I, CLOUDIUS

To the delight of constantly connected Apple fans Steve Jobs delivered details on Apple’s new iCloud service at the June 6 WWDC conference. iCloud’s overall features were released a week earlier – an unusual PR strategy for Apple who usually let Mr. Jobs deliver the big news on stage – but it nevertheless made a few headlines. Let’s look at what iCloud will mean for the mobile operators who are the ones delivering connectivity to Apple’s mobile devices for the foreseeable future.

iCloud means that there will be more data travelling the mobile networks than before. Explosive growth in mobile data is already predicted by us and many others, and easy-to-use and integrated solutions like iCloud will contribute to the predictions come true. Synchronizing photos, music, books and documents means a lot more things will happen in the background compared to the average smartphone usage patterns of today. Some operators will cry for an Apple-tax to pay for network capacity upgrades but it won’t work. The only way forward for operators is to find ways for people to pay for their mobile connectivity in a way that’s understandable, affordable and sustainable.

While device syncing will ensure basic file and content access when offline, people will still want to have real-time access to their private as well as other information on-the-go. This includes while travelling, and that means the pressure for lower data roaming fees will increase. In the absence of affordable roaming such as included-in-the-plan, Wi-Fi solutions may see a renaissance if Wi-Fi service providers package their offerings with easy sign-up, attractive coverage and good pricing plans. In the EU, roaming regulation will be a fact by 2015 if national and roaming data pricing differences aren’t zero. The question is which operator will be the first in providing such low fees.

Any operator having a large share of Apple products in their network can consider its own consumer data and address book synchronization solutions end of life. In terms of convenience for Apple devices iCloud is destined to be the winner, though there are more feature-rich and device independent solutions. It’s important to remember that iCloud is built for Apple products only and represents a walled garden. Android and BlackBerry users have to, and will be, open to alternatives, and pretty soon we might be seeing GClouds and CloudBerries as well.

A general concern is what happens when iCloud gets hacked. It’s rather “when” than “if”, because nothing on the Internet is fully secure by definition and the more attractive the data, the more likely a target. The hacking of Sony’s Playstation PSN network and loss of credit card information serves as the most recent example though PSN doesn’t really count as a “cloud” service. The point is that if everybody starts storing their email full of passwords and other personal communication on iCloud we can be rather sure it will be an attractive target for top-class hackers. In computer security it’s well known that you are always a step behind because security glitches are often not brought to public attention until they have been around for a while. This disturbing truth will apply to Apple and iCloud as well, just as it does for other cloud services.

Apple’s iCloud only makes it all the more obvious that the initiative for large-scale mobile applications and services has moved from the operators, probably for good. There will be opportunities for operators with locally tailored app stores, enterprise integrations and other things that are too customized or localized for a global player to handle. What’s more, outside iCloud operators should be worried that Apple now also has messaging services part of the iOS operating system, essentially making SMS and MMS less relevant. Both SMS and MMS will remain for long but operators may see their steady revenue decline faster than before. It’s time to do business model re-thinking and innovation before Apple and Google beat operators at their own game.

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