Sync versus streaming. Essentially, that is the difference between how Apple, Amazon and Google view the cloud. However, a closer looks finds iCloud could pay off big for the Cupertino, Calif. company looking to cash-in on the falling price of flash memory.
Apple’s decision to sync rather than stream your music to your iPad or iPhone with iOS 5’s iCloud should pay off big as consumers opt for the heftiest flash drives to store their tunes. “That means big profits for Apple, because it sharply marks up the cost of the NAND flash memory-storage chips used on its mobile devices,” reports the Wall Street Journal Thursday.
Although a 32GB iPhone or iPad costs consumers $100 more than a 16GB version, Apple pays about $15, according to the article. That’s an 85 percent margin for Apple’s devices.
Additionally, flash memory is only getting cheaper. Research firm Gartner expects NAN flash memory to fall 30 percent this year, another 36 percent in 2012 and 39 percent in 2013. It’s not as pretty a picture for Amazon and Google, who opted for streaming.
While flash memory is getting cheaper and more abundant, the cost of streaming music could hit a sour note for consumers. Mobile carrier AT&T charges $25 per month for 2GB of data and $10 per additional GB. Verizon reportedly is ready to drop its unlimited data plan for a usage-based system akin to AT&T. And AT&T’s LTE plans look to be similarly expensive even when Apple releases the iPhone 4G.
Although home Wi-Fi might avoid some current expenses, costs there will probably rise as landline-based broadband providers “will likely eventually” unveil usage-based cost plans similar to their cellular cousins, according to the WSJ.
In short? It’s a bleak time to be a streaming only cloud company. Apple’s playing it smart and sticking with what they are good at with the iCloud: being profitable in hardware first.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
47 responses to “Why iCloud Doesn’t Stream: Flash Memory Is Insanely Profitable For Apple”
iCloud streams photos though which have bigger file sizes. I guess we wouldn’t be streaming photos all the time though like we would with music if it were available.
Unlimited cable/landline data plans replaced usage-based cost plans because of massive competition (many alternative ways to pipe data into a home) and infrastructure improvement. I doubt we will see usage-based plans take over that space again. As soon as someone does it, they will have a massive exodus because there are many alternatives (in most areas), and probably no contracts binding them to anything. Only the ones that have unlimited data will prevail, IMO.
Unfortunately, the mobile space is not as diverse, has contracts, etc. so we will probably be stuck where we are until infrastructure can support unlimited data, and competition brings it back.
This isn’t very surprising. The point of a business is to make money :P
those dollar bills should be benjamins.
I’m not surprised. But what the devices don’t have enough storage capacity? That’s my problem. I would like to have the ability to have all my music and such, but storage capacity is too little.
And what if you are not on your personal device? With streaming, you would have the ability to still listen to music (in this case) and don’t have to download all the songs onto the device. Thats one thing I love about Google Music Beta. I can go down to college, log into my Google Music Beta account and stream all of my music without having to download any of it. Much more easier and convient to access all of my music.
It would be nice for Apple to give a bit more storage in their devices then, rather than using up around 2GB with the OS and pre-installed software. Of course, I’m a huge Apple fan, but I’ve noticed this on every iOS device I’ve seen – that the space stated isn’t the space they give you. Sure, it happens on PCs and Macs too, but they have larger amounts of storage, so you don’t notice it too much.
I still have unlimited data from AT&T. So glad I never switched!!
Apple may partially be pushing synching over streaming to
sell higher capacity devices but I suspect that they also want to avoid angry
newbs complaining to them about hefty data overages when they start streaming
all their music across 3G networks. I am
fortunate to have unlimited data on my iPhone but found out that music
streaming can add up. Recently, over the course of a 4 day road trip
I used 1.75GB of data while streaming music from Pandora and Rdio. An argument could be made that synching music
is just as data intensive as streaming it but once its synced you can listen to
it as much as you want without hitting your data allotment again.
As someone who has spent sometime streaming Pandora on my iphone over 3G, I can say it’s not very dependable and I experience drop outs often. For techies, this trade-off is clear, we know that an occasional drop in the stream is acceptable because we understand the technology and the limits of the infrastructure. But for the average user, who’s understanding of streaming is limited this will just feel like a bad product. Many will shake their phones and wonder why it’s suddenly not working. Apple is wise to wait until bandwidth and coverage are more consistent. They will jump in as soon as someone can deliver a streaming service that will “just work”.
I have to say, I prefer syncing over streaming for my own music. I’ll get what I want, from my collection (over 25k songs, hope they let us pay for more), when I want it. I rarely synced my own music to my iPhone. Tedious.
I can stream thousands of radio stations, Pandora etc. And frequently do with my grandfathered unlimited data plan. Best five extra dollars I spend every month. 3G is solid where I live and even while driving around town, I have few dropouts. I used to have Sirius and that dropped out much more often.
I like the randomness of live radio. I will like being able to grab whatever I want from my collection at will. C’mon Fall!
