With iCloud, Apple Once Again Opens Up New Market

by Ryan Cole, Investment U Research
Thursday, June 9, 2011

Apple is doing it again…

The company has a rich history of getting to a new sector, not first, but best. And when it does, everything changes. That’s not ad-man hyperbole – that’s just simple fact…

When Apple released the first iPod, personal MP3 players weren’t new – but they weren’t mainstream, either. That all changed when consumers experienced the ease of use of Apple’s then-revolutionary click-wheel.

When Apple started selling music via iTunes, many pundits wondered whether digital music could compete with physical media. Today, iTunes is the number one music seller in the world, with Amazon not far behind. Brick-and-mortar stores dedicated to music are just about extinct.

Last year, Apple released one of the first – but not the first – tablet computer. Now, Apple owns over 70 percent of the tablet market (and over 90 percent according to some calculations that consider sold-versus-shipped numbers).

Of course, none of this is counting Apple’s previous innovations… like icon-based operating systems, mouse-based interface systems, or advances in battery life that have helped the company dominate the high-end laptop market.

In short – what Apple does, it does well, and when it enters a new market, it tends to dominate it – at least for a time.

Competitors may swoop in to steal Apple’s early lead – as Microsoft did with the personal computer, and as Google may do with the tablet. But there’s no doubt – where Apple goes, the market follows.

That’s why Apple’s newest service – dubbed iCloud – is a bigger deal than many investors might realize.

Welcome to Tomorrow, Today: The Cloud Gets Real

Let’s be clear: Apple is far from the first to this space. Both Amazon and Google have been aggressively moving to the cloud.

But, as usual, Apple is doing it differently – and in a more user-friendly way. So, let’s take a look at what iCloud is offering:

File sharing that equals – or beats – Google docs.On Apple machines, you can start working on a document on one device, pick up exactly where you left off on another and make edits on a third (or fourth or ninth). This is much like other cloud services – but it’s more seamless with the Apple interface, and does a tremendous job of picking up exactly where you left off.
That goes for pretty much every program – pick it up on any device, and you’ll open to the exact view you left on your previous device. In other words – you aren’t just storing data on the cloud – this is more like working off the cloud.

Photos and videos taken on one device are automatically and immediately available on every other synced device. True – after 30 days, they disappear. Unless you want it elsewhere – and then you just mark it for a more permanent place.

Music bought on iTunes is immediately available on all devices. And, for $25 a year, any music in your library is available to every device in your ecosystem.

That’s a big differentiation with other services. Amazon charges twice as much, and requires time- and data-consuming uploads, while Apple just allows your device to download previous copies already on Apple’s servers. Google music doesn’t have a price yet – but is already outclassed by the services Apple is offering.

This is far from the last salvo – and this war is far from over. The gap between what Apple’s offering and competitors is small. There’s no saying yet who will dominate the cloud.

But that hardly matters. Apple has thrown its hat into the ring, with its usual slick user interface and huge horde of dedicated customers.

What counts is this: With Apple’s entry, the cloud is virtually guaranteed to now take off. No more promises for the future – the cloud is today.

Good investing,

Ryan Cole