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Apple iCloud: A big threat to consumer file sharing services

In early June, Apple announced iCloud, a new service that will wirelessly and automatically sync music, photos and documents across all of your devices. Even though from a technical standpoint iCloud is overdue, it’s a nice step forward for Apple.

Despite its late arrival, iCloud is a great addition by Apple and will be very convenient for end users. Since I am the founder and CEO of ShareFile, a cloud file sharing company (albeit one that is targeted at business users rather than consumers), I am often asked how iCloud will affect file sharing start-ups like Dropbox. In my opinion, services like iCloud and Amazon Cloud Drive pose a serious long-term threat to consumer file sharing and backup services. I’ll take you through my reasoning in a few steps.

Most consumer hard drive storage is occupied by media files like music, videos, and photos.

If you analyze your home computer’s hard drive, you’ll find that once you exclude executables and other operating system files (the type of stuff that you never need to backup or sync anyway), the majority of your hard drive space is probably occupied by music, videos and photos. The reality is that Word documents, Excel files and PowerPoint decks just don’t take up that much space. A single episode of Lost, on the other hand, can occupy hundreds of megabytes on your hard drive.

Media files are the battleground for the backup/sync war

Since most hard drive space is occupied by media files, the company that can successfully help consumers backup/sync/stream their media content to all of their devices will be the company that solves the core backup and sync problem in the consumer space. It’s tough to get above the 2 GB – 5 GB “free” threshold offered by Dropbox and other freemium providers with Word docs and spreadsheets alone. And it’s pretty trivial for iCloud (or competing services from Amazon or Google) to handle non-media files if they are already synching everything else.

People want a one-stop-shop

Some media files, like photos and home movies, are user generated. But many others, like music, TV shows and movies, are purchased and downloaded from Amazon or iTunes. For the average user, the path of least resistance is to let the company who sells you music and movies also store, sync and stream that same content. And once you are synching and streaming your purchased content using that provider, why not let them handle your local content as well? For all of the above reasons, I think iCloud could be a formidable threat to consumer backup/sync services like Dropbox, SugarSync, and Carbonite.

For those same reasons, I do not view iCloud as a major threat in the business space.

Businesses don’t purchase much content through the iTunes store, and they have a diverse set of use cases that aren’t easily captured by services like iCloud that are focused on personal media files that are consumed on the Mac OS. But there’s an additional reason why iCloud poses a threat to its startup competitors. Apple is not just a provider of cloud software. It also happens to control two of the most popular mobile devices on the planet: iPhone and iPad. It serves as the gatekeeper to its App Store, and it rules its mobile kingdom with an iron fist. There is nothing stopping Apple from allowing iCloud to tie into iOS at a level that is not available to independent app developers, giving iCloud an unfair advantage.

It wouldn’t be the first time that a software company used their control of an operating system to create a monopoly for applications that run on their OS. Is Dropbox the Netscape of cloud computing? Only time will tell.