Snap Commits $1B to AWSSnap Commits $1B to AWS
In addition to a $2 billion contract with Google's cloud, Snap is buying $1 billion worth of services from AWS.
February 9, 2017
Snap Inc. is spreading its money around the public cloud.
After committing $2 billion over five years to the Google Cloud Platform, the parent company of social media app Snapchat will also spend an additional $1 billion on Amazon Web Services during the same time period. (See Snap Pays $2B for Google Cloud Services.)
The agreement between Snap and AWS was signed on Feb. 8, and detailed in an US Securities and Exchange Commission filing related to Snap's $25 billion IPO offering. The two companies had a previous agreement that started in March 2016. (See Snapchat's IPO Filing Reveals $500M Loss.)
In the filing, Snap notes that it will use AWS for redundancy for its infrastructure. However, the company also notes that it may build its own data center or infrastructure for disaster recovery and redundancy in the future.
"In the future, we may invest in building our own infrastructure to better serve our customers," according to Snap's amended IPO form, which it filed on Feb. 9.
Figure 1: (Source: Kewl via Pixabay)
As it builds up to the IPO, Snap is showing that it will rely heavily on public cloud to support its services and keep its customer base. The company plans to use Google's cloud for a number of services, including storage, compute power and bandwidth.
At the same time, the $2 billion Snap committed to Google is a big win for the search engine giant's public cloud platform, which has found itself far behind AWS in this market and tied with several other vendors for distant second.
In a recent report, Synergy Research Group found that AWS controlled about 40% of the public cloud market in the fourth quarter of 2016, while Microsoft, Google and IBM represent about 23% of the market combined. (See AWS Maintains Its Public Cloud Dominance.)
The agreement calls for Snap to pay Amazon $50 million in 2017, $125 million in 2018, $200 million in 2019, $275 million in 2020 and $350 million in 2021.
The agreement also comes at a time when AWS' growth has slowed a bit from its rapid pace of the past several years, although its dominance of public cloud remains. (See AWS Growth Slows, But Amazon's Still Killing It in Cloud.)
— Scott Ferguson, Editor, Enterprise Cloud. Follow him on Twitter @sferguson_LR.
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