iCloud preannouncement leads Wall Street to expect big things from Apple at WWDC
After Apple tipped its hand on Tuesday and revealed it will unveil its new iCloud service next week, Wall Street analysts believe the company has set the stage for a strong software-focused Worldwide Developers Conference keynote.
RBC: iCloud and iOS 5 will expand iPhone, iPad markets
Mike Abramsky with RBC Capital Markets sees Apple's upcoming iCloud service as more than just a digital "locker" service that will store users' file. To that effect, he sees iCloud allowing Apple to target iPhones at 5.1 billion handset users worldwide, compared to 1.3 billion PC users.
iCloud could be an important step for Apple, making it so users are not required to have a Mac or PC to sync their device, or store music and movies. He imagines a new version of iOS where users no longer need to tether to a machine to upgrade their software, making the addressable market much larger.
Abramsky also said that iCloud could allow Apple to exploit what he sees are three competitive advantages: licensing and digital rights management, consumer friendliness, and a massive existing install base of more than 200 million iOS devices, plus iTunes users.
"Apple's licensing relationships and 'controlled' platform may appeal to studios/publishers seeking to minimize piracy, while protecting their economics in a hosted model," Abramsky wrote in a note to investors on Wednesday. "iCloud may also be differentiated via Apple's trademark user experience for convenience, simplicity, and discoverability. iCloud APIs may in time extend to developers."
As for the iOS 5 update, Abramsky said he believes Apple may offer hosted online services like content streaming, voice recognition and translation, photo sharing, community and multiplayer capabilities. This could lead to new iOS devices built around iCloud services.
But a key for Apple will be how strong the debut is for iCloud. Abramsky recalled that the 2008 debut of Apple's current cloud-based service, MobileMe, didn't go so well, with performance and reliability issues.
Jobs was said to be furious following the launch of MobileMe. The Chief Executive reportedly assembled the team that created the service and scolded them in a meeting at the auditorium on Apple's corporate campus, saying that they had "tarnished Apple's reputation."
Because of that learning experience, Abramsky expects that Apple will have a more measured, possibly staggered rollout of the new iCloud service. "Apple may initially limit iCloud's scope," he said, "before expanding to a broader audience."
Sterne Agee: iCloud could be a game-changer
Shaw Wu with Sterne Agee said Apple's unusual announcement on Tuesday, in which it revealed the talking points for Steve Jobs' WWDC keynote, signals that most of the focus will probably be on the new iCloud service, which he believes "could be a very big deal." He sees iCloud making iTunes even more powerful, allowing users to access their content from any device, anywhere.
"We notice that every time a new feature is added to iTunes (like TV and movie rentals), its utility value increases, which in turn drives more hardware sales, i.e., iPhone, iPad and Macs," Wu said in a note to investors.
With the focus on iCloud and software, Wu doesn't expect much of a focus on hardware. It's possible, he said, Apple could announce new Macs with Intel's latest Sandy Bridge processors, but he expects an iPhone announcement to come later than usual this year.
Citing checks with supply chain sources, Wu corroborated with other reports that have indicated the fifth-generation iPhone will be a relatively minor update from the iPhone 4. He has been told that Apple will have a "more radical iPhone refresh" in 2012, when the company is expected to introduce a model with support for high-speed 4G long-term evolution data.
JMP Securities: Revolution lies in the software
Analyst Alex Gauna said in a note to investors on Wednesday that he has fairly low expectations for new hardware at WWDC. Instead, he's more interested in what Apple has to say about software and its new iCloud service.
He said software advancements with Mac OS X 10.7 Lion, iOS 5 and iCloud could be "much more revolutionary" than a fifth-generation iPhone. Numerous reports have suggested that Apple will not unveil a new iPhone or any hardware at this year's conference.
"We will be looking to measure whether the advances are enhancements to consumer-centric offerings such as iTunes and MobileMe, or virtualization breakthroughs that pave the way for more significant enterprise, social networking, and/or multimedia inroads," Gauna wrote.
