2 Reasons You'll Love Apple's iCloud

If you're at all like me, you're anxious to see what Apple (Nasdaq: AAPL  ) will unveil at next week's Worldwide Developer Conference. The Mac maker will introduce iCloud, the new edition of Mac OS X (Lion), iOS 5, and if history holds, a surprise or two.

Listen to the music
Both OS editions are important and should show well. But if the headlines and Motley Fool CAPS chatter is to be believed, investors are most looking forward to the iCloud.

"The iCloud proves once again that [Apple] isn't slowing down anytime soon in their quest for market capitalization. Look for them to hit $370 [a share] this year," wrote Foolish investor DaveMarcus82 on Tuesday.

Rumor has it that iCloud will feature a streaming music service that, like competing offerings from Amazon.com (Nasdaq: AMZN  ) and Google (Nasdaq: GOOG  ) , will allow users to stream their music library from any Internet-connected device.

The difference? According to The Wall Street Journal, Apple has reached licensing agreements with three of the four major music labels and is expected to close on a deal with Universal Music Group this week. The arrangements supposedly will allow Apple to scan users' iTunes libraries and synchronize what they own with high-quality tracks in the cloud.

We don't yet know what Apple agreed to in order to get Warner Music (NYSE: WMG  ) , Sony (NYSE: SNE  ) , and the other labels on board. I'm guessing the Mac maker's $65 billion war chest played a role.

Upselling may have also come up during the talks. In scanning my library, iCloud should be able to differentiate between the tracks I've purchased and those I've "ripped" from CDs in our collection. A built-in iCloud Genius engine might see these tracks and offer to upgrade me to remastered or HD audio versions. The result? Labels get more revenue, Apple gets revenue and market share, and I get a better-quality listening experience.

iCloud: Your new home movie library?
We've yet to hear whether the iCloud digital locker will also make room for TV and movie files, but it's not a stretch to think it will. Walt Disney (NYSE: DIS  ) is already a close Apple partner, thanks to CEO Steve Jobs' position on Disney's board. (He's also The House of Mouse's top independent stockholder.)

And what about Sony? The company has been a major Hollywood player for years, thanks to its 1989 acquisition of Columbia Pictures and a 2005 collaborative buyout of Metro-Goldwyn-Mayer. Version 1.0 of iCloud might allow for synchronized storage of movies and TV episodes from these studios.

Can you imagine how disruptive that might be? No longer would users choose between streaming and downloading. With iCloud, they'd purchase tracks (or episodes, or movies) and store them on Apple's servers -- instantly extending the reach of their libraries, while also controlling their playlists. No more bowing to the whims of ever-shifting catalogs at Hulu, Netflix (Nasdaq: NFLX  ) , and Pandora in order to stream. Labels, studios, artists, listeners, viewers ... everyone wins.

Even Hulu and Netflix. Why? Think about how often you purchase movies or TV episodes. Streaming video services such as these will still offer the best vehicles to try series or flicks you might like. The "free movies" tab at YouTube and similar offerings from the likes of Comcast's XFINITY service could also fill this niche over time. Trying leads to buying. In this sense, Netflix could become a channel for Apple.

Your couch in the clouds
And these are just two possibilities. I'm sure there's plenty I haven't yet thought of that will make it into Jobs' keynote address next week -- the cloud is too big an opportunity for Apple to ignore any longer. But don't take my word for it. Take a minute to watch this free video right now, and you'll walk away with a richer understanding of how cloud computing is changing everything.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple, Google, and Walt Disney 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.

The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Netflix, Amazon.com, Google, Apple, and Walt Disney. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. 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 has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (8)

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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 June 02, 2011, at 4:29 PM, Henry3Dogg wrote:

    "Rumor has it that iCloud will feature a streaming music service that, like competing offerings from Amazon.com (Nasdaq: AMZN  ) and Google (Nasdaq: GOOG  ) , will allow users to stream their music library from any Internet-connected device"

    1) generally you stream to, not from, your connected device.

    2) they've had one for ages. I think they're planning rather more than that.

    Oh, and $370 this year? A joke, or a misprint?

  • Report this Comment On June 02, 2011, at 4:37 PM, jargonsays wrote:

    MISTAKE --- "Look for them to hit $370 [a share] this year," The [a share] description should read [market cap in billions]. The $370 almost definitly refers to market cap. That is a 16% rise from $320 B now. That correlates with a stock price per share of $418.

  • Report this Comment On June 02, 2011, at 4:41 PM, jargonsays wrote:

    Where did you read the announcement of the iOS5 introduction? I thought there was no mention of this.

  • Report this Comment On June 02, 2011, at 8:09 PM, aretiz wrote:

    I really wanted to embrace the cloud, but the more I read about it, the more I want to run away. I love the idea of being able to access my music, movies, files, etc, from any computer, but a few things cross my mind:

    1. Uploading the 10,000 songs I currently have on my external drive to an online "locker" does not sound like my idea of a fun Saturday night.

    2. A lot of beta apps tend to let you use and test them out for free in the beginning stages, then they hit you with subscriptions prices, tiered pricing, or any other kind of price they can think of. Unless you buy into what they're selling, your files essentially become hostage.

    3. Lastly, anything with that has the word "Sony" or "Warner Bros" attached to it cannot be a good thing.

    I'm just not sold on the idea of cloud computing just yet. Love the premise, but there has to be a better way.

  • Report this Comment On July 10, 2011, at 9:57 AM, DaveMarcus82 wrote:

    To dispel some of the confusion, "$370 a share" was in reference to stock price per share.

  • Report this Comment On July 20, 2011, at 11:35 AM, DaveMarcus82 wrote:

    And $418 isn't looking impossible at the moment.

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