OSX Lion, iOS 5, and iCloud

[txlaw]

Check this article and WWDC video out. 

 

http://gigaom.com/apple/think-icloud-is-reactionary-think-again/

 

Just makes you realize how visionary Jobs is.  You should also read the Steve Jobs Playboy article and watch the joint interview with Jobs and Gates at the AllThingsD conference to see how forward thinking both those guys are.

 

Clearly, the partnerships with the carriers and music labels are helping to determine when Apple releases certain functionality.  These partnerships have served Apple well in the recent past, so it seems unlikely that they would rock the boat, especially since Jobs has stated in the past that they could have been a contender against MSFT in the past had they just done a better job with partnerships.

 

if every device is connected to the internet, at increasingly high speeds, why do we need to sync again?

 

At some point, I'm hoping we won't.

 

Why do you think I'm invested in GOOG and LVLT?  ;)

[Guest VAL9000]

if every device is connected to the internet, at increasingly high speeds, why do we need to sync again?

This depends on your cloud philosophy.  Apple is firmly in the cloud-extends-OS camp.  Google, on the other hand, is more of a pure cloud provider, or maybe a cloud-as-OS provider.

 

With Apple, the applications and media are stored locally.  The advantages are low-latency access, native code (faster and device-optimized), higher quality media, and traditional "ownership" of media.  The disadvantages are things like requiring synching, "buffering" (having to download your stuff before you use it), and platform dependence.

 

With Google, almost everything you do is in the cloud.  The advantages here are broader platform support, no buffering, no synching.  But the biggest disadvantage in my mind is the native device thing.  I'm not 100% up on my HTML5 spec, but I think there are complications related to accessing mobile device peripheral capabilities: camera, gps, accelerometer, light sensor, etc.  And then when new bits get introduced, you have to rely on a broadly accepted spec to get these features to work on all devices.  One way of looking at this is to say that Google applications have greater breadth, but less depth.

 

Microsoft will probably be somewhere in between.  The Xbox and Win Phone and Windows 8 will all be core native application devices, but Windows 8 supports HTML + javascript as a native language, so there's a bit of that cloud-as-OS at work.

[txlaw]

I see nothing visionary at all. Squeezeboxes/Slimserver have allowed me to stream my own music anywhere, anytime, for years, even to other devices wherever I may be on earth. Why do people allow Jobs to pick their pocket at every turn? 

 

Nothing visionary with Jobs, in general?  Or nothing visionary about streaming music? 

 

I would agree that streaming music itself is not visionary.  But creating a workable business model for the music industry in the US is a big deal.  It's possible that we might actually have one that consumers, artists, and copyright holders (big labels, in many cases) will be satisfied with in not too long of a time.

 

I think you're taking the stance that the music you have is your own music.  Maybe it all is.  I can tell you, though, that my generation in the US was one of the first, if not the first, to have a large amount of our music library filled with unpaid-for music. 

 

I'd be quite happy to pay a monthly fee to stream a comprehensive catalog of music.  I used to subscribe to Rhapsody, actually, but now I usually just use Pandora or YouTube.

[txlaw]

if every device is connected to the internet, at increasingly high speeds, why do we need to sync again?

This depends on your cloud philosophy.  Apple is firmly in the cloud-extends-OS camp.  Google, on the other hand, is more of a pure cloud provider, or maybe a cloud-as-OS provider.

 

With Apple, the applications and media are stored locally.  The advantages are low-latency access, native code (faster and device-optimized), higher quality media, and traditional "ownership" of media.  The disadvantages are things like requiring synching, "buffering" (having to download your stuff before you use it), and platform dependence.

 

With Google, almost everything you do is in the cloud.  The advantages here are broader platform support, no buffering, no synching.  But the biggest disadvantage in my mind is the native device thing.  I'm not 100% up on my HTML5 spec, but I think there are complications related to accessing mobile device peripheral capabilities: camera, gps, accelerometer, light sensor, etc.  And then when new bits get introduced, you have to rely on a broadly accepted spec to get these features to work on all devices.  One way of looking at this is to say that Google applications have greater breadth, but less depth.

 

Microsoft will probably be somewhere in between.  The Xbox and Win Phone and Windows 8 will all be core native application devices, but Windows 8 supports HTML + javascript as a native language, so there's a bit of that cloud-as-OS at work.

 

One caveat, I would add, though.  Android is a hedge against the "everything in the cloud" vision that Google ultimately wants to occur.

 

This is what pisses Steve Ballmer off so much.  He wanted Google to just pick one view and go with it.  Unfortunately for Mr. Softie, Google is developing both Android and Chrome/Chrome OS.

 

Apple is all about client-side apps (media, I believe will be delivered from the cloud in less than two years).  But my guess is that they believe HTML 5 and the next iterations will eventually become robust enough to run everything off the cloud.  Just not anytime soon.

