New strategies in consumer-media cloud storage

1. Summary

Consumer use of portable connected devices continues to expand. As a result, cloudbased storage and cross-device syncing of media content are becoming more and more necessary, not to mention lucrative, to the consumer content storage market. The space attracts some entrepreneurs and venture capitalists, but currently the biggest investments have come from major consumer-facing platform providers who see cloud-based media services both as a way to increase attachment to their platforms and a means to extend and amplify their broader strategic goals. For this report we profile Apple, Google and Amazon, specifically. Each is pursuing a distinct approach to storing media in the cloud, and this report examines those strategies as well as the future prospects for each company.

Apple has sought to use the cloud to heighten the value of its tightly woven ecosystem by integrating its own cloud-based services into the core functionality of its devices and in doing so has created consumer lock-in. The company’s ultimate goal is to make reliance on Apple’s iCloud infrastructure transparent to the user of Apple devices, so that new features and capabilities can be introduced at scale and the value of the Apple ecosystem constantly enhanced.

Google’s approach to the cloud is characteristically more open and user-directed than Apple’s. As with the launch of Android, however, Google’s cloud strategy is in some measure defensive: As ever more content and computing moves to the cloud, Google risks having it become invisible to its search engines. Much of its cloud strategy is driven by a need to make sure the cloud stays open and searchable by providing much of the infrastructure itself.

Amazon’s cloud strategy has many parallels with Apple’s, in particular the tight integration between Amazon Cloud Drive and the Kindle Fire tablet. But Amazon’s approach to the cloud is fundamentally about driving more e-commerce. While the Kindle Fire is marketed as a cloud-connected media player, it also functions as a portable storefront for Amazon’s massive retail operation, including nondigital products. Much of its cloud-based media strategy, such as the Amazon Prime Instant Video subscription VOD service, is geared around reducing friction for nonmedia purchases from the Amazon store from mobile devices.

Finally, a handful of smaller startups funded by venture capital are worthy of brief examination here. Though Dropbox, Box, SugarSync and Bitcasa play a role in this space, those services will not likely have much impact on storage for commercial media like music, videos and e-books.