He believes Apple is in a "unique position to shock and awe with enhancements, extensions and harmonization" of Lion, iOS 5 and iCloud. Because of that, he hopes Apple's announcements are "substantial," and make the company "capable of distancing itself from Android's gathering momentum."
RBC: iCloud and iOS 5 will expand iPhone, iPad markets
Mike Abramsky with RBC Capital Markets sees Apple's upcoming iCloud service as more than just a digital "locker" service that will store users' file. To that effect, he sees iCloud allowing Apple to target iPhones at 5.1 billion handset users worldwide, compared to 1.3 billion PC users.
iCloud could be an important step for Apple, making it so users are not required to have a Mac or PC to sync their device, or store music and movies. He imagines a new version of iOS where users no longer need to tether to a machine to upgrade their software, making the addressable market much larger.
Abramsky also said that iCloud could allow Apple to exploit what he sees are three competitive advantages: licensing and digital rights management, consumer friendliness, and a massive existing install base of more than 200 million iOS devices, plus iTunes users.
"Apple's licensing relationships and 'controlled' platform may appeal to studios/publishers seeking to minimize piracy, while protecting their economics in a hosted model," Abramsky wrote in a note to investors on Wednesday. "iCloud may also be differentiated via Apple's trademark user experience for convenience, simplicity, and discoverability. iCloud APIs may in time extend to developers."
As for the iOS 5 update, Abramsky said he believes Apple may offer hosted online services like content streaming, voice recognition and translation, photo sharing, community and multiplayer capabilities. This could lead to new iOS devices built around iCloud services.
But a key for Apple will be how strong the debut is for iCloud. Abramsky recalled that the 2008 debut of Apple's current cloud-based service, MobileMe, didn't go so well, with performance and reliability issues.
Jobs was said to be furious following the launch of MobileMe. The Chief Executive reportedly assembled the team that created the service and scolded them in a meeting at the auditorium on Apple's corporate campus, saying that they had "tarnished Apple's reputation."
Because of that learning experience, Abramsky expects that Apple will have a more measured, possibly staggered rollout of the new iCloud service. "Apple may initially limit iCloud's scope," he said, "before expanding to a broader audience."
Sterne Agee: iCloud could be a game-changer
Shaw Wu with Sterne Agee said Apple's unusual announcement on Tuesday, in which it revealed the talking points for Steve Jobs' WWDC keynote, signals that most of the focus will probably be on the new iCloud service, which he believes "could be a very big deal." He sees iCloud making iTunes even more powerful, allowing users to access their content from any device, anywhere.
"We notice that every time a new feature is added to iTunes (like TV and movie rentals), its utility value increases, which in turn drives more hardware sales, i.e., iPhone, iPad and Macs," Wu said in a note to investors.
With the focus on iCloud and software, Wu doesn't expect much of a focus on hardware. It's possible, he said, Apple could announce new Macs with Intel's latest Sandy Bridge processors, but he expects an iPhone announcement to come later than usual this year.
Citing checks with supply chain sources, Wu corroborated with other reports that have indicated the fifth-generation iPhone will be a relatively minor update from the iPhone 4. He has been told that Apple will have a "more radical iPhone refresh" in 2012, when the company is expected to introduce a model with support for high-speed 4G long-term evolution data.
JMP Securities: Revolution lies in the software
Analyst Alex Gauna said in a note to investors on Wednesday that he has fairly low expectations for new hardware at WWDC. Instead, he's more interested in what Apple has to say about software and its new iCloud service.
He said software advancements with Mac OS X 10.7 Lion, iOS 5 and iCloud could be "much more revolutionary" than a fifth-generation iPhone. Numerous reports have suggested that Apple will not unveil a new iPhone or any hardware at this year's conference.
