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How Apple could exploit a forever-free iCloud

Gregg Keizer | Nov. 25, 2014
Rivals Google and Microsoft give away cloud storage to sell cheap notebooks, but Apple could take a different track.

While Google and Microsoft are using large amounts of free cloud storage to sell inexpensive consumer notebooks, Apple has stood above the fray.

But there's no reason Apple can't join in.

On Friday, Google announced that all Chromebooks purchased through Dec. 31 will be eligible for a free one-terabyte allowance to Google Drive for two years.

Although Google explained the promotion as "a bonus for the holiday season," the deal didn't originate with a Scrooge-style epiphany but from a business sensibility: Several Microsoft computer-making partners, notably Hewlett-Packard (HP), have taken to bundling free cloud storage with their Chromebook competitors.

HP includes either OneDrive storage space or both that and a free subscription to Office 365 Personal with its low-end Stream line of laptops. The US$199 Stream Notebook 11, for example, includes a one-year 1TB OneDrive as well as a one-year subscription to Office 365 Personal, a single-machine license to the suite. The $299 Stream Notebook 14, meanwhile, comes with a two-year 100GB OneDrive offer.

Ultra-cheap Windows-based notebooks have taken a bite out of Chromebooks' share of the low end market, according to the NPD Group. Earlier this month, Stephen Baker of NPD, citing statistics from his company's retail data, said Chromebooks' share of U.S. entry-level retail sales had dropped from the high 20s last year to under 20% this year as similarly-priced Windows laptops have gained momentum, largely because Microsoft is now subsidizing the OS, reducing OEMs' cost for Windows to zero or near zero.

To stay competitive, Google temporarily upped the usual 100GB Google Drive offer to 1TB.

But Apple has not played the cloud storage card.

There are good technical reasons it hasn't. Unlike Chromebooks, HP's Stream line and other minimalist laptops, Apple's MacBook Air and MacBook Pro come with relatively spacious on-device storage. While the typical Chromebook or HP Stream packs just 32GB of flash-based local storage -- necessitating Google Drive or OneDrive -- even the entry-level Air and Pro come with 128GB, or four times as much.

Currently, Apple gives customers a measly 5GB of free iCloud storage, used not only by Macs but also by iPhones and iPads, then charges for allotments above that. Even with iCloud extra-space price cuts this year, Apple's costs are very much out of line with the market, and its free allowance is just a third of Google's and Microsoft's.

The free Google Drive and OneDrive offers, and also the latter's unlimited space for $80 annually (via an Office 365 Personal subscription) only exacerbate the disparity.

There's nothing preventing Apple from giving away iCloud storage space: The company has more money in its coffers than it knows what to do with. If it wanted to, Apple could join the promotional space race to sell more Macs, which are on the rise, and iPads, which are not. But there's another reason why it would be a smart move.


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