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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.

Just as it did in 2013 when it gave away OS X upgrades and the iWork productivity suite, Apple could bundle a significant chunk of iCloud storage space with new hardware purchases to keep existing customers in its fold even as it encourages them to upgrade their hardware with new notebooks or tablets.

That may be part of Google's and Microsoft's strategy as well -- Microsoft's especially -- although their bundles smack more of old-fashioned market share skirmishing, each hoping to outdo the other in the entry-level space.

Because of its personal computer pricing, Apple really competes with no one other than itself: As Baker said two weeks ago, the race to the bottom by Google with Chromebooks and Microsoft with cheap Windows knock-offs has "decimated" the over-$300 Windows notebook segment in the U.S., with sales down 10% in the last weeks of October compared to the same period in 2013.

The inclusion of, say, 100GB or 200GB of free iCloud storage, would not in itself tip more than a handful of potential buyers from a much-less-expensive Chrome OS or Windows personal computer to a line that starts at $899 and climbs to double that and more. But it might be enough to nudge the already-in-Apple pool to buy a new Mac or iPad sooner than they might otherwise.

That's because consumers who already own an Apple device, whether iOS or OS X, are by definition committed, even if only tenuously, to iCloud. If Apple used the same mechanism for an iCloud enhancement as it used for iWork, the boosted iCloud allowance would be available to all the buyer's iOS and OS X devices.

(Last year, Apple gave away the iWork iOS apps to any customer who bought a new iPhone or iPad after Sept. 9, 2013; the Mac versions of the same applications were included free with any Mac bought after Oct. 21, 2013. In both instances, the apps were tied to a customer's Apple ID, letting them download the free-of-charge apps to any other iOS or OS X device associated with the same credentials.)

Add the offer to new iPad purchases -- perhaps limiting it to only the larger-sized iPad Air 2 -- and Apple would give people who already own a Mac or iPhone or even an earlier tablet another reason to buy, juicing sales of the now-declining iPad.

The disparity between the pricing of the least-expensive iPad Air 2 and the least-expensive MacBook Air or MacBook Pro might require a two-tier iCloud offer: 100GB for a new tablet, 200GB for a new notebook. That, in turn, could be spun to advantage by making the deals additive. Buy a new MacBook Air, get 200GB; buy a new iPad Air 2, get 100GB more, for a total of 300GB.


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