 

Even Microsoft has stated that HTML 5 is the web's future.

[ERICOPOLY]

I wonder what their algorithm is for determining whether or not a song is on your disk.  They can't simply look at the file header, or can they?

 

If so, point me to a database of file header info and I can write a simple tool to spit out files with those headers.  Then iTunes will give me access to the real version of those files?  25,000 songs via iMatch for just $25 per year?  

 

Distributing a database of file headers is probably not illegal -- as opposed to distributing actual pirated copies of music.

 

I used to pay for Rhapsody -- but I gave up on it because there are too many artists/labels that won't participate.

 

However, you could see some hackers taking advantage of the iMatch offer -- that's only $2 per month increase over what you pay for Rhapsody, and the iTunes library via iMatch can fill in the holes of the Rhapsody service.

 

So you just need a front end app for streaming music that merges Rhapsody with iMatch, seamlessly.

 

There must be some sort of random file sampling & matching going on -- the file header match would be too easy to cheat.  Some hacker will probably find a way to modify the code of iTunes in-memory at run time if need be, to force it to say "yes, it matches!".

[txlaw]

I wonder what their algorithm is for determining whether or not a song is on your disk.  They can't simply look at the file header, or can they?

 

If so, point me to a database of file header info and I can write a simple tool to spit out files with those headers.  Then iTunes will give me access to the real version of those files?  25,000 songs via iMatch for just $25 per year?  

 

Distributing a database of file headers is probably not illegal -- as opposed to distributing actual pirated copies of music.

 

I used to pay for Rhapsody -- but I gave up on it because there are too many artists/labels that won't participate.

 

However, you could see some hackers taking advantage of the iMatch offer -- that's only $2 per month increase over what you pay for Rhapsody, and the iTunes library via iMatch can fill in the holes of the Rhapsody service.

 

So you just need a front end app for streaming music that merges Rhapsody with iMatch, seamlessly.

 

There must be some sort of random file sampling & matching going on -- the file header match would be too easy to cheat.  Some hacker will probably find a way to modify the code of iTunes in-memory at run time if need be, to force it to say "yes, it matches!".

 

All interesting thoughts. 

 

Yeah, I would suspect there will be file sampling plus ID3 tag scanning.

 

However, does it really matter?  Why would a hacker actually download songs for the purpose of replacing with better quality AAC files?  More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library.  They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not.

 

I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea.

[Guest VAL9000]

Apple is all about client-side apps (media, I believe will be delivered from the cloud in less than two years).  But my guess is that they believe HTML 5 and the next iterations will eventually become robust enough to run everything off the cloud.  Just not anytime soon.

We'll have to see, but I'm not getting that cloud-utopia feeling from our friends in Cupertino.  The iCloud thing, to me, looks like a move towards Apple as a gatekeeper of media, rather than a move towards streaming.  Ignoring piracy, this service is all about moving your media ownership idea from the local disk to the Apple ownership model.  I don't see any indication that Apple wants to move away from the a la carte model and towards an all-you-can eat model.  As for apps, HTML5 applications will probably still need to get routed through the AppStore to qualify for presence on the device (i.e. to get an icon, local settings, etc.).  So, again, this same ownership model is applied: Apple is the sole provider of rights on media/apps for users of their devices and software.

 

Hopefully competitive pressures will change Apple's tune (hah) but who knows how long that will take.

[txlaw]

Apple is all about client-side apps (media, I believe will be delivered from the cloud in less than two years).  But my guess is that they believe HTML 5 and the next iterations will eventually become robust enough to run everything off the cloud.  Just not anytime soon.

We'll have to see, but I'm not getting that cloud-utopia feeling from our friends in Cupertino.  The iCloud thing, to me, looks like a move towards Apple as a gatekeeper of media, rather than a move towards streaming.  Ignoring piracy, this service is all about moving your media ownership idea from the local disk to the Apple ownership model.  I don't see any indication that Apple wants to move away from the a la carte model and towards an all-you-can eat model.  As for apps, HTML5 applications will probably still need to get routed through the AppStore to qualify for presence on the device (i.e. to get an icon, local settings, etc.).  So, again, this same ownership model is applied: Apple is the sole provider of rights on media/apps for users of their devices and software.

 

Hopefully competitive pressures will change Apple's tune (hah) but who knows how long that will take.

 

I agree -- there's definitely no cloud-utopia feeling from Cupertino.  I also agree that Cupertino likes to keep things controlled.

 

However, I just don't think that the a la carte w/o all-you-can-eat model is sustainable in the long run.  Netflix has shown the value of having an all-you-can-eat catalog of content.  I believe Apple gets it and will eventually release such a service.

