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The Race to the 'Personal Cloud' — Gold Rush or Fool's Gold?

Mon, 07/11/2011 - 2:04pm
Hal Steger, Funambol

It seems that every week another new personal cloud service is introduced. Apple iCloud, Google Music Beta and Amazon Cloud Drive represent three of the latest new personal cloud digital locker services for accessing user data and commercial media on mobile devices. With the personal cloud market forecasted to grow to $12B by 2016 and to be the third major wave of computing this century, following the Internet and mobile, according to Forrester Research, what are the major trends driving this and how is it likely to evolve?

The personal cloud is being driven by several factors. The first is the rapid adoption and commoditization of smartphones. As smartphone prices drop and sales increase, people naturally want to use them to access Internet data and rich media. At the same time, smartphone feature sets, performance, usability, apps, etc. are Hal Stegerbecoming more indistinguishable. So, the next major battleground for smartphones are the degree and ease in which they work with personal clouds, exhibits A and B being the iCloud and Google cloud services.

Secondly, mobile data plans are becoming faster, cheaper and better. Operators are evolving data plans from expensive, mainly for business, all-you-can-eat packages to affordable, family friendly plans. As a result, more consumers are purchasing plans, increasing the likelihood that users will access a personal cloud. A sub-trend is that operators are gradually instituting more caps and tiers of service for mobile data, similar to DSL or cable Internet. The upshot is that although more people are using mobile data, many will not want to stream rich media to mobile devices as this will count against their cap or degrade their service. Thus, personal clouds that sync data and media with local devices will be more popular than streaming-only services.

Third, people are using more Internet-ready devices than just mobile phones and laptops. These include mp3 players, tablets, TVs, picture frames, e-readers, game players and navigation systems. As the number of connectable devices increases, the ability and desire to sync them using a cable decreases. It is simpler, easier and more convenient to wirelessly sync devices with a personal cloud.

Lastly, although people still harbor serious privacy concerns about storing data in the cloud, these concerns will gradually subside in favor of convenience as users grow more accustomed to backing things up in the cloud, as evidenced by the growth of some cloud file services.

While these trends are converging to foster adoption of personal clouds, the personal cloud also portends major implications for mobile companies. Here are some likely impacts.

For carriers, the personal cloud offers a major new opportunity to engage with both consumer and enterprise users as the unifying force for one's devices. Most subscribers will have more than one brand of device and will want a way to access their data and media beyond the confines of the personal cloud "silo" of device manufacturers. Who better to provide this than a wireless provider?

For device makers, Apple iCloud offers a blueprint for the industry that the personal cloud is not just for sharing media across diverse devices but is also a conduit for selling a wide range of commercial content. In the case of Apple, this is via iTunes. Other device makers will follow suit so they do not forego a significant way to monetize personal cloud users.

For Internet content giants such as Google, Facebook and Amazon, they will strive to ensure that people predominantly use their cloud rather than another's. As these companies do not provide hardware per se, it will be important that their personal cloud supports the maximum number of mobile phones and devices. This will not be easy, especially for the "long tail" of devices, which for mobile is quite lengthy due to the high fragmentation of mobile devices and operating systems.

For commercial content providers such as music labels, movie studios, e-book publishers and retailers/e-tailers, they will want to establish relationships with cloud digital lockers as these will become a significant channel to reach customers and garner presence on mobile devices.

For independent personal cloud providers such as Dropbox or Funambol, these companies will differentiate their services to add significant value. For example, for mobile operators looking for a white-label solution for subscribers, Funambol offers a version which is distinguished by its ability to support the most mobile devices and its interoperability with other clouds such as social networks, email systems, online media sites and commercial media sources.

In summary, the age of the personal cloud is drawing near. It is being driven by major trends and it will affect all participants in the mobile ecosystem. It is important for companies to provide significant value and ease-of-use so that the personal cloud is more of a gold rush than fool's gold.

Hal Steger is vice president of Worldwide Marketing at Funambol.

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