Apple’s Secret Cloud Strategy And Why Lala Is Critical

This is a guest post from Michael Robertson, a 12-year veteran of the digital music business. He is the founder and former CEO of digital music pioneer MP3.com. He is currently the CEO of music locker company MP3tunes. Robertson is also an adviser to Google Voice.

For years there’s been speculation that Apple would supplement their $1/song (now $1.29) iTunes business with a monthly subscription service, but their upcoming plans are quite different and once again are positioning them to lead the digital music industry into a new era. Leveraging their ubiquitous iTunes software Apple plans to upgrade their users almost over night to a cloud music service in an ambitious move to beat Amazon and others to a cloud music service. Record labels are wary to give Apple even greater dominance which is why Apple’s new strategy is designed to sidestep new licenses from the major labels.

Apple’s recent acquisition of digital music startup Lala rekindled speculation of an iTunes subscription service. There’s no shortage of subscription offerings (Napster, Rhapsody, Spotify, Pandora, etc), but none have attracted the millions of subscribers necessary to make the high royalty structures work. Experts have pondered that Apple’s design expertise and hardware integration could make subscription work. And leveraging Lala’s digital library, licenses from the major labels, and a management team who cycled through several business models including the ten cent web song rental could make it a reality. It’s a logical assumption, but after talking to a wide variety of insider sources it’s clear there is no upcoming Apple subscription service and Apple has far different plans.

Lala will play a critical role in Apple’s music future, but not for the reasons cited above. Lala’s licenses with major labels are non-transferable, so they’re not usable for any new iTunes service. The 10 cent song rental model never gained traction and does not cover mobile devices thus is of little value to Apple. What is of value is the personal music storage service which was an often overlooked component of Lala’s business. As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.

An upcoming major revision of iTunes will copy each user’s catalog to the net making it available from any browser or net connected ipod/touch/tablet. The Lala upload technology will be bundled into a future iTunes upgrade which will automatically be installed for the 100+ million itunes users with a simple “An upgrade is available…” notification dialog box. After installation iTunes will push in the background their entire media library to their personal mobile iTunes area. Once loaded, users will be able to navigate and play their music, videos and playlists from their personal URL using a browser based iTunes experience.

Apple will link the tens of millions of previously sold iPods, Touches, AppleTV and iTablets to mobile iTunes giving users seamless playback of their media from a wide range of Apple branded devices. Since media will be supplied from the user’s personal collection, Apple is freed from the hassles of device and region limitations. iTunes shoppers will be able to continue to buy music and movies as they can now with purchases still being downloaded, but once downloaded they will be automatically loaded to their mobile iTunes area for anywhere access. Again because users are in possession of the materials no new licenses are required from the record labels or publishers.

Some are curious why Apple with thousands of engineers would need Lala talent and technology. For sure Apple could copy Lala technology, but time is of the essence and Lala lets Apple move faster in transitioning from their PC software business to a cloud service. They get a knowledgeable digital music engineering team, plus a code base to build upon which already does uploading and web playback. There’s precedence for this strategy. The iTunes software did not originate within in Apple but came via an acquisition. Finally, Apple gets the quick witted, brilliant, but occasionally loony Lala CEO Bill Nguyen who will play a future role in Apple. (Although one wonders how Jobs and lime light relishing Nguyen can co-exist.)

It’s critically important that technology companies build and maintain a core strength. This cornerstone allows them to command a significant portion of the profit stream and is a beachhead to launch other initiatives. Think Amazon/e-commerce, Microsoft/OS, Google/search, Apple/media. Jobs is keenly aware of the digital transition from PC to cloud centric programs and services. It’s imperative Apple lead in this transition or risk ceding leadership in media to others such as Amazon, Real, Microsoft, Yahoo, etc. Lala will help Apple protect their media franchise from encroachment by accelerating their cloud efforts. iTunes users can expect mobile iTunes in 2010.

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CareCloud Raises $2.3 Million For Web-Based Physician Practice Software Suite

CareCloud, a Miami, Florida-based provider of web-based physician practice software and services, today announced it has raised $2.3 million from unnamed “prominent entrepreneurs and business leaders”.

CareCloud’s proprietary SaaS solution connects physicians to their patients through a social networking-based practice management system.

By joining the CareCloud community, physicians can simplify the process of getting paid for their services while streamlining their clinical operations.

CareCloud’s system also comes with a revenue cycle management back-office service that aims to liberate practices from initiating expensive insurance claim follow-up efforts, posting of remittance and other functions.

The company is currently servicing a limited number of clients on its software and revenue cycle management service as it prepares for full product launch in Q2 2010.

CareCloud will use the capital for the development of its electronic medical records product and sales and marketing efforts.

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U.S. Mobile Web Usage Grew 110 Percent Last Year; Apple Dominates, Android No. 2

The mobile Web grew 110 percent in the U.S. last year and 148 percent worldwide as measured by growth in pageviews, according to a new Quantcast Mobile Trends report (embedded below). Even so, the mobile Web accounted for only 1.26 percent of Web consumption in the U.S. (and 0.99 percent worldwide).

Apple’s iPhone and iPod Touch drove much of this growth. In the U.S., Apple has a commanding 65 percent market share of mobile Web access as of the end of December, 2009. Only 41 percent of that is from the iPhone. The other 24 percent comes from the iPod Touch, which has been growing rapidly as a mobile Web device even though it only has WiFi. Globally, Apple also dominates in every market except Africa (where simpler and cheaper Java phones still rule).

