By Michael Woloszynowicz

By Michael Woloszynowicz

Saturday, June 11, 2011

Apple’s Commoditization of Cloud Storage

While Apple unleashed a host of cool features for both iOS5 and OS X this week, the most important and game changing announcement was that of iCloud. The reason this is so momentous, is that by offering 5 GB of storage for free, they have effectively commoditized cloud storage for a large chunk of the consumer market. For most, 5GB is all that is needed to store the majority of content that you need protected or made available across multiple devices, particularly when combined with services like iTunes in the cloud and iTunes match. There is also no doubt that this storage limit will grow over time, or that Apple will offer expanded storage for a nominal fee. 
While many argue that the proprietary nature of iCloud make it no threat to other providers such as Dropbox, we have to be mindful of the technology race between Apple and Google. In an effort to match iOS’s value proposition, Google will no doubt release a similar service in the near future, particularly since it would just be an extension of their Google Docs, Music, Gmail, and Apps services. Given the huge combined market share of iOS and Android, this will provide cloud storage to the majority of technophiles; the very same clients that Dropbox caters to. By releasing a host of API’s to their storage services, Apple has opened the flood gates to a whole new breed of applications that previously may not have wanted to host the storage themselves. For example, services like Evernote can be created simply as a set of applications, without the hassle of worrying about most of the server infrastructure that backs them. Even though most cloud storage services provide API’s, the lure of the established Apple and Android user bases, as well as the distribution model of their respective app stores, will prove much more enticing for developers. More and more we’ll see the value of cloud storage reduced to the services built on top of them, and it is the provider that offers the best set of these services that reigns supreme. It is the very advantage that Apple has gained from their App store, and the hundreds of thousands of applications that occupy it. Three years later, many of their competitors have failed to catch up, and with iCloud, Apple is hoping to repeat this success. 
This is not to say that consumer cloud storage providers like Dropbox are doomed, there is still a large market that may not want to be bound to either Apple or Google, but it does reduce the size of the potential market they can target. What Dropbox needs to do is become more of an open platform for building applications and services on top of, rather than just a provider of cloud storage. Dropbox itself has a huge user base that they can leverage as a distribution channel for third party services, albeit without the millions of credit cards that Apple has in their possession.
Even if you’re not an Apple customer, or even an Apple hater, you should rejoice in the release of iCloud as it is merely the start of a new wave of storage providers, and the services built on top of them. 

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