 

Now, you might be right that your access to music rights will depend on which OS layer you use (all-you-can eat only available on Apple devices via iTunes, Google Music/Spotify on Android, and Spotify/Amazon/MSFT equivalent on Windows), but I don't think Apple can get away with keeping the labels from offering access to their music on non-Apple devices.  If that is the case, why wouldn't Apple want to divorce iTunes from their OS'es and try to get their music storefront/service on every single device?

 

Note that Apple can't get rid of YouTube or Netflix, and they're not going to try to lock down video.  So the only other media they can lock down (remember, I don't consider apps media) is music, and I'm suggesting to you that they will want iTunes to be the music equivalent of Netflix and YouTube such that it can be present on any device.  They would gain a huge market share by having an iTunes streaming service available on every device.  Indeed, they would become the de facto storefront/service for Big Music. 

 

Regarding HTML 5 apps, I agree that Apple will keep the "curated" experience for as long as they can and they will also want to take a cut of every app as long as they can. 

[Liberty]

Not sure if this already has been posted or not, but check out Apple's new HQ:

 

 

Pretty amazing.

[txlaw]

I wonder what their algorithm is for determining whether or not a song is on your disk.  They can't simply look at the file header, or can they?

 

If so, point me to a database of file header info and I can write a simple tool to spit out files with those headers.  Then iTunes will give me access to the real version of those files?  25,000 songs via iMatch for just $25 per year?  

 

Distributing a database of file headers is probably not illegal -- as opposed to distributing actual pirated copies of music.

 

I used to pay for Rhapsody -- but I gave up on it because there are too many artists/labels that won't participate.

 

However, you could see some hackers taking advantage of the iMatch offer -- that's only $2 per month increase over what you pay for Rhapsody, and the iTunes library via iMatch can fill in the holes of the Rhapsody service.

 

So you just need a front end app for streaming music that merges Rhapsody with iMatch, seamlessly.

 

There must be some sort of random file sampling & matching going on -- the file header match would be too easy to cheat.  Some hacker will probably find a way to modify the code of iTunes in-memory at run time if need be, to force it to say "yes, it matches!".

 

All interesting thoughts.  

 

Yeah, I would suspect there will be file sampling plus ID3 tag scanning.

 

However, does it really matter?  Why would a hacker actually download songs for the purpose of replacing with better quality AAC files?  More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library.  They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not.

 

I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea.

 

Why do people need amnesty? the music is on their drives. how are they in danger now? these people are going to think twice about the TOS, which will be scrutinized carefully when the service becomes live. most people buy their music now that the industry has given consumers the right product at the right price.

 

Nobody needs amnesty.  It is insurance for people who are extremely risk averse, and it is also a way to extract money for people who think they should pay some amount for whatever they have downloaded in the past.

 

I know some people think that nobody in their right mind would retroactively pay for the music they have downloaded illegally, but I bet you'll be surprised at the number of people who actually take Apple up on the offer.  It may not be the majority of iTunes users, but it will likely be a good amount.  Are they suckers?  Depends on your point of view.

 

Now, if Apple and the labels keep track of what you've downloaded in order to hit you over the head later for music that does not qualify for iMatch, that would be troubling.  But do you really think the labels and Apple want to go there?

[txlaw]

I wonder what their algorithm is for determining whether or not a song is on your disk.  They can't simply look at the file header, or can they?

 

If so, point me to a database of file header info and I can write a simple tool to spit out files with those headers.  Then iTunes will give me access to the real version of those files?  25,000 songs via iMatch for just $25 per year?  

 

Distributing a database of file headers is probably not illegal -- as opposed to distributing actual pirated copies of music.

 

I used to pay for Rhapsody -- but I gave up on it because there are too many artists/labels that won't participate.

 

However, you could see some hackers taking advantage of the iMatch offer -- that's only $2 per month increase over what you pay for Rhapsody, and the iTunes library via iMatch can fill in the holes of the Rhapsody service.

 

So you just need a front end app for streaming music that merges Rhapsody with iMatch, seamlessly.

 

There must be some sort of random file sampling & matching going on -- the file header match would be too easy to cheat.  Some hacker will probably find a way to modify the code of iTunes in-memory at run time if need be, to force it to say "yes, it matches!".

 

All interesting thoughts.  

 

Yeah, I would suspect there will be file sampling plus ID3 tag scanning.

 

However, does it really matter?  Why would a hacker actually download songs for the purpose of replacing with better quality AAC files?  More likely, the hacker/college kid will refuse to pay the $25, continue to download even better quality versions of the songs they want for free, and use Grooveshark or some app that combines Grooveshark functionality with their own library.  They might even decide to subscribe to whatever streaming music service comes out when the 4G build is in full effect, although maybe not.

 

I see iMatch as being for the regular public and for people who really want to take the labels up on the amnesty idea.

 

Why do people need amnesty? the music is on their drives. how are they in danger now? these people are going to think twice about the TOS, which will be scrutinized carefully when the service becomes live. most people buy their music now that the industry has given consumers the right product at the right price.

