Apple Inc’s iCloud service, part of its first product release since the death of Steve Jobs on October 5 , may cement the loyalty of millions of consumers lured by Jobs’s pioneering mobile devices over the past decade.
The service would automatically store photos, songs and other files on servers at Apple’s data centres and sync them with a customer’s gadgets. A photo taken with an iPhone would appear within seconds on a user’s iPad, iPod Touch, Apple TV set-top box and any personal computer running iTunes.
The move steps up competition with Google Inc’s Android and other mobile-device rivals by making it harder to switch away from Apple products, said Bill Whyman, a technology analyst with International Strategy & Investment Group. If iCloud works as advertised—something Apple’s previous online products haven’t always achieved—the convenience of no longer needing to upload, download or sync files may lead many customers to buy exclusively from Apple, he said. “iCloud could raise the switching costs for the customer, and the barriers to entry for the competitor,” Whyman said. “That’s very powerful.”
Walter Price, a portfolio manager at RCM Capital Management, estimates iCloud could increase Apple’s market value by $100 billion to $500 billion, due to the service’s effect on hardware sales and purchases of songs, movies and other media. The Cupertino, California-based company is already the world’s most valuable business, with capitalisation of $371.1 billion.
iCloud would be included free, along with an update of Apple’s iOS mobile software, was made available to customers on Tuesday. The service marks Apple’s most ambitious effort to expand its internet-based operations beyond the basic iTunes store, which doles out songs, TV shows, audio books and mobile apps to one device at a time.
“Keeping these devices in sync is driving us crazy,” Jobs, then chief executive officer, said when he introduced iCloud at Apple’s Worldwide Developers Conference in June. With the new service, he said, “everything happens automatically, and there’s nothing new to learn. It all just works.”
To succeed, Apple would need to improve on its mixed record in online services. Since Jobs returned to the company in 1997, the company has unveiled a series of internet features. While iTunes and its App Store took off, some were quickly forgotten, such as an Apple-staffed editorial site, called iReview, to recommend websites. An online storage service named iDisk, too, never caught on. And, a synchronisation service called MobileMe suffered high-profile outages and performance problems after it was introduced in 2008.
If iCloud is a hit, it could help Apple build thicker walls around its carefully controlled ecosystem of devices, at a time when Google, Facebook Inc and Amazon.com Inc are trying to lock in users to their own technologies.
Price predicts that iCloud would magnify Apple’s strength as a content distributor. If more customers buy only Apple devices, they’re more likely to get their music, TV shows and other forms of media from Apple—rather than from Netflix Inc, Amazon and Comcast Corp.
iCloud is one of many features in Apple’s new mobile operating system, called iOS 5. The software also includes a service called iMessage that lets Apple customers send text messages to each other. And, iOS 5 includes better integration with Twitter Inc; a service for seeing the location of other iOS devices; and Cards, for people who want to create greeting cards and have Apple print and mail them.
iCloud comprises a handful of separate, free services. One, called Photo Stream, automatically stores a user’s 1,000 most recently taken pictures and syncs them with a customer’s iOS devices. Another ensures all the machines have the latest version of memos and spreadsheets created with Apple’s iWork applications.
Apple would charge $25 for a service called iTunes Match, which lets music fans automatically sync songs in their iTunes library that weren’t purchased from Apple.