Apple's Hidden Cost Savings in the Cloud
Scott Moritz
Scott Moritz
06/07/11 - 08:00 AM EDTNEW YORK (TheStreet) -- Apple's (AAPL) new iCloud threatens to lower hardware costs and add more juice to device sales.
It's easy to see the big impact the iCloud could have in streaming media, pitting Apple against new rivals like Netflix (NFLX),Comcast (CMCSA) and Sirius (SIRI), among others.
But the so-called cloud is a subtle but potentially transformative move -- in another way -- for Apple. The cloud is a big step toward playing music and watching shows streamed to you from your iTunes account instead of downloading and storing big media files on your device. If successful, the cloud opens a broad new market for Apple in both services and devices.
After years of building an empire around selling gadgets, Apple is now selling services to feed those millions of devices. Apple announced Monday a $25 a year iTune Match, for example, that will store up to 5,000 songs on the network for users to listen to on any Apple devices.
Importantly, the services of the cloud means that the devices, which used to require constant increases in onboard storage capacity, can now be smaller and cost less.