Apple Confirms New Data Center Will Be Used To Deliver iTunes and MobileMe Content

In 2009, when Apple was building out their new North Carolina data center, I blogged that someone at Apple told me that once their data center was up and running, Apple would starting using it to deliver a lot of their own content, relying less on third party CDNs. [Updated: I am speculating that Apple will rely less on third party CDNs when their data center is up and running since they said they would deliver some of their own content. But my source never said that automatically means Apple will in fact rely less on third party CDNs for content delivery, that's my speculation.] While no details were available at the time about what type of content delivery Apple would bring in-house, at today's shareholder meeting Apple confirmed that come spring, the new data center will support their iTunes and MobileMe services. In my check with someone today who knows more details, they confirmed for me that video content will be part of what Apple plans to deliver on their own.

While it will take Apple some time to get up to speed and bring a lot of their content delivery in-house, it's only a matter of time before this impacts Akamai and Limelight. This move by Apple is very similar to the one that Microsoft did where over the course of three years, Microsoft pulled 60% of their content delivery away from third party CDNs. For those that might be worried that this is a new trend of companies bringing their video delivery in-house, it isn't. You have to be the size of a Google, Microsoft, Apple, Yahoo, or AOL in order for it to make sense.

I have read comments from some who suggest that Apple has to use third party CDNs for video delivery as Apple won't be able to provide good quality video delivery from only a East and West coast data center. In some cases that is accurate in that Apple has a global customer base and I expect them to always have to use third party CDNs for regions of the world where Apple is not in. But right now, the vast majority of Apple's content, especially video, is delivered within the U.S. and with Apple using the HTTP protocol to deliver this content, it's not nearly as hard to deliver good quality video as it use to be, especially in just one geographic region.

But for Akamai and Limelight who deliver an unknown portion of Apple's content, it's clear that over time, Apple's new North Carolina data center will impact the volume of bits they deliver on behalf of Apple. In the near term it won't have any impact and in fact, Apple recently renewed their contract with Akamai for an even larger commitment than before. But the writing is on the wall with this one and we can expect to see Apple take on much more control of their video delivery amongst other content.

Based on this news, some are going to ask me what percentage of Akamai's revenue comes from Apple and how much potential business is at stake? Honestly, I have no idea and don't even have an estimate since I have no data to go off of. Clearly it's in the millions of dollars but whether that's single digits or double digits, I have no idea.

  • ICR

    A data center just for the sake of iTunes and MobileMe contents? This is pretty cool and slick. With this move and strategy by Apple, customers will be more attracted and served. This will move will definitely come unnoticed by other competitors as this strategy will cause a stir and will create stiff competition. We should thank them if there will be competition because there will be more services available and for sure, there will be cheaper charges for all of these.