We believe Apple's iCloud product could be a game changer. iCloud fires a shot across the bow directed squarely at Microsoft's Office365, and Google's Small Business Apps cloud productivity offerings because iCloud provides a near frictionaless adoption path for Apple iOS device customers. It is quite likely that the iCloud announcement serves notice to investors in highly visible upstarts Dropbox, Surgarsync, Evernote and others that their free ride is over.
Amongst the raft of features announced by Apple at the Worldwide Developers Conference in San Francisco, the announcement of iCloud was in our view the most significant. It is also the one announcement that got somewhat lost in press coverage as the iTunes in the cloud music sharing service overshadowed what is in our view a real game-changer for the personal and groupware productivity solutions markets. iCloud, in our view, is the first cloud solution from a major vendor that has a clear brand identity; an understandable, compelling offer; and is likely to re-shape multiple markets in the next twelve months.
Apple did away with its much maligned MobileMe service that provided a virtual folder capability and email for $99/year. In its place, Apple announced iCloud, -a cloud-based service with a robust, integrated and mostly free set of personal productivity apps (Mail, Contacts, document and file sharing, etc. ) that provides email, storage, and PUSH-based synchronization capability for iWork documents. Apple will provide each user with a 5GB free storage and is making its storage APIs available to developers prior to the product go-live date in this fall. The new, reworked apps represent a rather complete set of personal productivity and small office tools that allow for sharing of contacts, calendars, and files using a relatively seamless and familiar interface. The suite is AD-free.
From here on, any individual professional or a small business or a group can easily and freely establish a cloud-based, shared and synchronized office environment. This is a direct shot at Google Docs as well as at Microsoft. With the simple announcement of iCloud as a free productivity solution, Apple has quickly outpaced Microsoft and Google, both of whom have been trying now for a few years to carve out a viable productivity cloud strategy and are now forced to play catch up. Initially, iCloud will make things more difficult for Google than for Microsoft Live offering, but the speed with which Apple entered and established itself in the cloud space is a clear warning sign for Microsoft. We are not ready yet to write the Microsoft Office and Exchange obituaries, - large companies will continue to rely on these mature products. Apple still has a long way to go to make iCloud appealing to enterprises and there is no indication that they have any interest in this market. Moreover, Apple, (and Google), does not offer the management tools needed by enterprises to deploy and administer large groups of users, but clearly Apple is not that far away from being able to do so, given that similar technology underpins much of what is iCloud internally. Microsoft, Google, RIM, and all the third-party hosted email providers should all take note.
Security is an additional issue as the PUSH nature of iCloud and similar products can make them the distribution mechanisms for infected code. Given the recent spate of highly visible security breaches at various tech companies and consumer businesses, anyone looking to deploy an office solution based in the cloud is going to want to get additional assurances of tight security monitoring as well as evidence of tools, process and staff to combat any emerging security threats.
For individuals and small businesses, iCloud makes it very difficult to justify paying a lot of money for personal productivity applications, email, and storage. Overnight, Apple has established itself and the iCloud brand as the dominant consumer and personal productivity cloud offering.
June 10th 2011. (c)2011 MGI Research, LLC.
