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, Amazon.com, 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:
EMC (NYSE: EMC)
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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