Why iCloud Will be as Important as the iPod

Apple’s World Wide Developers Conference keynote last week will be remembered for two things: the bloodbath of disrupted developers and apps it left in its wake, and that it was as important for cloud services as the iPod was for digital music, and that the iPhone was for smartphones.

The Developer Bloodbath

Despite the many cheers from the crowd of developers at the keynote, I reckon there were several hundred third party developers and apps collectively put on notice (and maybe put out of business) by the various announcements. As the NY Times wryly put it, “How do you know if you’ve created a really great, useful iPhone app? Apple tries to put you out of business.” (The Times provides a handy list of apps now scrambling for a second act.)

In truth, quite a few of the things that Apple announced - such as a basic to-do list app, and ways of storing web articles offline for later reading - have become such fundamental needs for so many people that they deserved to be part of the core OS. Unfortunately they are also the bread and butter of many niches developers who saw the same need and leapt to fill it in the intervening years. They will have to rethink and improve what they do, and many of them will I’m sure.

Such is life in the shadow of an ecosystem behemoth. Apple giveth (App Store to give independent developers more visibility and access) and Apple taketh away (obviating the need for those apps in the first place).

Apple has been pretty consistent in adopting good ideas from third parties into its core offerings. Perhaps most famously, Apple introduced the Dashboard feature (a precursor to the iconized app view on the iPhone), to loud complaints of it ripping off a third party developer, Konfabulator who had created something very similar.

As problematic as this can be, it’s all part of Apple’s plan. Chetan Sharma put it succinctly: “Apple’s goal is to commoditize the software, Microsoft’s goal is to commoditize the hardware, Google - both”

Apple has high tolerance for making software free, even if it makes life painful for its developers, because it makes almost all its profit on hardware. For the time being at least, Apple has enough strength and/or momentum relative to Google, Microsoft, media companies and service providers that it can thrive with this approach.

The Mainstreaming of Cloud Services

The announcement of iCloud was met with both enthusiasm and incredulity.

Apple has been firing on all cylinders for years with hardware and software, but has consistently stumbled with services, whether it be the expensive and lackluster MobileMe (the launch of which even Jobs had to admit at the keynote was “not our finest hour”), or the weak reception to its music “social networking” service Ping. (This isn’t a new phenomenon - anyone remember eWorld?) The only service area where Apple has really sung is with its retail stores.

With iCloud, Apple is cinching up the ecosystem it has painstakingly built up, cinching it so tight that it will become increasingly difficult for others - even ones as big as Google - to crack open.

MobileMe was an expensive, under-performing sideshow, but iCloud aims to reach deep into all the other Apple devices and make them all work together better. What was announced on Monday is surely only a hint of what lies ahead in the next 18 months for iCloud, iOS, and OS X all finally getting in sync.

Ironically, iCloud aims to improve on what was arguably the worst part of MobileMe - iDisk, a basic cloud storage feature. Given Jobs’ obvious frustrations with MobileMe, I can’t believe he would let yet another half-baked attempt out the door, especially not one that is now a major strategic piece of the puzzle. Based on the massive data center Apple has invested in, they’re not joking around.

Since the iPad launched, its lack of a file system has meant it’s not a true laptop replacement. One of the brilliant ideas about Dropbox is that it essentially puts the file system in the cloud and moves it off the device entirely. iCloud apparently opens the door for the same thing, and with even superior integration. Today with near ubiquitous broadband and 4G/LTE networks starting to roll out that offer home broadband speeds while mobile, this suddenly becomes a workable solution. (Bandwidth caps, tiered pricing, disappearance of all-you-can-eat data plans? Yes, there are flies in the ointment, but the longterm trend is clear.)

Linking Cloud, Apps, Devices, and OS’s

Consider two things that were discussed separately in the keynote: journaling in the next rev of the OS, Lion (which means no more saving - a file is continuously saved as it’s worked on), and continuous cloud syncing. Voila - you have your most up-to-the-second work constantly saved to the cloud, and made available on every other device.

My feeling is that iCloud will prove to be similar to IBM launching its PC in 1983. Prior to that point, the PC market was highly fragmented and dominated by niche players, and had little mainstream appeal. The arrival of IBM on the scene gave PCs a stamp of credibility and stability, and they gained sharply more acceptance. IBM made PC’s “easy” to get into, made them relevant, and created the archetype which others would mimic for decades.

Apple pulled off the same feat with mp3 players and smartphones, for largely the same reasons. So it will be with iCloud. Cloud services are not new (neither were mp3 players or smartphones), and the fact is that much of our critical data already lives in the cloud, via various web apps, service subscriptions, and email. But until now the various services have been poorly integrated, and offered by startups that many people don’t feel comfortable handing their data over to, whether for security or long-term availability/stability reasons.

They haven’t been ready for the mainstream, and iCloud will come to be seen as the turning point which changes that. For consumers who don’t yet get the relevance of cloud, the media syncing across devices provides the carrot to get into the concept.

MG Siegler looks at the different approaches to the cloud being taken by Apple, Google and Amazon, and notes that “Apple’s belief is clearly that users will not and should not care how the cloud actually works.” Exactly. This is what Apple does best - take complicated things that most people don’t care about, and makes them easy and understandable for a mainstream audience.