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Software Over Hardware, Services Over Software

Gordon Kelly


Why Apple Runs Shy of The Cloud

So Wednesday brought about the launch of the iPad 2. The media swooned, then there was a predictable backlash. By turns the new device has been seen as the tablet to sweep away all pretenders and a disappointing evolutionary upgrade. As ever the truth lies somewhere in the middle. What has received far less attention, however, is what Apple didn't announce on Wednesday and that is what I find most interesting of all…

Where the hell is Apple's Cloud strategy? A knowledgeable snooker fan knows you watch the path of the white ball around the table, not the pots. A similar relationship exists between hardware and software. Apple may be able to distract punters with shiny new hardware, but it is software that is the real key and here the company's positioning seems some way off.

This may sound like heresy. After all isn't Apple's greatest strength its ability produce beautiful, intuitive software polished within an inch of its life? Most certainly, but it doesn't mean the two notions are mutually exclusive. One is software, the other services. More to the point I'd argue the business model which currently serves Apple so well will increasingly become a noose around its neck if it keeps refusing to evolve.

If you believe Friday's reports Apple is set to offer customers unlimited downloads of iTunes music purchases. Bloomberg claims negotiations are underway with all the major music companies and "an agreement may be announced by midyear". Well if this is Apple's big play it is destined to fail. Why? Because it already has.

Back in 2009 Virgin announced the "world's first unlimited music download subscription service" in partnership with Universal. At the time Virgin Media CEO Neil Berkett proclaimed: "In terms of both convenience and value, our new music service will be superior to anything that's available online today and provides a fair deal for both consumers and artists." This week Virgin Media's head of music, Richard Wheeler, sang a very different tune:"Users' desire to cache tracks and listen to them on the go, that outdates the unlimited download model," he told MusicWeek. Is the service set to fail? No, it never actually launched.

A similar path was beaten by Sky Songs – also in 2009. It shut down due to lack of interest in 2010. Then there is perhaps the most famous of them all: Nokia's Ovi Music Unlimited (formerly Comes With Music). It didn't even require users to purchase the tracks, they simply paid a monthly fee and got unrestricted access to download anything they wished. Even after going DRM free it bombed and rumours had it being cancelled in January. As of this moment it struggles on, but is simply waiting to be put out of its misery.

If Apple thinks unlimited downloads of existing purchases are the answer is it deluded.

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