparisons, Huberty said. Apple’s share of the high-end smartphone market, however, still looks solid, she said. Another worry is that iPhone average selling prices and profit margins will decline, especially when Apple launches its rumored 4-inch iPhone 5SE in March. But Huberty expects the 4-inch iPhone to carry gross profit margins that are better than the company average and potentially in line to above margins for other iPhone models. She expects Apple to roll out two revolutionary iPhone features over the next one to two years that will show smartphone innovation is alive. They are foldable OLED displays and wireless battery charging. “OLED displays should allow Apple devices to offer better picture quality and become even lighter and thinner and/or offer longer battery life as OLED uses less power,” Huberty said. “Foldable OLED could enable smartphone-sized mobile devices that can open like a book to reveal a larger tablet-like screen inside.” Wireless charging will enable over-the-air charging of iPhones, Apple Watches and other devices, she said. However, foldable OLED and wireless charging are unlikely to be in the iPhone 7 due out this fall, she said. Yet even without those revolutionary technologies, the iPhone 7 should be able to drive high single-digit unit growth in fiscal 2017, which starts Sept. 25, she said.

Amazon.com Turns Up Heat On Apple, Makes Spotify Easier On Echo

Amazon.com ( AMZN ) announced Thursday that it would make Spotify Premium — which has between 20 million and 25 million subscribers — available on its Echo speaker and Alexa virtual assistant. Spotify is an iTunes-like music streaming service for mobile and desktop. “Now playing your favorite music from Spotify is as easy as asking Alexa,” Toni Reid, Amazon Alexa director, said in a statement. “Music is one of the most popular features on Amazon Echo, and Spotify has been one of the most requested services, so we’re excited to bring it to our customers today.” Amazon.com stock was up a fraction in afternoon trading in the stock market today . Earlier this year, the Wall Street Journal uncovered Amazon’s plans to build a beer-can-sized version of the Echo that will likely put pressure on other virtual personal assistant providers, such as Apple ( AAPL ) and its Siri. Microsoft ( MSFT ) and Alphabet ‘s ( GOOGL ) Google also offer virtual personal assistants. Spotify was available on Echo prior to Thursday’s announcement, but it wasn’t seamless and required several steps to set up, according to Re/code .