The importance of iCloud

The importance of iCloud should not be underestimated!

  • The iCloud is the biggest shift in computing paradigm since personal computers replaced the client-server model.

Strong statement. Let’s look at it.

First, what is it?

iCloud provides a set of internet based (cloud) services. While these services differ a bit in specifics, they mostly are a form of:

    1. Internet based storage of user data files: photos, videos, settings, documents, mail, calendars, and applications.
    2. Any one of these items is instantly available to a user on any connectable device (iOS or OSX, Others via internet).
    3. Any update to any of these is instantly available across all your  devices. This includes photos taken with other cameras and imported to iPhoto on your Mac.
    4. On iOS and Mac OSX Lion, all this occurs transparently to the user. It just looks like everything is right there.
    5. Backup functionality.
    6. Find my friends.
    7. Find my iPhone (any iOS device and Macs).
    8. If the user loses connection to the internet, some files will not be accessible.
    9. User also gets a free email account.

Usage Model

The main concept is that you have instant access to all files on any device with access to your account. You take a photo with your iPhone, and your iPad and computer see them virtually instantly. All your iTunes media (songs, movies, podcasts) are stored in the iCloud. They are always ready to be viewed, on whatever machine you are using.

All this happens without you doing anything. Theoretically, you could login on a Mac at a cybercafe in Jakarta, link to your iCloud account, and have the identical environment that you have at home. Heck, if you have setup internet file sharing, you would even have access to your hard drive.

Now, while there are other services that provide similar functionalities, (Dropbox) none do it so transparently and pervasively as iCloud. The functionality is not an add-on. It is built into the operating system and any application can choose to participate in it.

Now, whatever you changes you make to documents, or to media files (take or edit photos|video|music) these changes instantly appear everywhere. Of course…

You must be connected to the internet  to view any files that do not have local copies.

One more benefit. Your files are all effectively backed up. Assuming that Apple never has a breakdown or break-in, you never have to worry about losing any of your files. If your devices are lost or stolen or break, all your data is safe up in the iCloud, accessible from any other device you own. (You DO need to be aware of the iCloud photo policy. I believe it actually does delete certain photos after a period of time

Why so good for Apple? (Investors take note.)

While the benefits for the user are exceptional, there are also incredible benefits for Apple. And this is something that the investor need to mark!

Differentiator. First, the service really improves the overall user experience. (This is assuming there is no repeat of the MobileMe launch experience!) This means it drives users to their products at least in part for this feature. It is a differentiator from the competition. As mentioned above, no one else has a system as deeply integrated as iCloud, although Amazon’s Kindle Fire approaches it. (More on that below.)


More importantly… iCloud provides real incentives for users to stick with the iOS products. When you have this on your iPad, you are much more likely to buy an iPhone and shun the competing systems. This is really leveraging the current total dominance of the iPad.

More importantly yet… It provides a very strong motivation to select a Mac as your next computer. Let’s face it. Macs are expensive. You can buy Win-based computers for a lot less. [I do not want to get into a discussion here as to whether they are worth it or not. This is irrelevant to the current discussion.] People buy any product for only one reason – Perceived Value. Therefore, in order for someone to overcome a significant price differential, he must have a sense that it has additional value over the alternative. In the past, arguments for this have been many and debatable. But the value of iCloud, of having instant, transparent access to all your files, this is a strong positive that is not really debatable. Lion connects seamlessly to iCloud. No other system does. Period. End of argument.

Now, there are about 60 million Macs in the world, but over 250 million iOS devices! Ever since the original iPod, there has been a “halo effect” moving customers to the Mac. The iCould will greatly accelerate this! Here is a very strong motivation to move to the Mac. Mac has always been easier than Windows® (at least so they say), here is a system in which they definitely excel. Again – a very powerful motivation to switch.

Stickiness (the dark side?)

Here is one more very powerful benefit to Apple. Once you spends some time in the iCloud system, you have you have a lot of data that exists up there, and only up there. It becomes much more difficult to move to another system.

Suppose you currently use iTunes for your music and have an iPhone. All your music is physically on your computer. If you want to switch to another phone system, you just need to figure out how to gobble the music from iTunes into your new phone. Pretty easy really. When you move to the iCloud system, however, your files never really live on your devices, but up in the cloud. Now you can still change to another phone, just download all your music to your computer. Repeat with photos and video. And documents. Not terribly difficult, but it is is an extra step that takes time and patience. A bit of a pain.  A real motivation not to change.

Broader Strategic Implications – Why Amazon is on Fire

OK, OK! So there are some benefits for Apple here, but this is not so earth shattering. Apple gets to tie up their customers with “velvet handcuffs” to their system. It helps them out. Not really a big deal. Is it?

I think yes it is. The cloud is the battle ground for the customer space of the future. Sure, Apple does not own its customers. They are free to purchase from anywhere they want. BUT! they are within the Apple system and spend their their time there, and Apple has access to all their information.

Apple lives by hardware sales. Amazon lives by retail sales. They need these customers, and this is why they have created a cloud based system with a lot of similar features.

As I outline in my post:

    • There’s gold in them thar hills!
      That’s right, there’s gold, and if you don’t stake your claim PDQ you are out. Period! The gold is customers, and any company that wants to play big in the online sales business had better stake out a claim or forever be a has-been. Amazon realizes this and they are in the game to win.

This is why they are willing lose money in order to stake out their claim in the Internet Cloud.

Amazon is a very smart company that sees the implications here, realize their importance, and has gone all out with a brilliant strategy to buy into the top-tier marketers of the future. They are one of the few that is holding its own against Apple.

Still, the amount of energy and money they are investing show how really important it is to them!

Their strategy?