 

Nobody needs amnesty.  It is insurance for people who are extremely risk averse, and it is also a way to extract money for people who think they should pay some amount for whatever they have downloaded in the past.

 

I know some people think that nobody in their right mind would retroactively pay for the music they have downloaded illegally, but I bet you'll be surprised at the number of people who actually take Apple up on the offer.  It may not be the majority of iTunes users, but it will likely be a good amount.  Are they suckers?  Depends on your point of view.

 

Now, if Apple and the labels keep track of what you've downloaded in order to hit you over the head later for music that does not qualify for iMatch, that would be troubling.  But do you really think the labels and Apple want to go there?

 

insurance for people who are "extremely risk averse" at the same time being downloaders of illegal content? Is that a large group you are talking about? This service will appeal the hardest of the hardcore in the cult. Those that pretty much do whatever Steve tells them too. But as products get more complex, they sell "less".

 

Hey, there are plenty of people who downloaded tons of music in the past (shoving skeletons back in the closet a la VAL) that would be happy to pay some sort of penance. 

 

A large group?  Dunno.  But I suspect a large percentage of people who use iMatch, which may not be a large percentage of iTunes users, will not do it for the "amnesty" but instead for the upgraded audio files.

 

But now I see where you're coming from.  I guess you think that anyone who would actually pay money for that that is an iIdiot, like misterstockwell does.

[Guest VAL9000]

However, I just don't think that the a la carte w/o all-you-can-eat model is sustainable in the long run.  Netflix has shown the value of having an all-you-can-eat catalog of content.  I believe Apple gets it and will eventually release such a service.

 

Now, you might be right that your access to music rights will depend on which OS layer you use (all-you-can eat only available on Apple devices via iTunes, Google Music/Spotify on Android, and Spotify/Amazon/MSFT equivalent on Windows), but I don't think Apple can get away with keeping the labels from offering access to their music on non-Apple devices.  If that is the case, why wouldn't Apple want to divorce iTunes from their OS'es and try to get their music storefront/service on every single device?

There's that bit about Apple making gross profit margins of 50-60% on the iPhone, iPad, and iPod devices.  Releasing their grip on media will only serve to commoditize the hardware business.  Apple knows today that they can't continue to out-innovate everyone forever.  If they can lock you in with your media (again, cost of switching), it won't matter if the devices cost more for the same feature set.  You'll buy them anyway.

 

Note that Apple can't get rid of YouTube or Netflix, and they're not going to try to lock down video.  So the only other media they can lock down (remember, I don't consider apps media) is music, and I'm suggesting to you that they will want iTunes to be the music equivalent of Netflix and YouTube such that it can be present on any device.  They would gain a huge market share by having an iTunes streaming service available on every device.  Indeed, they would become the de facto storefront/service for Big Music. 

They already lock down video - all of their video content employs the same DRM scheme as music.  You can only play it on Apple devices.  iCloud for video is probably still a ways off.  Pay-per-play is more to Apple's liking here, I bet.

 

The subscription fee scheme is another method by which Apple is exerting control over its customers.  Look at the mechanics.  You must offer the lowest price for in-App subscriptions.  You must give Apple a 30% cut for in-App originated subscriptions.  Therefore, a publisher can never pass the savings of going with a non-Apple supplier on to the customer.  Apple has locked up these subscription costs so that they're always priced at or below the competition.  At no cost to Apple.

 

My interpretation of their actions is that Apple is doing everything they can to inflate the cost of switching out of the Apple ecosystem.

[Viking]

Jobs in his key note explains things very clearly:

 

1.) 10 years ago Apple had the vision that the PC would be the digit hub for consumers: where they would store and access their music, photo and video.

2.) given the proliferation of devices (smartphones, tablets, laptops, desktops, game consols AND FUTURE DEVICES) the PC as the digital hub is terribly inefficient.

3.) starting now 'the cloud' will be the new digital hub and any content you own will be available to any device you have.

 

By moving your hard drive to 'the cloud' you also enable any number of new devices (in your car, in your kitchen, in your living room etc). Do you think Apple has interesting new devices to launch once 'the cloud' is in place to drive consumers to their brand?

 

This is why Microsoft is moving to one interface with Windows 8 (same swipe motion for smartphone, tablet, computer AND FUTURE DEVICES).

 

To me the specific details of what Apple has announced are noise. The real news is they are officially launching the move of the consumer's digital hub from the PC to the cloud. Game on. My guess is there will be lots of winners as this happens (i.e. like MSFT, Corning etc).

 

Globe & Mail explanation: http://www.theglobeandmail.com/news/technology/tech-news/apple-sets-sights-on-cloud-control/article2049641/?from=sec501

[ERICOPOLY]

This is beyond stupid. Why would I pay Apple for this? I have 2TB of high quality lossless music that I can listen to anywhere. You'd have to be an iIdiot to pay for the privelege of listening to your own music.

