Apple's shady iCloud strategy

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The fanfare that invariably accompanies a public appearance of Apple CEO, Steve Jobs, has finally died down. Amongst the slew of announcements at Apple’s World Wide Developer Conference 2011 on June 6 were a number that may have a profound effect on CSPs worldwide, especially those in the mobile/wireless network space.

Perhaps the most surprising new feature revealed during the keynotes was iMessage, a real-time messaging service that lets iOS users send texts, photos and videos to other iOS users over Wi-Fi and 3G. No big deal on the surface , sounds a lot like BlackBerry Messenger that has hardly set the world on fire, but when you dig down you discover that a push notification is received on ALL the recipients iOS devices. If you know any Apple aficionados, you’ll know they are likely to have more than one device in their possession.

That’s pretty cool but its limitations, like those of Messenger, are that it can only inter-operate with other proprietary Apple devices. If the service is provided at no charge some analysts believe iMessage may be a potentially lethal threat to operators' premium SMS and MMS services. However, it has some stiff competition from other cross-platform messaging options already around, including Twitter, that has also been embraced by Apple.

It remains to be seen how successful these moves will be. Little has been heard of the success of Apple’s last foray into the telcos VAS space, FaceTime, a video calling app that was supposedly going to make video calling cool. This was despite repeated failures by operators to attract mass take-up of similar cross-platform technology that has been around for years. Not to mention Skype that offers all the above on any platform.

The biggest news was around iCloud, Apple’s foray in cloud services but with a twist.  Jobs noted at the keynote that the cloud has “demoted” the PC and Mac to just mere devices, and iCloud will step in as the “center of your digital life” and digital hub. "iCloud stores your content in the cloud and wirelessly pushes it to all your devices," he explained. "It automatically uploads it, stores it, and pushes it … Now, when I buy a song on one of my devices it automatically downloads to all of my devices without having to sync or do anything at all. We're making it free, and we're very excited about it."

But wait, there’s more! Apple is incorporating its iWork suite of programs (Pages, Numbers, and Keynote) into iCloud so that users can work on projects using one of these apps on one Apple device and then pick up where they left off using another. iCloud will also sync up the Camera library among multiple devices using Photo Stream, which pushes the last 1,000 photos taken on any of the iCloud-enabled devices to the rest.

OK, enough already, are you getting the message? Apple wants all its customers to be able to sync all their devices, all the time, anywhere. The whole strategy is predicated on continuous connectivity to the internet over fixed-line (cable, ADSL, etc) and preferably over wireless (3G, Wi-FI, Wi-Max, LTE). Presumably, Apple believes that network operators worldwide will be happy to transport the extra traffic, effectively multiplied by the number of Apple devices being synced continuously with the iCloud mother-ship.

This is taking OTT to new level and one wonders if operators will be happy to play along or will have to formulate special iCloud plans to include all their customer’s Apple devices. Those customers will be wanting, no, needing, all-you-can-eat options just to cope. Operators will surely be hesitant to offer anything more than capped plans to preserve their precious, limited bandwidth.

Knowing how critical fast internet access is to the success of iCloud, you would think Apple would have consulted operators to see how they could work together and benefit jointly. It is doubtful that this has happened and further consolidates the industry’s worst fears that OTT players like Apple, Google, Amazon and Facebook will continue to view their networks as ‘big fat pipes,’ there for the taking!


Posted 06-15-2011 7:16 PM by The Insider

Comments

Tim Chambers wrote re: Apple's shady iCloud strategy
on 06-20-2011 2:38 PM

I don't think OTT can be stopped. It's what consumers want. But is the Internet robust enough to handle all the real-time traffic that now flows over mobile voice and SMS channels? If not, can mobile provides make it robust enough? It seems natural for Google to move into the "TCP/IP anywhere you 'can hear me now'" space. Besides, doesn't LTE/4G promise TCP/IP native to and from our mobile devices? Really, won't all the traffic sometime in the future be packets? There's no more need for voice or SMS at that point, is there?

Robert Rich wrote re: Apple's shady iCloud strategy
on 06-23-2011 4:54 PM

Apple makes money when customers buy more devices. By providing simple, convenient replication of data among all its devices, Apple increases the chances of customers buying *only* Apple devices, and not others. The closed messaging platform plays on that strategy as well.

Jobs may look altruistic to Apple fan boys with his "free Cloud" strategy, but it's just another (clever) ploy to get consumers to buy more Apple product.

Gunnar Nilsson wrote re: Apple's shady iCloud strategy
on 06-27-2011 5:38 AM

Always interesting with value chains.

Where are all the B2B thinkers in this industry?

Here's a try to spell it out with an example from another industry:

(note; these are my value assumptions, not facts!)

Let's imagine a monetary unit of 100 per cup of coffe.

Starbuck price per cup of coffe at Victoria station: 100.

Cost of serving: 20

To the coffe plantages, the "green" component: 1-5

Cost for Victoria station at the "hot spot": 50

Results in a handsome profit for Starbuck (read OTT player) but more so for the Victoria station...

Ok, the operator "fat pipes" doesn't have the same factor of "scarceness of resource" as Victoria station. But, as article indicates, access is no ubiquity resource just there for the taking.

Conclusion; any device with service, or service on it's own,  provided OverTheTop could definitely be considered for multi-sided business models with easy to explain B2B value chains. In our industry, it did work for imode in a millenium not to far ago:-)

John Gustavsson wrote re: Apple's shady iCloud strategy
on 06-28-2011 3:11 AM

Interesting analogy. The difference, however, is that there isn't several competitors selling coffee at same location to the same customer. CSPs are competing at the same location. It stands to reason that if one CSP is happy enough to become a "dumb pipe" to offer unlimited service (and work with Apple?) the other CSPs would have to follow or come up with a competing offer.

The undercover economist is a very interesting read (here is an extract of coffee at waterloo station)

www.littlebrown.co.uk/.../9780349119854.pdf

Gunnar Nilsson wrote re: Apple's shady iCloud strategy
on 07-05-2011 9:28 AM

To repeat, my concern is really "Where are all the B2B thinkers in this industry?"

My intention was certainly not to come across as reusing anothers example and transposing it to our industry while claiming it's easy. Hence here is a bit more on the subject... (and the subject is really way off this thread to start with:-)

Indeed it is the "undercover economist", by Tim Harford, I used the example from. Thanks for noting and supplying a link. I certainly do recommend to pick up a complete copy of the book!

However, we fail to give credit to Tim's hard work if we stop at; quote John; "The difference, however, is that there isn't several competitors selling coffee at same location to the same customer. CSPs are competing at the same location."

For communications industry, let's note a few trends that may move access provider farther away from being ubiquity; 1: Access providers multiregional and multinational operations increase. 2: Revenue/payment flows increase with payment exchanges that bill for multiple operators. 3: Network sharing is becoming more popular.

And, it's easy to understand Apple's choice of payment channel. Collecting payment across relatively few credit card companies is infinitely easier than having to agree with around 500 access providers around the world.

Some more, if you are not Apple sized on the provider side. And, from the other side, if you are consumer and/or a small medium business. Then there are numerous niches to be filled with competence gaps and great new services. Like a consumergroup responded at TM Forum. Do you really trust facebook and and other to secure your personal data. The answer was "not really", and "why not" when the same was asked in regards to access provider (the actual term used was mobile operator).

And, John, I presume you know Swedish. This one by Lars Reinius was interesting since he's not in the middle of the telcom industry:

www.idg.se/.../det-finns-mer-an-angry-birds

All the best

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