Snap’s IPO, the Rise of AR, and Scaling in the Cloud

From Wall Street to Silicon Valley, the IPO of Snap, the parent company of mobile social sharing app Snapchat, is set to make big waves in a variety of industries. A considerable part of that excitement is centered around the revealing of the company’s data storage agreements.

As the company prepared for its IPO, it revealed more details about its financials and its partners. The big news lately is about its cloud partnerships and how they display the company’s plans and ambitions going forward. Snap announced that it has committed $3 billion to cloud infrastructure from Amazon and Google over the next five years.

What’s the significance of this size of a commitment?

First of all, the decision to rent rather than buy the space is telling. Though the company claims it will consider building its own dedicated data center in the future, right now it is firmly committed to the cloud model. For a company that relies so heavily on the effective and efficient transfer of data (its users send over 2.5 billion image or video messages per day) it is a significant display of faith in the cloud model going forward.

Second, the scale. Snap is branding itself as a camera company and it intends to go far beyond the Augmented Reality (AR) innovations it has already implemented into its camera-based app. What exactly these AR-enhanced photo and video experiences will look like is anyone’s guess, but what is certain is that the more complicated they become, the more data they will take to produce, move, and store.

AR files are already bigger than standard photo or video files. But virtual reality video files, for example, could beup to 20 times larger than a similarly sized HD video today. For that reason, Snap sees its needs scaling up as each year passes. For example, for the $1 billion it has committed to AWS, it will spend $50 million this year, $125 million next year, $275 million the year after, and $350 million the year after that.

That’s a pretty significant jump each year, and Snap is on the hook for every dime of it, even if their services don’t scale as quickly as they are planning for. However, with Digital Realty’s Service Exchange, powered by Megaport, customers are able to scale from a single cabinet up to multi-megawatts of compute capacity & storage while only paying for what they use. They can also turn up and tear down connections in real time through the MarketplacePORTAL.

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