Wall Street Journal
Talk about irrational expectations. Investors have grown so accustomed to blockbuster product announcements any time Steve Jobs takes the stage that his announcement Monday of new operating systems and a remote storage product seemed downright banal. In fact, such announcements are crucial for Apple to keep its lead. A key reason for Apple’s hardware dominance isn’t just the breadth of its products—from handsets to tablets, computers and music players—but the simplicity with which they function together. A service like iTunes acts like glue, sticking customers to successive generations of Apple products.
Enter the latest adhesive—iCloud. As they take more photos, download more music and create more files, consumers are weighing themselves down with ever more digital luggage. It is cumbersome trying to move it between devices. What makes Apple’s latest product compelling isn’t unique technology; both Amazon and Google have Internet-based storage offerings. Rather, it is that Apple is doing more to lock in customers. According to IDC analyst Danielle Levitas, as they surrender more digital property to Apple servers, users become more likely to buy future generations of Apple products. Moving it all is complicated. The iCloud initiative should also help Apple continue to charge premium prices for other products.
With Steve Jobs’s health still a question mark, investors remain worried about the future. But that hasn’t stopped Apple continuing to position itself for a dominant role in the years to come.