Cloud-computing, the buzzword of Q1 2008, has recently been gaining a lot of traction (if you saw the movie August, you get that reference). The most notable feature, or missing feature, of the latest line of mini-notebooks (Acer One, EEE PC, HP Mini, and soon to be DELL E) is a high storage hard-drive. For the most part they come standard with around a 4-8GB solid state drive, upgradable to around 32GB; the current Ipod classic on the other hand comes in a 160GB version. Although innovation in the storage sector has revolved around fitting more storage in less space (the CEO of Seagate is very bullish on the idea that cloud computing will only increase the need for storage on the client side), these new Mini-notebooks are a very interesting indicator as to where the entire segment of portable devices is heading.
This is where the IPhone 3G and Ipod Touch come in. 16GB may ultimately be enough. I recently signed up for the Rhapsody service and I must say, aside from the occasional unavailable album, to ability to have almost any song available on demand is really quite something. This is the future of the music industry; the subscription model will be the last one standing. Having to pay $.99 per song versus pirating it is one equation. But, paying a flat fee monthly and having an entire high quality, virus free, catalogue is entirely another. Ultimately, as long as that music is truly available anywhere, anytime, on any device, people will adapt the subscription model. Although there is certainly something romantic notion lost in not having albums that you own to pass down, I don't think your Itunes library was filling that void anyway. Your kids probably won't care much as the entire music library of all time will be available.
That is largely what the Iphone is all about. It's not merely a replacement for your PDA/phone, it's Apple's realization that the Ipod was a dying concept. Same for the Itunes store. By putting a device in your hand that presumably will always be connected, Apple was laying the groundwork for what will be the next phase of it's media strategy: Itunes subscription service. Available on your Apple computers, your AppleTV, your Iphone, and your soon to be Apple controlled home media center (an actual TV to bypass the set-top box?). This model will probably also include a video subscription service to rival Netflix, among other things. Who knows, the entire thing might all be a packaged deal (maybe even with your Broadband/Wireless access).
Nokia has been trying to reposition its handsets in a similar way, becoming not only a hardware provider, but also a media provider. Although Apple may not be in the media game for that much longer than Nokia, the closed system approach that Jobs has developed is why they are ultimately better positioned to win the game. Nokia has no skin in any other hardware/software game; they have no ecosystem. Apple has rapidly been putting its products at every step of the chain. Jobs has long understood that the future is about the entire chain, not disparate devices. Cloud-computing, the storing of the actual media on the server side, will help realize this reality. When the time comes to choose who will be delivering your content from the cloud, Apple has already placed their shiny and well designed Trojan horse in your hands, your bag, and probably your house.
