Cutting The Cord: What Apple Will Really Do With Its $1 Billion Server Farm
Earlier in May, word got out that Apple is planning to invest $1 billion in a server farm. The facility, to be located in the State of North Carolina, will follow a similar (albeit smaller) $600 million undertaking by Google. As could be expected, analysts, bloggers, and the Twitterverse the world over speculated about the possible uses for the investment, but I don’t think anyone hit the nail squarely on the head. I think Apple will use its new server farm to completely cut the cord between its iPhone product line and the desktop. And it will do so in a big way.
Since the iPhone is the premier mobile device made by Apple today, it gives us an idea of what features will migrate down to the iPod line in the future. So let’s take look at the current state of the iPhone and its interaction with the desktop computer. For the most part, an iPhone will synchronize the following items with iTunes: mail accounts, contacts, calendar appointments, bookmarks, stored passwords, user names, and apps. Most of these items can be synchronized today without ever plugging the iPhone directly into a computer: more specifically, contacts, calendar items, and mail can all be synced over-the-air (OTA) with web-based applications from Google (calendar, contacts), Yahoo online services, Microsoft Exchange, as well as Apple’s own MobileMe.
But let’s not forget the original reason for plugging an iPhone directly into a desktop system: music, video, and podcast synchronization. And here’s where the server farm comes into play: I believe that
Apple will use its new $1 billion server farm to back up and sync music, video, and podcasts over the air to and from users’ iPods, iPhones, and iTunes libraries.
Why would Apple want to do this? For starters, it would eliminate the need to plug an iPhone into the computer to perform a sync. Imagine your iTunes library on the desktop being synced to Apple’s servers – much in the same way that contacts and calendars sync to MobileMe today. Since the iPhone will also sync with these servers, all added libraries will stay up to date automatically, whether it’s iTunes running on Windows 7, an iPod Touch connected via WiFi, or an iPhone connected via 3G (AT&T allowing).
Apple is a company that’s well-known for taking an already-existing idea and executing with pure perfection. A few examples: the iPhone was not the first touch-screen smartphone, the iPod was not the world’s first digital music player. But both are nothing short of awesome when it comes to execution: the marketing (market targeting, pricing, sales channel/distribution), ease-of-use, and the sheer “cool” factor that goes along with owning these devices. Apple will make a complicated and confusing technology (synchronization) accessible to the mainstream audience via sexy devices (iPhone, iPod) and simple software (iTunes).
Apple will also achieve a side benefit here for the public good: since a merged copy of the user’s iTunes libraries will live on Apple’s servers, the user will have a back-up in the cloud and not even realize it’s there (until a hard drive goes bad or an iPhone gets dunked in a swimming pool) . In an era where back ups are crucial – yet (unfortunately) implemented by very few – this is a major benefit.
On top of that, it would also makes sense that Apple would enable online access to the stored media from any internet-connected machine. Here’s a use-case scenario: if I’m away from my iMac and the battery in my iPhone’s is drained, I can use my friend’s machine to stream my backed-up media collection straight from Apple’s web-based interface.
It would make sense that Apple bundle this sync functionality with its MobileMe web services package. At the present time, the service provides 20GB standard, with 40GB and 60GB packages available for $49 and $99, respectively. Apple could easily upgrade the default amount of storage to 40GB and provide upgrade plans of 80 and 160GB for a fee. Considering that storage prices are falling, the only thing Apple would have to keep an eye out for is bandwidth – nothing that the company can’t overcome.
So how far off is this dream of the ultimate tech zen? Considering that Apple is still in the early stages of building this data center, I’d put it about a year out. But with calendar, contacts, and whatever other data being synchronized over-the-air, syncing music, movies, and podcasts seems to be the next logical step! Sync FTW!
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Posted in Apple, Cloud Computing, Featured, Mac, MobileMe, Speculation, Synchronization, iPhone, iTunes
6 comments to “Cutting The Cord: What Apple Will Really Do With Its $1 Billion Server Farm”
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4. August 2009 at 4:27 am :
Why? AT&T provides bad service, customers are unhappy with them. Apple has the real goods- the iPhone. None of us non Apple or AT&T employees know exactly which company handles which aspects of iPhone usage other than the basics. Apple, the hardware, AT&T, the wireless towers. Yet there are details to be taken into consideration- the authorization of phones, the security, the iTunes purchasing, this is all data going through AT&T currently. If Apple owns their own data center they can most likely work with any mobile carrier they desire.