"We will be looking to measure whether the advances are enhancements to consumer-centric offerings such as iTunes and MobileMe, or virtualization breakthroughs that pave the way for more significant enterprise, social networking, and/or multimedia inroads," Gauna wrote.
He believes Apple is in a "unique position to shock and awe with enhancements, extensions and harmonization" of Lion, iOS 5 and iCloud. Because of that, he hopes Apple's announcements are "substantial," and make the company "capable of distancing itself from Android's gathering momentum."
Comments
I'm mostly curious to see if Apple can write cloud software that works more efficiently and reliably than MobileMe, which wasn't just poor at launch but has been poor in every iteration. I suspect that Apple's isolation from enterprise has left them weak when it comes to data processing as opposed to multimedia. Are they learning yet? I hope so.
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Jobs was said to be furious following the launch of MobileMe. The Chief Executive reportedly assembled the team that created the service and scolded them in a meeting at the auditorium on Apple's corporate campus, saying that they had "tarnished Apple's reputation."
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" Going live today BOOM (in Malta) "
The past few years have shown the industry that at the end of the day what you can do with your computer, desktop of mobile depends on the software, the OS and the apps. Although Apple has the most beautiful hardware on the market in my opinion many venders are catching up in the way of specs. Software however is another big part of the success equation and both Microsoft and Google have proved that making a great operating system is hard.
A few points, regarding above and otherwise:
1) Apple usually hasn't tried to lead on hardware specs (leave that to the guys playing catch-up!), and in fact using "state of the shelf" hardware rather than "state of the art" is a ticket to getting higher profit margins on each device; instead, they trump specs with the "magic" of the software inside driving a sublime experience, which they monetize with high margin hardware (design is also part of it).
2) What are rumor sites going to do if we aren't following wholesale hardware orders, etc. If a new apple product is simply announced by flipping a switch at a server farm, we may never see new products coming. The era of apple secrecy may actually be reborn, rather than fading away....
3) I agree with J. Gruber on this: the announcement of iWork for iphone/touch suggests that there is PLENTY to talk about at the keynote itself. No padding (remember iPod socks?). And also, I think they are putting the iCloud meme out there now to generate buzz (of course), reduce expectations for new hardware, but also because "iCloud" is not the punchline to the talk, it's the jumping off point, which is very exciting. It sounds like the beginning of a big strategic shift that they are going to start to explain. Eventually (not next week) may be able to sit down at any mac, badge in with our NFC iPhone/iDevice, and be looking at the screen of our whole freaking home computer. Who knows? The idea of media mirroring is actually kind of boring and a relatively low performance option given the cost of wireless bandwidth and the explosing of solid state memory capacity per dollar. This may be the birth of a la carte cable (imagine if you could just watch espn on your apple TV? Who the hell would subscribe to the rest of it?). So much seems possible when we don't need to sift through patents or east asian photos of prototypes, etc, to see ideas.
Mike Abramsky with RBC Capital Markets sees Apple's upcoming iCloud service as more than just a digital "locker" service that will store users' file. To that effect, he sees iCloud allowing Apple to target iPhones at 5.1 billion handset users worldwide, compared to 1.3 billion PC users.
iCloud could be an important step for Apple, making it so users are not required to have a Mac or PC to sync their device,
This is the ultimate goal but can Apple deliver? I'm just not confident.
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3) I agree with J. Gruber on this: the announcement of iWork for iphone/touch suggests that there is PLENTY to talk about at the keynote itself. No padding (remember iPod socks?). And also, I think they are putting the iCloud meme out there now to generate buzz (of course), reduce expectations for new hardware, but also because "iCloud" is not the punchline to the talk, it's the jumping off point, which is very exciting. It sounds like the beginning of a big strategic shift that are going to start to explain. We may be able to sit down at any mac, badge in with our NFC iPhone/iDevice, and be looking at the screen of our whole freaking home computer. Who knows? The idea of media mirroring is actually kind of boring and a relatively low performance option given the cost of wireless bandwidth and the explosing of solid state memory capacity per dollar.