    • Do not go head to head with Apple – at least not at first. (Fire is not directly competing – see above link)
    • It is OK to lose a little money at first.
    • Slowly build:
      • Services
      • Experience
      • Customers
    • When customer base is sufficient, move up to more competitive products.
    • When customer base and experience are sufficient, move to profitable products.

Profit for Amazon always includes the value of an added customer who is to some degree locked into their system.

I know that some of these ideas are not original to me. However, I feel I have put them all together in a unique way. I also think that not many others see the real implications of the Cloud Computing paradigm, and how important it is.

Let me know what you think!

In Summary

Perhaps this statement, “biggest shift…” is a little too strong. Whether it is exaggerated or not, however, the important thing is that the impacts are real.


The big Apple (non?) Event.

Well, At fist glance, this event was no-news – at least to us tech fanatics who have been following all the rumors for weeks now!

So, it seems like there are more reasons than ever to buy an iPhone: it is definitely a leader in smartphones if not the leader. It probably has the greatest technology of any phone. But to upgrade? First I do at first glance, then I follow with a deeper  analysis below.

At first glance there was nothing really new. Let’s look at them:

  • Upgrades to iPods? Ok. Nice, but not much really. I wish the iPod Touch had a camera (still) and GPS. That has always been a disappointment to me.
  • The iCloud – Sounds kinda cool, but… well we’ve known about that for months. So what’s the big deal with it anyway. A nice little convenience, but does not really change much.
  • iPhone 4s :

    • iPhone 5! Yay! – oh, oh… there is none. Gee, that is disappointing, only a new 4s…
    • New Camera? – very impressive, but this is not earth shattering. I watched Engadget’s live blog and the photos really are spectacular, but still this does not rocket one to the overnight queue.
    • New A5 chip. Now this is impressive. The technological advance is mind boggling. But still, in terms of some real new functionality, it does not get me jumping. Unless you are a real gamer, it does not seem like a reason to jump online.
    • Siri Assistant – now this is very cool! This seems like amazing technology, and I can’t wait to get my hands on it! Or… well maybe I can wait. I mean, I have lived without this for all my life. I just wait until next year when my plan gets me a new phone (well my wife gets a new phone. While I am a technophile with computers and photography, I have never liked cell phones and don’t own one smart or dumb. When my Nikon can talk to the phone over wifi, I will get one.)
    • Better Antenna/Reception: That is good too. (yawn)
    • Higher Data Speeds is something we can all get behind, but if you
So… What is the verdict here?
I have been saying all along here that this is at first glance. And if you list all the new features one by one, you get a picture of great evolutionary growth here. Everything is a significant improvement over the iPhone 4. The 4s is a strong push ahead. Heck, you cannot create a revolution every year!
The new features seem so modest at first glance, one could easily pass them as cosmetic. But I believe they are not all so superficial.
A5 Chip: The power here is pretty amazing. You see it most i the gaming. The demo there had even the usually snarky Engadget blogger impressed. This new chip will make all graphic intensive jobs go much faster, from taking photos, to editing them, to web page reproduction. It also allows compute intensive jobs to run quicker, including the Siri Assistant. In fact, that appears to require the A5 to function. This is a greater advance than many will think in advance, but will go a long ways to improving the experience overall (not to mention Siri Assistant again).
Siri Assistant
This, I think, will be very very big. at first it will be only a novelty. As people use it, however, they will soon find that can’t remember how they lived without it. It reminds me of all the pundits who said of the iPad “Oh so nice, but who needs it?” Only to write two months later, “Now I can’t live without it.” In three or four years, it will be just a part of our lives like text messaging.
To me, this is the really big one. Finally, the promise of my digital world anytime, anywhere, seamlessly and effortlessly will be a reality. It has been coming slowly. Thirty years ago it existed in the technical world of Unix programmers who could access their account from any machine in their company’s system. Later we got the ability to do so from home via VPN, and it was not longer limited to Unix. But it was never seamless. You had to log on and there was definitely a sys-admin to deal with both for help and restrictions.
Now we all have that access with no hassle at all (other than having access to the internet).
Once again, I am certain that this is feature is going to become so incredibly pervasive, that it will soon be a complete necessity. This is particularly good news for Apple share holders because it is going to make the product line very very “sticky.” That is, once a person has an iPad, it only makes sense to get a Mac because it will share seamlessly. Sure, you can get on any web browser and access your photos and files, it it takes a concerted effort to do so, With iOS and Lion, it will all happen automagically.
The even bigger thing for investors is how this will effectively lock users into the Apple family. Today, if Julie wants to move from an iPhone to a droid, she just has to figure out once how to to get her iTunes library into her new phone, not a difficult thing at all. But if Julie has most of her files in the iCloud, then it is a different story. Now she has to make sure that everything gets downloaded to her computer (which she maybe does not use much anymore) and while this is not particularly difficult, it is non trivial and a real pain. So, while she is not locked in, there is certainly a real hurdle to get over if she wants to change.
Amazon has realized this too. They realize very well the importance of the cloud storage. This is why they limited Kindle to just 8 GB of data. First to save a few dollars (and very few dollars). After all, you do not need a lot of onboard memory when you can always get what you need from the internet whenever you need it. (Although this is a little more problematic on a device with no cellular connection to the internet.) More importantly, however, they understand that to get you to join their system, is to lock you into it. They do not throw away the key, just make it a little more difficult to jump ship. Besides, it is also so easy to just upgrade to another one of their own devices later on…
While some of the individual components of the 4s upgrade appear to be merely evolutionary, and others while new and “cool” do not appear enormously important, two of there really are revolutionary improvements that will have profound effects on the future of computing, both mobil and desktop/laptop.