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Cloud Storage Wars: Apple unleashes iCloud Storage

Jun 3 2014, 5:12am CDT | by , in News | Apple

Cloud Storage Wars: Apple unleashes iCloud Storage
 
 

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Cloud Storage Wars: Apple unleashes iCloud Storage

Apple has been threatening Dropbox since at least December 2009. Back then, Steve Jobs summoned Dropbox’s CEO Drew Houston and told him his fledgling startup was a “feature, not a product.” Houston rebuffed Jobs’ offer to sell the company and it took 2 years for Apple’s competing iCloud to reach the market. But iCloud left out the most popular feature of Dropbox — brain-dead file synchronization — and did nothing to dent the momentum of Houston’s company. Yesterday, that changed with the announcement of iCloud Drive. While it’s far too late to fulfill Jobs’ promise to kill Dropbox, Apple’s aggressively priced offering joins a crowded market with a winning offering that could be worth billions to the Cupertino company anyway.

Changing the game

Until iOS 8 ships this fall, iCloud remains the ugly duckling of cloud storage. Unlike competitors from Microsoft, Google, Dropbox and Box, it doesn’t allow you to store regular data files (think Excel documents, MP3s). Only if you use apps that are iCloud enabled can you store documents in iCloud. That will change with iOS 8, which adds a folder you can put anything in that will automatically appear on all your Macs and iOS devices. And, in a nod to the Mac’s small market share, it will be possible to get documents over to Windows computers via a web browser.

At least as importantly, Apple has slashed pricing on storage, with a new 20GB plan that will cost just 99 cents a month. (Apple didn’t detail all pricing for iCloud storage, so this post contains some assumptions). At $12 annually, that plan should do a good job of satisfying most casual users for iCloud backups and Apple’s much improved handling of photos. Gone is the incomprehensible PhotoStream of old, replaced by a cloud solution that will backup every picture you ever take — without requiring you to use a computer.

For power users who shoot thousands of photos or lots of video, Apple’s new 200GB plan seems like a big winner, too. At just $3.99 monthly, the storage cost compares favorably to offerings from Box, Dropbox and Microsoft. Only Google Drive comes in cheaper per gigabyte (see chart). But Google doesn’t offer a comparably sized plan, nor will it easily sync your iPhone photos, music and the like. Apple seems to have threaded the pricing needle here and gotten appropriately aggressive in a competitive space.

There are important things going on here for Apple and its competitors:

Big bucks for Apple? First, this looks like a big-ish business opportunity for Apple. The number of iOS devices in use is going to cross the 1 billion mark this year. If even 10% of them ultimately end up taking a $48 storage plan, that’s potentially a $5 billion revenue stream for Apple. (By way of comparison, Dropbox was rumored to have done about $250 million in business last year.) That won’t happen overnight, of course. But it certainly seems like the longer people use iOS devices, the more digital data they’ll accumulate. And Apple is poised to win a good deal of the business storing that data.

Fewer dollars for Dropbox? The trajectory of Dropbox hasn’t been quite as vertical as some believed, but the company has nevertheless benefited from converting a portion of its 300 million users into paying customers. With its cheapest plan at $99 annually for 100GB, that was good business. The operative word there for those paying attention? Was. Google’s pricing is 75% lower at 100GB and now Apple’s is similarly low at 200GB. Apple, significantly, doesn’t seem intent on offering an Android client, but for iOS/Mac loyalists, there appears to be little reason to pay for a bigger Dropbox as an individual….

A level playing field for the enterprise. … and on the enterprise side, Apple has thrown everyone a bone. One of the new APIs in iOS 8 allows apps to easily save data to any cloud provider of their choosing. This is great news for Box, which previously required support to be explicitly built by developers. The new frameworks Apple is providing should make it easier to just link an app to Box. Or Microsoft’s OneDrive. It’s true that Dropbox will be a choice of developers as well, but that’s actually a downgrade from where it stood before when it was the choice. Prior to iOS 8, the extra work to link to cloud storage often meant choosing to support just one platform, which was great for market leader Dropbox. In iOS 8 and beyond, that “special position” will be reduced to being one of many.

Follow me on Twitter. Read the rest of my Forbes posts here.

 

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