I would certainly like to see an ecosystem for my content to match the ecosystem of Apple hardware I already have, and that would encourage me to try more, such as an iPad, which I currently ignore because of the need to manage content manually between Apple devices.
I'd like to have some kind of central dashboard where I can manage what goes where based on my user logins on my different devices. Maybe they could call it Grand Central (Oops!) or Mission Control (D'oh!) or something ...
Apple likes Disney and vice versa, and jobs is on the Disney Board. In fact, disney always seems to be on board early for all the apple stuff, etc.
And Disney Owns ESPN
What if, THROUGH YOUR APPLE TV, you could subscribe to ESPN for $10 a month. Would comcast and all the other orifice companies puke on themselves or what? ESPN would start demanding $10 per user from the Cable Cos? It would be a huge monopsony-busting move for Disney, meaning more profit for them.
This could be huge. I wonder when this will happen.
Apple should also lock down the exclusive rights to the NFL for about a billion a year, because the NFL sunday ticket thing (which you have to subscribe to Direct TV for) is a complete shakedown and follows the ESPN logic above.
I think realtime sports is the killer app for the Apple TV, if they can make it happen, and a huge role for a huge server farm, if only one existed, say in North Carolina...
I've heard that something like $4 of your cable bill goes to ESPN, compared to 9 cents per user for the other crappy channels like, i dunno, oxygen or spike or food network or whatever. These numbers are probably not exactly right but the orders of magnitude are....
Apple likes Disney and vice versa, and jobs is on the Disney Board. In fact, disney always seems to be on board early for all the apple stuff, etc.
And Disney Owns ESPN
What if, THROUGH YOUR APPLE TV, you could subscribe to ESPN for $10 a month. Would comcast and all the other orifice companies puke on themselves or what? ESPN would start demanding $10 per user from the Cable Cos? It would be a huge monopsony-busting move for Disney, meaning more profit for them.
This could be huge. I wonder when this will happen.
Apple should also lock down the exclusive rights to the NFL for about a billion a year, because the NFL sunday ticket thing (which you have to subscribe to Direct TV for) is a complete shakedown and follows the ESPN logic above.
I think realtime sports is the killer app for the Apple TV, if they can make it happen, and a huge role for a huge server farm, if only one existed, say in North Carolina...
Never happen. ESPN or any major cable network is not going to give up cable subscribers who are still the majority of subscribers. What there will be is an evolution where cable subscribers get to watch on any device, with little or no additional payment. Also, while Disney owns ABC which owns ESPN, the company is run in a very decentralized manner and is frequently even competitive internally.
A few points, regarding above and otherwise:
1) Apple usually hasn't tried to lead on hardware specs (leave that to the guys playing catch-up!), and in fact using "state of the shelf" hardware rather than "state of the art" is a ticket to getting higher profit margins on each device; instead, they trump specs with the "magic" of the software inside driving a sublime experience, which they monetize with high margin hardware (design is also part of it).
2) What are rumor sites going to do if we aren't following wholesale hardware orders, etc. If a new apple product is simply announced by flipping a switch at a server farm, we may never see new products coming. The era of apple secrecy may actually be reborn, rather than fading away....
3) I agree with J. Gruber on this: the announcement of iWork for iphone/touch suggests that there is PLENTY to talk about at the keynote itself. No padding (remember iPod socks?). And also, I think they are putting the iCloud meme out there now to generate buzz (of course), reduce expectations for new hardware, but also because "iCloud" is not the punchline to the talk, it's the jumping off point, which is very exciting. It sounds like the beginning of a big strategic shift that they are going to start to explain. Eventually (not next week) may be able to sit down at any mac, badge in with our NFC iPhone/iDevice, and be looking at the screen of our whole freaking home computer. Who knows? The idea of media mirroring is actually kind of boring and a relatively low performance option given the cost of wireless bandwidth and the explosing of solid state memory capacity per dollar. This may be the birth of a la carte cable (imagine if you could just watch espn on your apple TV? Who the hell would subscribe to the rest of it?). So much seems possible when we don't need to sift through patents or east asian photos of prototypes, etc, to see ideas.
