Who Benefits From Apple's iCloud?

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Whether you view Apple's (Nasdaq: AAPL  ) recently announced iCloud as a revolutionary platform, or simply an evolutionary move that builds upon the cloud services offered by the likes of Microsoft,, and Dropbox, there's no denying that Apple's move represents a giant investment.

By providing free online storage and syncing for the apps, books, and media files used by a base of more than 200 million iOS devices, as well as 5GB of storage for documents and other files, Apple might soon exhaust much of the raw computing and storage capacity at its new billion-dollar data center in North Carolina.

That's the kind of up-front investment in free services that you normally associate with Apple's archrival Google (Nasdaq: GOOG  ) , not with Steve Jobs & Co., whose previous attempt to offer an online backup/syncing service (the underwhelming MobileMe) came with a $99 annual subscription fee attached.

And Apple's massive investment is bound to produce some massive ripple effects. Though Apple is the most obvious beneficiary from iCloud (even after accounting for the cloud-based music and movie streaming services it announced last month, Google doesn't offer anything truly competitive at this point), a number of other tech companies stand to directly or indirectly gain. The following companies might prove to benefit the most:

Isilon Systems, recently acquired by EMC, is reportedly providing 12 petabytes (that's 12,000 terabytes) of storage for Apple's new data center. Given iCloud's scope, it might not be long before Apple expands its deployment of Isilon gear. iCloud also represents a huge reference win for Isilon's high-performance, clustered storage systems, and it could pave the way for additional deals.

Mobile infrastructure equipment providers
The enormous amount of content due to be wirelessly backed up and synced via iCloud will provide yet another boost to mobile data traffic growth. Mobile infrastructure giant Ericsson (Nasdaq: ERIC  ) is an obvious beneficiary. Networking equipment vendor Juniper Networks (Nasdaq: JNPR  ) , whose Project Falcon initiative aims to offer a slew of different products for handling mobile data and video traffic, also stands to gain.

Flash memory manufacturers
This is counterintuitive, since iCloud allows for cloud-based file storage and music streaming that could theoretically reduce the need for local storage. But the practical effect will likely be a greater amount of content synced between PCs and iOS devices, and between iOS devices as well.

Apple seems aware of this, hence its decision to limit the number of pictures synced via iCloud's announced Photo Stream service to 1,000 on iOS devices. Increased flash memory needs for future Apple tablets and smartphones (and potentially Android devices as well, if and when Google counters with a fully competitive service) will be music to the ears of flash memory manufacturers such as SanDisk (Nasdaq: SNDK  ) and Micron Technology (Nasdaq: MU  ) . Even if Apple sticks with historical flash supplier Samsung for upcoming devices, the increased demand for flash in general will lead to higher prices and better margins for all manufacturers.

A silver lining for this cloud
As much as anything, iCloud demonstrates the kind of heavy lifting that advanced cloud services often need, whether for enterprises or consumers. While the developers of these services might grab most of the headlines, the server, storage, software, networking-equipment, and chip vendors on whom they rely to offer these services stand to profit considerably from them as well.

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The Motley Fool owns shares of EMC, Microsoft, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Microsoft, Apple, and Google, creating a bull call spread position in Apple and a diagonal call position in Microsoft, and shorting Juniper Networks. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Eric Jhonsa wishes he could wirelessly sync his espresso machine when on the run. He has no position in any of the companies mentioned. 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 (2) | Recommend This Article (4)

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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 10, 2011, at 1:02 AM, RobertC314 wrote:

    The comment about the cloud increasing flash memory usage was particularly interesting as "increased storage efficiency" is one of the much touted benefits of the cloud. Reminds me of the "paperless" office where all documents were stored digitally - in reality people printed everything out when they wanted to read it, and paper usage exploded instead of shrinking.

  • Report this Comment On June 10, 2011, at 2:48 AM, njdo wrote:

    Gene Pool Diversity and The Cloud

    The Cloud is an extended electromechanical phenotype of the human gene pool.

    The gene pool is the number of genes, the variety of genes and the type of genes existing in a population. A large gene pool indicates high genetic diversity, increased chance of biological fitness and survival. A small gene pool indicates low genetic diversity, reduced chance of biological fitness and increased possibility of extinction.

    Because electromechanical systems are an extended phenotype of the human gene pool, the same principals of diversity and increased chances of survival apply to cloud storage and processing sytems that apply to human populations. Developement of the cloud will lead to fewer and more homogenous systems of data storage and processing and will thus reduce innovation (mutation) and diversity in the fields of data storage and processing, which will be driven by the private motives of a decreasing number of increasingly large monopolists subject to the demands of the economic political elite, i.e. the new world order. There will be no way to truly secure personal or business information in your "box" since it will all be in the "cloud".

    Who will own these systems and have access to all information on the planet on demand?

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