6. August 2009 at 12:11 am :
I dont think Att service is that bad. I think its actually quite good.
That said, are you proposing apple make their own carrier or be a virtual carrier through by means of an MVNO? I don't think that's a reality, more like a pipe dream. Do you have any idea how much that would cost? Would apple charge higher prices for the service?
Apple is all about high margins. Launching it's own carrier would strip those margins out, as being a wireless carrier these days clearly has shown.
6. August 2009 at 12:36 am :
Not AT&T be a virtual carrier but rather handle certain aspects of operating the iPhone, iPod Touch, and the rumored Tablet. Currently there is probably some aspects handled by AT&T. As it is any data, authentication, customer info, iTunes purchasing, etc… is all going over AT&Ts network but then having to authenticate with Apple. I imagine Apple will use this data center to retain a certain amount of control over the iPhone users but allow customers to use all mobile networks have access to the iPhone… from their they may do something like you're suggesting, open up a VOIP service…. considering all the fall out with the Google CEO leaving Apple's board, the blocking of the Google Voice app (which are allowed on AT&T and the Blackberry) seems to be Apple is scheming something….
6. August 2009 at 3:07 am :
I see! That makes sense – operate certain aspects of the network most closely tied in with the network-connected devices.
But Apple would need to do this on a global scale, right? (Since the devices – iPhone and tablet – are worldwide products.) Wouldn't Apple need a data center on every continent to make this most effective because of latency issues and the fact that rersponses must be immediate (as opposed to sync, which doesn't necessarily have to be instant).
That pains a very confusing picture on the back end. The current \”upheaval\” about the poor quality of service on ATT is – in my opinion – overblown. Extremely overblown. Like I said before, I get perfect service, whether it's browsing or making calls, I couldn't be happier.
Add to that the fact that Apple's core competency is not to operate any kind of network – even the small amount of traffic you're proposing. Apple has nothing to leverage here. It did with the iPhone (os x) and with iPod touch and the rumored tablet.
What do you think?
14. August 2009 at 3:57 pm :
This is an interesting conclusion. I don't think that the billion dollar server farm will be used to sync music and video. It is simply too much data. I dont see how iTunes can currently afford to buy songs and the bandwidth to stream and upload them for the <=$0.99 they do. Now all of a sudden offering to sync all of this content all over again and again and again (I assume this service would be open to iPhone, Mac, and PC users…ie- sugarsync) would cost alot to the user, although maybe not as much as the outrageous, potentially increasing, priced mobile me accounts.
How much is it worth to sync your personal media? Whenever I am away, I can purchase new music on any of my devices, and when I am home I can plug it in. I know I am no music junkie, and I do love my OTA PIM syncing, but all of a sudden syncing 10-100GB of data across multiple machines just in case I get a new song on my iPhone and want to listen to it on my mac without taking it out of my pocket and plugging it in for 30 seconds. A better solution would to just allow redownloading from the iTunes music store like the App store.
I guess bandwidth is my main concern. Bandwidth costs money, even in large quantities. I am in full support of wireless media syncing over a network (ie- AppleTV). I think that is coming to the iPhone sooner than later. Syncing millions of people's massive media libraries over the internet doesn't seem feasible with today's pipes, especially when those pipes consist of AT&T's current 3G network
.
The server farm could be the future of the App store for the iPhone, Mac, and Tablet.
28. September 2009 at 4:54 pm :
I agree that syncing media libraries over the web would be a daunting task for the infrastructure – both from a \”load\” perspective and from a cost perspective.
However, I think this farm is a long-term play for Apple. I see this farm being put into use in a few years' time – maybe 5 or 10. In that regard, it's a very long term play.
In either case, we saw parts of this in the recent iPod event – home sharing allows users to download apps and other iTunes content on other devices/computers from the same account. I think the logical evolution of home sharing is what I proposed. I hope. I would love for all my content to seamlessly travel with me and be constantly updated an synced. Waiting for that day to come. I guess I should call it \”media nirvana.\”
Alex Luft
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