Android isn’t really much of a player yet outside the U.S. But inside the U.S, Android is coming up fast, with 12 percent market share. Android is now the No. 2 mobile Web operating system, recently beating out Blackberry’s RIM OS, which has an 8.7 percent market share.

The sudden growth spurt of Android jives with Admob data showing that it doubled since October. And that’s before today’s release of the Nexus One. Most of that share comes from HTC handsets, and Verizon’s launch of the Droid in November. (Motorola’s Droid is the yellow part of the chart below.

Quantcast Mobile Report1

CrunchBase Information

iPhone 3G

Android

Information provided by CrunchBase

CrunchBase Information

iPhone 3G

Android

Information provided by CrunchBase

Crunch Network: MobileCrunchMobile Gadgets and Applications, Delivered Daily.

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Mobile Cloud Poses Capacity, Security and Discoverability Issues

Posted: December 15, 2009

By James Zipadelli

Cloud computing refers to accessing data and resources anywhere, with any device that has an Internet connection. However, when discussing mobile cloud computing, some issues still need to be ironed out. ABI’s Dan Shey and Mark Beccue discuss this trend in a recently held webinar, “Introduction to Mobile Cloud Computing.”

Three barriers to cloud computing Beccue and Shey mention are discoverability, data security and bandwidth limitations.

“Search is really important,” Beccue says. “When you move forward, how will consumers find out about a product if you have hundreds of thousands of apps? Data security is not really an issue, but some consumers don’t trust their information is safe in the cloud.”

Shey and Beccue both say bandwidth limitations will be an “ongoing issue” in mobile cloud computing.

“How much bandwidth can the pipe handle from the cell tower to phone?” Beccue says. “There might be a massive amount of devices all at one time within a cell. There’s a difficulty in the mobile sense of how the carrier manages that. The network is overtaxed because there are choke points.”

“It would be like a dropped call; the connection would go dead,” Beccue continues. “It might cause other connections to slow down.” It depends, Beccue says, on how close the device is to the tower, how many devices are accessing the tower at the same time, and other variables.

Beccue compared the issue of “intermittent connectivity” to the AT&T and Verizon Wireless commercials, in which both carriers claim to have a better network than the other.

“Any carrier will show you a map and if they showed you 3G coverage vs. 2G coverage, it’s going to be blotchy,” Beccue says. “We’re never going to get ubiquitous 3G coverage across country, the same with 4G.”

Beccue says HTML 5 is important, but a “work in progress.” It is important with mobile cloud computing because of geolocation capabilities and support of off-line data access (caching), Beccue says.

“It gives a Web app an opportunity to go on a more equal footing with native apps,” Beccue says.

One of the recommendations Shey and Beccue mention is the concept of a mobile strategy for phone operators. They say it’s important from a business perspective to capture enterprise customers. “US smartphones this year will represent 20 percent of mobile subscribers. 80 percent of subscribers out there don’t really participate in the mobile app market,” Beccue says. “The best way to do this is expand my market. Any phone that has a decent Web browser can use it. Investment in the Web-based standards, network APIs and device APIs.”

One thing Shey talks about is RIM. “RIM has dominated the marketplace with mobile email serving the enterprise,” Shey says. “However cloud services will provide one more threat, namely the availability of Exchange in the cloud [Microsoft BPOS] and more enterprise-class cell phones [Nokia N, E series] and the Apple iPhone, having the ActiveSync client.”

“Essentially, if more customers can acquire Microsoft Exchange because it is a cloud based, subscription service and enterprise phones have the Active Sync client, more enterprise customers will consider Exchange with ActiveSync for push email, which is a threat to RIM. Cloud services are enabling this threat.”

Mobile operators ask, ‘how do I get to play?’ “I’m kind of boxed out because the advantage goes to the vertical market (like iPhone), Beccue says. “The mobile operator has a problem because he has a lot of different devices, so they have to play multiple cards.

“If they embrace Web standards, they can’t ignore mobile OS, represented by app stores,” Beccue continues. “If they go ahead and support Web standards for app development, and make their APIs available, they’re going to benefit because they can get some of the revenue. They’re going to be an active participant in revenue in mobile apps.”

Shey and Beccue say North America will be a hot market for consumers. “The business customer will garner the majority of revenues for mobile cloud computing applications early in the forecast period, but this will shift to consumers having a greater share of revenues by 2014 due to acquisition of game and social networking mobile cloud apps,” Shey says. “North America will hold the most share of revenues due to a large mobile business customer base and many PaaS [Platform as a Service] platforms for development and data/compute resource access for mobile cloud apps.”

James Zipadelli is a Connecticut-based freelance journalist. He has written for CTNewsJunkie.com, Helium.com and several publications in Boston. You can find him on the Web at www.jameszipadelli.com or on Twitter @redsoxlive.

Cracking PGP In the Cloud

pariax writes “So you wanna build your own massively distributed password cracking infrastructure? Electric Alchemy has published a writeup detailing their experiences cracking PGP ZIP archives using brute force computing power provided by Amazon EC2 and a distributed password cracker from Elcomsoft.”

Read more of this story at Slashdot.

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