 

How can you listen to it anywhere?  Do you carry around a 2TB drive with you?

 

Everyone is an idiot for paying Google to store their files online (Google docs)?

 

[zarley]

This is beyond stupid. Why would I pay Apple for this? I have 2TB of high quality lossless music that I can listen to anywhere. You'd have to be an iIdiot to pay for the privelege of listening to your own music.

 

How can you listen to it anywhere?  Do you carry around a 2TB drive with you?

 

Slingbox

[txlaw]

However, I just don't think that the a la carte w/o all-you-can-eat model is sustainable in the long run.  Netflix has shown the value of having an all-you-can-eat catalog of content.  I believe Apple gets it and will eventually release such a service.

 

Now, you might be right that your access to music rights will depend on which OS layer you use (all-you-can eat only available on Apple devices via iTunes, Google Music/Spotify on Android, and Spotify/Amazon/MSFT equivalent on Windows), but I don't think Apple can get away with keeping the labels from offering access to their music on non-Apple devices.  If that is the case, why wouldn't Apple want to divorce iTunes from their OS'es and try to get their music storefront/service on every single device?

There's that bit about Apple making gross profit margins of 50-60% on the iPhone, iPad, and iPod devices.  Releasing their grip on media will only serve to commoditize the hardware business.  Apple knows today that they can't continue to out-innovate everyone forever.  If they can lock you in with your media (again, cost of switching), it won't matter if the devices cost more for the same feature set.  You'll buy them anyway.

 

The profit margins are a result of vertical integration.  A large percentage of the 600 basis point gross margin comes from their software, not the hardware.  By tying their software (OS and bundled apps) to high end hardware, they are able to deliver a premium product that extracts large margins from consumers who are able to pay for the premium product. iTunes is just part of what draws people to Apple devices.

 

As I said before, the long term trends will keep Apple from locking you in with your media.  In a world where media streaming is the norm, Apple will not be able to lock you into their device  -- the best they can do is get you to adhere to them in the short run and then try to lock you in by having you get used to their UI.

 

Note that Apple can't get rid of YouTube or Netflix, and they're not going to try to lock down video.  So the only other media they can lock down (remember, I don't consider apps media) is music, and I'm suggesting to you that they will want iTunes to be the music equivalent of Netflix and YouTube such that it can be present on any device.  They would gain a huge market share by having an iTunes streaming service available on every device.  Indeed, they would become the de facto storefront/service for Big Music. 

They already lock down video - all of their video content employs the same DRM scheme as music.  You can only play it on Apple devices.  iCloud for video is probably still a ways off.  Pay-per-play is more to Apple's liking here, I bet.

 

How can video be locked down when the vast majority of people consume their video through MVPD, broadcast, theater-going, Netflix, and ad-serving sites (e.g., YouTube)?  The number of people who will be paying iTunes for movies/TV episodes will dwindle as others (YouTube, for example) launch competing services.  

 

The movies people bought from iTunes are not keeping them from switching to Android or Win Phone.

 

The subscription fee scheme is another method by which Apple is exerting control over its customers.  Look at the mechanics.  You must offer the lowest price for in-App subscriptions.  You must give Apple a 30% cut for in-App originated subscriptions.  Therefore, a publisher can never pass the savings of going with a non-Apple supplier on to the customer.  Apple has locked up these subscription costs so that they're always priced at or below the competition.  At no cost to Apple.

 

My interpretation of their actions is that Apple is doing everything they can to inflate the cost of switching out of the Apple ecosystem.

 

Pass the savings?  What publisher is going to pass the savings onto their customers?

 

Publishers are going to offer the same apps with in-app subscriptions at the same price point on Android, make higher margins, and keep that profit.  They have to be on Apple devices.  But they also have to be on Android devices.  Subscription pricing will be set uniformly across the entire ecosystem (Android, Win Phone, and Apple) to maximize their profit. 

 

Sure, they're trying to do everything they can to lock us in, but ultimately, they will only be able to keep people coming to Apple if they out-innovate, not because of media or app lock in.  Unless they become a monopoly, in which case they may be able to throw their weight around in ways that do not lead to innovation.  But in that case, we'll just see whether the feds have something to say about their deals with the record labels.

[ERICOPOLY]

This is beyond stupid. Why would I pay Apple for this? I have 2TB of high quality lossless music that I can listen to anywhere. You'd have to be an iIdiot to pay for the privelege of listening to your own music.

 

How can you listen to it anywhere?  Do you carry around a 2TB drive with you?

 

Slingbox

 

I am heading in a different direction, outsourcing my home IT to these cloud service companies.

 

I don't need to back things up, and don't need to keep the physical backup in a different location (safe from fire and theft).

 

I am paying for making it simple.

