“The Cloud” is certainly the buzz-phrase du jour as the behemoth IT companies rush to offer remote storage “in the cloud” for everything from document files to home videos. You get the convenience of easy access to the stuff on a variety of devices in a variety of places. They get… well, it’s not certain what will they get, or how. But somewhere down the line, the “what” will have to include profits – which is the one troubling aspect of this Next Big Thing in information technology.
For all the hoopla, the cloud is a work in progress, with different companies offering variations in what they store, and how easy it is to access and share content. Cloud storage has been around for a while, in the form of online backup services like Carbonite and Dropbox. What’s new – and what’s changing the game – is the entry of major integrated IT/entertainment vendors including Microsoft, Google, Amazon, Facebook and now Apple.
So, what’s not to like? Once again, money is the root of all evil.
We kid, of course: Somebody has to cover the costs of all those petabytes of secure storage capacity in servers around the globe – not to mention all the computer power to manage the data efficiently. But the way the providers plan/hope to make money will certainly affect what economists think should matter most: the value to consumers.
All the new high-profile cloud storage services want to sell you something – or perhaps many things. Google is selling storage capacity beyond a free taste; Amazon offers a lot of free space, provided you buy some music; Microsoft is selling business software and entertainment hardware (Xboxes) to complement its storage.
Which brings us to the subject of Apple and the concept of the “walled garden”—the technology-driven barriers to moving off the platform. Apple wants you to play and work in its cloud using only hardware sold by Apple and (in a concession to commercial reality) PCs as long as they have Apple’s iTunes on board to sell entertainment. Oh, and did we mention, that Apple will allow only apps approved by Apple?
Walled gardens can have several advantages. They can improve user security and lower the costs of getting information, and they encourage firms to innovate by allowing them to keep more of the profits from innovation. Note, however, that walled gardens have downsides. In particular, they can affect the ease with which other companies can entice people – and, in the case of the cloud, people’s data — to move outside of the garden.
It’s tempting to give government a role in deciding what’s kosher within the garden and what’s not. We think the burden of proof should certainly be on those who want to regulate them. But there are gray areas – for example, when the garden owner attempts to foreclose options for competitors. Think of Apple not permitting apps on the iPhone that compete with Apple services, or a cable company barring access to specific VoIP services on the Internet. The test, in the end, ought to be whether the consumer benefits of a walled garden exceed the consumer costs.
If, for example, an Internet Service Provider keeps suspect web sites off the platform to enhance security or the general user experience, this may not be a bad thing. The same is true of applications on the iPhone. In this case, competition from other phone providers should keep the company honest.
Should we stop worrying and learn to love yet another neat (and ultimately, expensive) innovation from Apple? Yes, as long technological change and ferocious competition offer alternatives to Steve Jobs’ sometimes-smothering embrace.
(This post was also published on Forbes.com)