Good post... Nice!
3) I agree with J. Gruber on this: the announcement of iWork for iphone/touch suggests that there is PLENTY to talk about at the keynote itself. No padding (remember iPod socks?). And also, I think they are putting the iCloud meme out there now to generate buzz (of course), reduce expectations for new hardware, but also because "iCloud" is not the punchline to the talk, it's the jumping off point, which is very exciting. It sounds like the beginning of a big strategic shift that they are going to start to explain. Eventually (not next week) may be able to sit down at any mac, badge in with our NFC iPhone/iDevice, and be looking at the screen of our whole freaking home computer. Who knows? The idea of media mirroring is actually kind of boring and a relatively low performance option given the cost of wireless bandwidth and the explosing of solid state memory capacity per dollar. This may be the birth of a la carte cable (imagine if you could just watch espn on your apple TV? Who the hell would subscribe to the rest of it?). So much seems possible when we don't need to sift through patents or east asian photos of prototypes, etc, to see ideas.
Ugh, not this crap again. Let's get media streaming right first, before we start fantasizing about the magic Mac.
After Apple tipped its hand on Tuesday and revealed it will unveil its new iCloud service next week, Wall Street analysts believe the company has set the stage for a strong software-focused Worldwide Developers Conference keynote.......
For once the analysts bring some interesting perspective to the discussion. iCloud in the context of Apple's broader development is more interesting than whether streaming music to your iPhone is worth it
I think realtime sports is the killer app for the Apple TV, if they can make it happen, and a huge role for a huge server farm, if only one existed, say in North Carolina...
I think you're on the right track.
Apple did not build a giant data center in North Carolina and pre-announce the iCloud service to unveil a digital storage locker for backup copies of movies that people want to move off their hard drives and to stream music that you already own and already have saved on your iPod.
iCloud is going to be a means for a content play. My guess is that it will have several different parts that will include (if Apple can get the licensing worked out):
1. Streaming access to the full catalog of music on iTunes that will allow you to add and delete tracks (actually markers for streaming tracks) to your playlists on the fly that will sync automatically to all of your other devices for $9.99 or $14.99 a month. It will include limited disc burning or require you to pay something extra to burn new releases or other specific tracks.
AND
If you don't want to sign up for the subscription service, you can stream all of your existing tracks plus any new tracks that you buy.
2. A Netflix-killer package of streaming access to catalog movies and TV shows for $7.99 a month (same price as Netflix).
3. A Comcast-killer package of current season TV shows that will launch when the new season starts in September. If it's comprehensive, $49-$74 a month plus premium services and sports packages. If it's not comprehensive -- meaning NBCU won't play -- you'll be able to subscribe to a cheaper not-so-comprehensive package or to specific networks or specific shows.
4. Most of the stuff that's already in Mobile Me -- mail, contacts and calendar syncing and online space for documents. Included free with any paid service.
5. A re-imagined iPhoto that syncs your photos and videos to all of your devices and even syncs your photo edits. Included free with any paid service.
Let's just let Apple say what they have to say so we don't feel underwhelmed when our wildest dreams of magic Macs and teleporting iPhones don't come true.
Never happen. ESPN or any major cable network is not going to give up cable subscribers who are still the majority of subscribers. What there will be is an evolution where cable subscribers get to watch on any device, with little or no additional payment. Also, while Disney owns ABC which owns ESPN, the company is run in a very decentralized manner and is frequently even competitive internally.
No one is saying they would turn their back on their cash cow, but if they can make more by opening up another channel and not cannibalizing the first, I think it's inevitable once exclusivity arrangements expire, etc.