 

[txlaw]

Jobs in his key note explains things very clearly:

 

1.) 10 years ago Apple had the vision that the PC would be the digit hub for consumers: where they would store and access their music, photo and video.

2.) given the proliferation of devices (smartphones, tablets, laptops, desktops, game consols AND FUTURE DEVICES) the PC as the digital hub is terribly inefficient.

3.) starting now 'the cloud' will be the new digital hub and any content you own will be available to any device you have.

 

By moving your hard drive to 'the cloud' you also enable any number of new devices (in your car, in your kitchen, in your living room etc). Do you think Apple has interesting new devices to launch once 'the cloud' is in place to drive consumers to their brand?

 

This is why Microsoft is moving to one interface with Windows 8 (same swipe motion for smartphone, tablet, computer AND FUTURE DEVICES).

 

To me the specific details of what Apple has announced are noise. The real news is they are officially launching the move of the consumer's digital hub from the PC to the cloud. Game on. My guess is there will be lots of winners as this happens (i.e. like MSFT, Corning etc).

 

Globe & Mail explanation: http://www.theglobeandmail.com/news/technology/tech-news/apple-sets-sights-on-cloud-control/article2049641/?from=sec501

 

except he isn't going to be storing much of your data. he isn't going to store your entire music library and he isn't storing your video. he is giving you all of 5g free. he is going to store pointers to the one copy of a song he needs to serve everybody. See if he did store all your data in the cloud you would have no need to buy a 64g iphone.

 

How's that?  Is it really the size of the hard drive that causes people to buy their iPhones? 

 

Almost nobody I know that has an iPhone has it filled up with data.  And most people I know also have the 16 GB version, not the 32 GB version.

[txlaw]

This is beyond stupid. Why would I pay Apple for this? I have 2TB of high quality lossless music that I can listen to anywhere. You'd have to be an iIdiot to pay for the privelege of listening to your own music.

 

How can you listen to it anywhere?  Do you carry around a 2TB drive with you?

 

Slingbox

 

I am heading in a different direction, outsourcing my home IT to these cloud service companies.

 

I don't need to back things up, and don't need to keep the physical backup in a different location (safe from fire and theft).

 

I am paying for making it simple.

 

 

Same here.

[Guest misterstockwell]

This is beyond stupid. Why would I pay Apple for this? I have 2TB of high quality lossless music that I can listen to anywhere. You'd have to be an iIdiot to pay for the privelege of listening to your own music.

 

How can you listen to it anywhere?  Do you carry around a 2TB drive with you?

 

Everyone is an idiot for paying Google to store their files online (Google docs)?

 

 

You can stream it anywhere there is internet access

[Guest misterstockwell]

 

Hey, there are plenty of people who downloaded tons of music in the past (shoving skeletons back in the closet a la VAL) that would be happy to pay some sort of penance. 

 

A large group?  Dunno.  But I suspect a large percentage of people who use iMatch, which may not be a large percentage of iTunes users, will not do it for the "amnesty" but instead for the upgraded audio files.

 

But now I see where you're coming from.  I guess you think that anyone who would actually pay money for that that is an iIdiot, like misterstockwell does.

 

I have never downloaded any song illegally. Apple's upgraded audio files would be a downgrade in quality for my 50,000+ songs. I don't think many people care about audio quality any more or the mp3 craze would have never happened. I don't see it as a prod to sign up for this pickpocketing.

[txlaw]

 

Hey, there are plenty of people who downloaded tons of music in the past (shoving skeletons back in the closet a la VAL) that would be happy to pay some sort of penance. 

 

A large group?  Dunno.  But I suspect a large percentage of people who use iMatch, which may not be a large percentage of iTunes users, will not do it for the "amnesty" but instead for the upgraded audio files.

 

But now I see where you're coming from.  I guess you think that anyone who would actually pay money for that that is an iIdiot, like misterstockwell does.

 

I have never downloaded any song illegally. Apple's upgraded audio files would be a downgrade in quality for my 50,000+ songs. I don't think many people care about audio quality any more or the mp3 craze would have never happened. I don't see it as a prod to sign up for this pickpocketing.

 

Clearly you are in the minority.  Or maybe you're just old.  (Just kidding, just kidding  :P).

 

Seriously, though, how many ordinary people are going to set up a media server in their house where they can stream their music anywhere they want?  And how many people own 2TB of lossless digital audio files! 

 

You seem to be an audiophile.

 

I have lots of songs that are pretty crappy quality back from my college days.  I would actually like to have new versions.  I am also one of those suckers who wouldn't mind paying $25 to the record labels for my past indiscretions.  Unless they're keeping dibs on me.  We'll see when the TOS comes out.

[Guest VAL9000]

The profit margins are a result of vertical integration.  A large percentage of the 600 basis point gross margin comes from their software, not the hardware.  By tying their software (OS and bundled apps) to high end hardware, they are able to deliver a premium product that extracts large margins from consumers who are able to pay for the premium product. iTunes is just part of what draws people to Apple devices.