Apple is about the quality of the user experience. Try streaming something over 3G, especially video. Then take a look at your bill at the end of the month. Titling the article to suggest a local storage preference is due to Apple’s determination to upsell consumers on higher-capacity devices is the definition of linkbait. You’re better than this.
It isn’t motivated by profit. It’s motivated by user experience.
Constant streaming over 3G means significantly reduced battery life and higher recurring monthly data plan costs. Constant streaming over WiFi means significantly reduced battery life.
People want their phones to last *at least* a day. Yes. At *least*. Streaming music all day is a great way to shoot battery life in the foot.
I disagree with the ‘linkbait” comment, but agree the decision was more about usability. The third leg missing here is Apple’s support of streaming. Forget about idiot users who gobble up bandwidth to (re)watch reruns of “Parks and Recreation” (hey, it’s gotta be streaming viewers that keep that dog on the air), to stream your iTunes Apple has to support it on their end. That requires a LOT more bandwidth and servers in North Carolina than just dumping a super-compressed file down the pipeline.
It’s a win-win (-win) for Apple. Better user experience, cheaper data center costs, AND they still can stick it to us on the cost of memory. 85% markup? Really? That’s just unconscionable.
If Apple does stream, I hope they opt users to still utilize sync and flash RAM.
Streaming music so far has been half par quality to me unless I pay Pandora to stream 256K audio to stream over the air. Plus we will have to pay AT&T large amounts of money to utilize that quality. $30 for 5GB LTE doesn’t last long to many users. Nor does the $80 plan.
I’m actually against the idea mainly because you can’t stream in tunnels and basements most of the time. Unless the government approves LTE to go through secured areas, I can’t use stream.
Streaming sucks when mobile – i.e. driving in a car. There are too many dead spots to stream.
Also, bandwidth is a problem. You always gets lower quality sound.
And, streaming will cost you as you reach your data limits.
Wow. You cite that carriers are getting stingier about cost of streaming. And other commenters find — as I do — that streaming over 3G is dodgy. Tell me again: why aren’t consumers MUCH better off with Apple’s sync strategy?
And while streaming is just iffy on a car trip that goes thru occasional dead or slow zones and under bridges, it’s annoying at best on the Bay Area subway trains, and utterly useless in most planes. That might have just a bit to do with why we like music ON our devices and most streaming services have a hard time making a go of it.
Anyway, iCloud is MOSTLY not about music but about you having control of YOUR stuff — having updates and the same status on your iPad, phone and desktop PC. That is just utterly huge for most of us, and indispensable for those of us who travel a lot (myself: ~50 trips/year).
iCloud marks the second generation of “smartphones” in making them powerful, capable, reliable tools with a huge network behind them, rather than dumb browser windows connected some of the time to a centralized resource. Watch the 1997 video where Jobs talked to developers and realize: this is the culmination of a 14-year-old dream of putting all the power in your hands, easily under your control.
Streaming makes you dependent on Rhapsody’s or Google’s or Microsoft’s teat, when mama sow pulls away, you’re SOL. Syncing puts you in the driver’s seat.
why not allow the customer to decide?
i’m unlimited.
me to, and streaming was about the only think that interested be in iCloud.
i’m going to look at rdio & Spotify when comes out.
i want something with a non AIR desktop client. i believe radio is AIR and/ or a webapp.
Apple doesn’t have to be — for many, many people absolutely isn’t — the end-all, be-all. The customer CAN decide, and does.
Apple doesn’t want to do streaming? Fine: I use Pandora. I buy Sirius XM, only accessing it over the web. Of course, there are MANY other streaming services. Choose all you want.
Don’t count on ’em being around forever, however. Sirius has already dealt with bankruptcy. Rhapsody, Real, others have been around forever, gaining no traction. Pandora had a great IPO and we still wonder how it will make money.
Mostly, streaming is a difficult business model. Force it over 3G and it’s worse. Doesn’t mean I don’t like the content, but why should Apple jump in there?
Apple doesn’t have to be — for many, many people absolutely isn’t — the end-all, be-all. The customer CAN decide, and does.
Apple doesn’t want to do streaming? Fine: I use Pandora. I buy Sirius XM, only accessing it over the web. Of course, there are MANY other streaming services. Choose all you want.
Don’t count on ’em being around forever, however. Sirius has already dealt with bankruptcy. Rhapsody, Real, others have been around forever, gaining no traction. Pandora had a great IPO and we still wonder how it will make money.
Mostly, streaming is a difficult business model. Force it over 3G and it’s worse. Doesn’t mean I don’t like the content, but why should Apple jump in there?
ummm….comcrap has had a 250GB cap on for years now, and there’s nowhere else to run to b/c they control certain segments of certain markets. u-verse, cox, nor verizon fios are available, so now what? most isp’s have bandwidth caps in place, and with the exception of cox, i don’t know of any who don’t!
Strange, most people that I know have about 4 options. Sucks to be you!
I think it’s in Apple future, but they chose to wait perhaps for wireless speed to catch, as you suggesting.
I still don’t see iCloud as an “offering” along the same lines as Spotify, on Rdio.
It look great for what it suppose to be, but not really a competitor since you can’t stream music from it. Yet anyway.