Ugh, not this crap again. Let's get media streaming right first, before we start fantasizing about the magic Mac.
Point is, lots more is possible than media mirroring.
I think you're on the right track.
Apple did not build a giant data center in North Carolina and pre-announce the iCloud service to unveil a digital storage locker.... iCloud is going to be a means for a content play. My guess is that it will have several different parts that will include (if Apple can get the licensing worked out):
1. Streaming access to the full catalog of music on iTunes that will allow you to add and delete tracks (actually markers for streaming tracks) to your playlists on the fly that will sync automatically to all of your other devices for $9.99 or $14.99 a month. It will include limited disc burning or require you to pay something extra to burn new releases or other specific tracks....
2. A Netflix-killer package of streaming access to catalog movies and TV shows for $7.99 a month (same price as Netflix).
3. A Comcast-killer package of current season TV shows that will launch when the new season starts in September. If it's comprehensive, $49-$74 a month plus premium services and sports packages. If it's not comprehensive -- meaning NBCU won't play -- you'll be able to subscribe to a cheaper not-so-comprehensive package or to specific networks or specific shows.
.
I agree with the general spirit of unbundling or at least the a la carte option. The more granular the better with TV.
Netflix is actually getting pretty scary to media companies, I'd imagine. Seen the data lately about what % of US bandwidth it occupies? Huge, like large minority huge, more than BitTorrent, equal to web surfing, more than youTube, etc. Ironically, Hollywood is probably looking for another outlet for SECURELY delivering streaming movies, since they won't want to get WalMarted into one huge customer.
I'm a bit suspicious of the whole subscription music thing since I do think people like to own their music (and listed repeatedly, obsessively, even) but rent most video. Also, most music is crap. Hard to believe Jobs, a guy who is still listening to Bob Dylan, really wants a monthly subscription to be supporting in any way the William Hung Christmas Album.
Taking a page out of the Netflix book, though, I wonder if a "long tail" play could be made where you could subscribe to all the older tracks (a la the original netflix) but pay a la carte (like current iTunes) for the latest Ke$ha song (the spike). So sell the spike, subscribe the tail? Will the entire Windowing Phenomenon seen with hollywood films be layered within iTunes? One could see this happening, too: first you have to Pay-Per-View it, then buy it, then get it with a subscription.
Lion - not overly impressed with the cosmetic iOS layover and the other minor GUI tweaks, especially if it's done at the expensive of system performance and stability.
iOS5. Wait and see here but it better include wireless syncing with either Mac/PC or iCloud, and even better if there's no sync/activation dependency at all in this alleged "post-PC" era. It also needs robust improvements to GUI & notifications to make it less attractive to jailbreak but again, can't be done at the expensive of stability and performance.
No iPhone upgrade now but late 2011 light refresh and major refresh in 2012 (i.e. 4G/LTE). I sure hope the prognosticators are wrong on this prediction. One of the dependencies for this projected iCloud service is speed and and not having 4G/LTE until presumably late 2012 would be rather disappointing and a light & late hardware refresh reeks of milking the cow. I'd rather see light refresh as a 2nd model of iPhone that's more affordable.
No one is saying they would turn their back on their cash cow, but if they can make more by opening up another channel and not cannibalizing the first, I think it's inevitable once exclusivity arrangements expire, etc.
Well, thats the trick isnt it?
The problem for the service providers, as more and more people sign up for streaming, they dump or down grade cable. Think the CableCo are going to give up profit without a fight? Who will win?
Netflix (bless their little hearts) started the battle off with subscription service. Hope they can keep that model up.... I've read the content providers want more $$$.
IMO... shhhh, the netflix service is probably worth twice the price in the market place. That service almost makes channels like Movie Channel, Cinamax(minus the Max at night.. thats another 10 bucks a month
Me'h... unfortunately History channel, Discovery Channel and other channels that have the occasional good shows are owned by the big three. Probably never allow streaming service.