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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.

It would also amplify the "halo" effect on the iPhone, easily Apple's most-owned device in its current triad of iPhone-iPad-Mac. Boosting iCloud storage space -- invaluable for storing the photographs that make up the largest portion of the content iPhone owners generate -- could be another way to entice iPhone owners, most of whom do not own a Mac or iPad, to add to their Apple-made device inventory, just as Apple hopes its iOS-OS X "Continuity" feature set will do.

Such a plan might not only encourage multiple purchases, albeit over time, but would also differentiate Apple's cloud storage deal from the get-a-terabyte-right-off-the-bat of its rivals by reminding customers that few need that much storage now but many will down the road. Purchase enough Apple hardware and you'll get to that terabyte about the time you really require it.

Unlike the Google and Microsoft offers, which expire after two years -- at which point the stuff stored in the cloud still remains accessible -- Apple could give away iCloud storage in perpetuity, just as it has iWork. That would be simpler to manage, since Apple would not have to track expirations and then pitch customers to pay to continue playing above the skinflint free line. And the forever-free angle would both separate iCloud from other consumer-oriented storage services and mesh with an Apple already-stated strategy.

"Free is good," said Apple executive Craig Federighi more than a year ago when trumpeting the free upgrade to OS X Mavericks.

On Friday, Google boasted that its 1TB storage offer was "almost $240 in value," a phrase that found its way into most reports of the deal. Apple would never say that, although others might make the calculations for them (by the way, 200GB of iCloud storage now costs about $48 annually). While giving away stuff to sell stuff is a linchpin of Apple's long-time strategy -- think Apple Genius support, think its history of bundling first-party apps with its OSes -- it doesn't tend to put a dollar value on what it bundles.

Instead, Apple likes to present its giveaways differently, not as giveaways per se, certainly not as reactive moves required by market exigencies, but as a customer benefit because they add to the overall value of its ecosystem.

"We think that iWork is a really key advantage for our customers' productivity," CEO Tim Cook said last year as he explained why Apple did the free apps-for-iOS deal. "We think that all iOS devices are made even better if they have these apps. And almost all of customers want these apps."

Substitute "free iCloud" for "iWork" and "these apps" in Cook's comments, and there's the rationale for an iCloud-for-life freebie.


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