The thing that I was getting at is that Apple needs to make the sale to get the 60%.  It doesn't matter if it comes from hardware, software, or Steve's Reality Distortion Field.  Once competitors catch up (and they will), the moat gets reduced by the amount that was contributed by innovation.  Look at how good Android is!  The innovation gap is closing swiftly...

 

How can video be locked down when the vast majority of people consume their video through MVPD, broadcast, theater-going, Netflix, and ad-serving sites (e.g., YouTube)?  The number of people who will be paying iTunes for movies/TV episodes will dwindle as others (YouTube, for example) launch competing services.  

 

The movies people bought from iTunes are not keeping them from switching to Android or Win Phone.

This whole thing needs to be viewed at a higher level than a few movies won't keep me from switching phones.  What if you had 50 movies, 5,000 songs, and 50 apps in your collection?  Would that be enough to keep you on the Apple platform?  Don't forget, this isn't about just a phone.  This is about iPhone, iPod, iPad, Apple TV, and whatever other devices they dream up in the future.  All of that is going to be hooked into the same platform.

 

Streaming erodes this model, but currently it's still relevant.  When streaming is actually real and introduced, then we can re-evaluate based on whatever bag of tricks Apple is going to throw at us next.

 

Pass the savings?  What publisher is going to pass the savings onto their customers?

 

Publishers are going to offer the same apps with in-app subscriptions at the same price point on Android, make higher margins, and keep that profit.  They have to be on Apple devices.  But they also have to be on Android devices.  Subscription pricing will be set uniformly across the entire ecosystem (Android, Win Phone, and Apple) to maximize their profit. 

Pass the savings / keep the profits.  It's the same thing in aggregate.  Apple is price fixing for their vendors by saying that even if you can deliver on Android for 10% cost and Apple for 30% cost, you can't sell for $8 on Android and $10 on Apple.  That's offensive.  Even more offensive is that Netflix doesn't have to pay the 30% at all.  Ugh.  And in addition to ensuring that their providers can't reflect the trust cost of service to their customers, they've also eroded some of the argument to switching to Android: because it's cheaper.

 

[txlaw]

The thing that I was getting at is that Apple needs to make the sale to get the 60%.  It doesn't matter if it comes from hardware, software, or Steve's Reality Distortion Field.  Once competitors catch up (and they will), the moat gets reduced by the amount that was contributed by innovation.  Look at how good Android is!  The innovation gap is closing swiftly...

 

Okay, if you're talking about making the sale and gaining mindshare, as opposed to keeping us locked in for all of time, I agree that the media deals help. 

 

I especially agree that the innovation gap is closing swiftly.  Also agree that the OS+hardware cannot support 60% gross margins over time when you're dealing with the Android business model.

 

This whole thing needs to be viewed at a higher level than a few movies won't keep me from switching phones.  What if you had 50 movies, 5,000 songs, and 50 apps in your collection?  Would that be enough to keep you on the Apple platform?  Don't forget, this isn't about just a phone.  This is about iPhone, iPod, iPad, Apple TV, and whatever other devices they dream up in the future.  All of that is going to be hooked into the same platform.

 

Streaming erodes this model, but currently it's still relevant.  When streaming is actually real and introduced, then we can re-evaluate based on whatever bag of tricks Apple is going to throw at us next.

 

Okay, well then let's talk about it at the higher level instead of nitpicking about whether there really is a complete lock down of music or video consumption by Apple, which I do not think is accurate.

 

I disagree on how big an effect existing collections of music, video, and apps will have on keeping users from migrating from Apple devices to non-Apple devices.  Most music purchased from iTunes can be upgraded to DRM-free, I believe.  So it can be moved to other devices.  Video protected by DRM may or may not keep people from migrating, though I suspect not in a world where Netflix and other services increasingly have much of the content you want to watch anyway.

 

Your point on apps, which I don't consider media, is well taken.  However, whether your app collection will deter you from migrating is going to depend on how much you paid for the apps and whether you have data stored locally that cannot be migrated to a different device.  If all your apps are only $1 or free apps, it won't cost much to migrate over to a different ecosystem.  The data problem, however, is a real one, and I recognize that that could be the big lock in proposition.  But most apps with data you would want to take with you appear to store the data with the web services rather than locally.  Not all, but most.

 

Pass the savings / keep the profits.  It's the same thing in aggregate.  Apple is price fixing for their vendors by saying that even if you can deliver on Android for 10% cost and Apple for 30% cost, you can't sell for $8 on Android and $10 on Apple.  That's offensive.  Even more offensive is that Netflix doesn't have to pay the 30% at all.  Ugh.  And in addition to ensuring that their providers can't reflect the trust cost of service to their customers, they've also eroded some of the argument to switching to Android: because it's cheaper.

