Apple's Secret Cloud Weapon Is Already Inside Your Phone

The battle for the cloud. That's what keeps Google, Amazon, and Apple execs and engineers up at night. That's where the next generation of tech dominance is going to be won or lost. Unless, as the WSJ suggests today, Apple's already won.

Google Music, Amazon Cloud Drive, and Apple's iCloud may sound similar, but the first two really couldn't be more different from the last. Google and Amazon's plan is to zap your music to you anywhere, anytime. It's a streaming future that's only going to be as convenient—and expensive—as your data plan. Apple, meanwhile, has opted for a syncing solution that blasts all of your content to all of your devices and stores it there for easy access. Which looks like it might be a double whammy.

Why is Apple's path more enlightened (at least from a profit perspective)? Two reasons: it's cheaper for you and more lucrative for them. That's a tough combination to beat, especially if—like Google and Amazon—you've got an uphill battle as it is getting people to use your services in the first place.

While Cloud Drive and Google Music sound great, streaming that much music takes bandwidth, and bandwidth costs. A lot. Especially with the gradual extinction of all-you-can-eat plans, it's going to be a huge pain in the wallet to make that Broken Social Scene bootleg rain down from the cloud over 3G or 4G. With Apple, though? You sync at home or over public Wi-Fi, and you're clear. Listen to everything anywhere. The only downside for you is that it takes up space on your iDevice. Which is exactly what Apple's betting on.

You see, Apple's discovered that it can charge more—much, much more—for a 32GB iPad than it can a 16GB iPad, despite a material cost to the company of maybe $15 in extra NAND flash storage. The margins Apple makes on NAND alone are an estimated 85%, more than double the company's already substantial overall gross margin. Essentially: they suspect you'll be more willing to pay through the nose for a device than to cough up huge data overages. And they're probably right.

It's too early to directly compare these services. Google Music is in beta. Cloud Drive's stuck in first gear. And we won't be using iCloud for months yet. But maybe that's what makes the WSJ's point all the more compelling. We're not even out of the gate yet, and Apple's got a commanding lead. [WSJ]


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