Amazon Attacks Apple in the Cloud

Fresh off rumors of Google (Nasdaq: GOOG  ) testing its own streaming music service, Amazon.com (Nasdaq: AMZN  ) this morning introduced Cloud Player for purchasing, storing, and playing tracks via the Web.

Think of it as an online version of iTunes and emblematic of what Lala was before Apple (Nasdaq: AAPL  ) purchased the company in December 2009 to keep it from causing trouble. Now, Amazon gets to be the pest.

Actually, "pest" might be too small a word for what's going on here. This is an assault on the iTunes empire, with two versions of Cloud Player leading the charge: one for the Web and another for Android devices. There is a catch, however. Protected AAC files common to iTunes can be uploaded to but not played inside either Cloud Player. Amazon won't mess with content that isn't DRM-free.

So be it, though the timing is nonetheless interesting. Last week, the e-trailer rolled out its controversially named Appstore for Android. In building a Cloud Player for Google's OS, the e-tailer leaves little doubt as to its ultimate aspirations. What iTunes is to iOS users, Amazon wants its Appstore to be for Android users. (Cue ominous music.)

But the story doesn't end there. Amazon this morning also introduced a service called Cloud Drive, which is both like and unlike a similarly named service from Rackspace Hosting (NYSE: RAX  ) . They're alike in that both allow users to store data in the cloud.

The difference is that the e-tailer aims to create a space for individuals to house digital goods purchased from its online shelves, whereas Rackspace's Cloud Drive is more often used to back up file servers or create a shared filing system for a disparate team.

Conceptually, I like Amazon's strategy. The entry price (free!) is unbeatable and adding space is easy. U.S. customers who purchase an album from Amazon anytime during the year will see their Cloud Drives upgraded from five to 20 gigabytes of storage space.

And then there's the convenience factor. Keeping tracks in the cloud should allow users to play them on any device, anywhere, so long as they have access to a reasonably fast Internet connection.

Whether that comes to pass is immaterial at this point. With Cloud Player and Cloud Drive, Amazon has served notice that it's time for Apple to figure out what, if anything, it can do to make Lala and MobileMe come together as an attractive platform for consumer cloud computing.

Do you agree? Disagree? Let us know what you think about Cloud Player and Cloud Drive, Google's suddenly marginalized Android Market, and Apple's thus-far nonexistent cloud computing strategy using the comments box below.

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Google is a Motley Fool Inside Value pick. Google and Rackspace Hosting are Motley Fool Rule Breakers recommendations. Amazon.com and Apple are Motley Fool Stock Advisor selections. Motley Fool Options has recommended members open a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple and Google and has written Apple puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is always plugged in.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 29, 2011, at 3:43 PM, NeuroProf wrote:

    It's time for Apple and Amazon to dance together. It will be in the interest of both companies and their stockholders. I want to use the Amazon cloud on my iphone, ipad2, iMac and ITouch. I bet I'm not the only one....

  • Report this Comment On March 29, 2011, at 4:11 PM, Henry3Dogg wrote:

    Apples iDisk app has been acting as a cloud based music streamer for at least the last year.

    Stick your media on MobileMe's cloud based iDisk, open it using the iDisk app on iDevice or your favorite layer on Mac or Dos, and listen to it stream.

    Amazon are just catching up!

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