 

Perhaps it is cheaper to develop an app for Android versus for iOS.  I have no idea.  If somebody reading this post does, I'd love to hear their thoughts.

 

But we also have to ask: what's the return on investment per unit for an Android app versus an iOS app?  If more people buy your app because of the curated nature of the iOS platform, giving you ridiculous incremental net margins on each additional unit sold, then maybe it makes sense that Apple gets a bigger cut than Google and that they try to set their price.  Clearly, developers are willing to pay more for access. 

 

Of course, if Apple becomes the dominant power in the market, they will have to watch what they do to make sure they aren't running afoul of the antitrust laws.

 

Netflix doesn't have to pay the 30% because they're a big dog and Apple needs to have them on the iPhone.  That seems fine to me.  I really hope Apple doesn't buy Netflix.

[Guest VAL9000]

Okay, if you're talking about making the sale and gaining mindshare, as opposed to keeping us locked in for all of time, I agree that the media deals help. 

 

I especially agree that the innovation gap is closing swiftly.  Also agree that the OS+hardware cannot support 60% gross margins over time when you're dealing with the Android business model.

 

Well I think the locked in piece is a part of it, but that's where we seem to have our disagreement.  I think it's important, you don't.  I can live with that difference :)

 

Okay, well then let's talk about it at the higher level instead of nitpicking about whether there really is a complete lock down of music or video consumption by Apple, which I do not think is accurate.

 

I disagree on how big an effect existing collections of music, video, and apps will have on keeping users from migrating from Apple devices to non-Apple devices.  Most music purchased from iTunes can be upgraded to DRM-free, I believe.  So it can be moved to other devices.  Video protected by DRM may or may not keep people from migrating, though I suspect not in a world where Netflix and other services increasingly have much of the content you want to watch anyway.

 

The whole argument seems to be centered on how big and beautiful the streaming service businesses become.  We both think it's coming, but when and how amazing it will be is pure speculation.  I'll summarize it this way: the value of the media locked into the Apple ecosystem reduces as the quality, cost-effectiveness and breadth-of-selection of streaming services increases.  I think streaming overtaking traditional media purchases is still a ways off.  So, for as long as that's the case, the lock-in continues to be an effective tool for increasing product stickiness (my opinion).

 

Don't you think the timing is odd for Apple to introduce iCloud as is?  I mean, if all-you-can-eat audio streaming were just around the corner, wouldn't this iCloud thing look lame in comparison?  I can't reconcile this.  I mean, if anyone knows what the record companies are working on, it's Apple, and Apple's saying this is how you're going to stream.

 

Your point on apps, which I don't consider media, is well taken.  However, whether your app collection will deter you from migrating is going to depend on how much you paid for the apps and whether you have data stored locally that cannot be migrated to a different device.  If all your apps are only $1 or free apps, it won't cost much to migrate over to a different ecosystem.  The data problem, however, is a real one, and I recognize that that could be the big lock in proposition.  But most apps with data you would want to take with you appear to store the data with the web services rather than locally.  Not all, but most.

 

It's funny the things we agree on and disagree on.  I'm not worried about this.  I think most cloud based apps will be ecosystem agnostic.  If you switch phones, you can just install your app on the new phone and login to your same account with all of your data.  Moving your data from that service, though, is way out of scope.  I won't comment except to say that it will probably be regulated in the next 5-10 years.

 

Perhaps it is cheaper to develop an app for Android versus for iOS.  I have no idea.  If somebody reading this post does, I'd love to hear their thoughts.

 

But we also have to ask: what's the return on investment per unit for an Android app versus an iOS app?  If more people buy your app because of the curated nature of the iOS platform, giving you ridiculous incremental net margins on each additional unit sold, then maybe it makes sense that Apple gets a bigger cut than Google and that they try to set their price.  Clearly, developers are willing to pay more for access. 

 

Of course, if Apple becomes the dominant power in the market, they will have to watch what they do to make sure they aren't running afoul of the antitrust laws.

 

The subscription cut isn't about how much it costs to make the app in Apple vs. Android - these are one time costs that are sunk in a subscription model.  Plus they are relatively low (regardless of platform) compared to cost of the content you're supplying with the app.  When a publisher pushes a new edition, the incremental cost to put that edition onto Apple, Android, and the Web is nearly zero.  I don't think it's a problem that Apple charges more.  I think Apple should be able to charge whatever they want.  What I have a problem with is Apple also dictating the customer price to be the lowest price available.  This is a "dick move".

 

Netflix doesn't have to pay the 30% because they're a big dog and Apple needs to have them on the iPhone.  That seems fine to me.  I really hope Apple doesn't buy Netflix.

 

Oh I know *why* they don't have to pay.  I just don't agree with it.  There's a lot of things that are curated for me by Apple that I don't agree with.  No bikinis or boobs, except you, Sports Illustrated, and you Playboy.