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I have wondered if this was in the cards for a while now. I have had trouble reconciling it with a few things though. On one hand, from a competition standpoint

by JunkDNA 16y ago

I have wondered if this was in the cards for a while now. I have had trouble reconciling it with a few things though. On one hand, from a competition standpoint, there is an argument to be made that google is providing free cloud-based sync for all users. Therefore, Apple needs to be competitive with them. However, Apple rarely (never?) releases products as loss leaders. They are always interested in breaking even or (ideally) extracting a small amount of revenue from every offering. I can't see them generating sufficient revenue using advertising, but perhaps iAd would be one way to do it. On the other hand, the cost of hosting email, calendars, address book sync, etc... is fairly small. I could see a dropbox-like scenario where you get a small amount of free storage (plenty for contacts, calendars, and recent email). Then you pay for additional storage and/or access to premium streaming content. That offering could be built into the purchase price of most Apple gear without a dramatic price increase.

Glide 16y ago
The real value for most people with Mobile Me will be the calendar and contact sync. If Apple made that free it would offer a lot of value to iPad and iPhone users. Especially for the PC users, because there is no Address Book equivalent to manage contacts on Windows. But I do agree with you on your first point. Apple does not create products as loss leaders. It just doesn't seem to be a part of their culture to create a product that cannot be profitable on its own.
jonknee 16y ago
I see it sort of like the free support at the Genius Bar--it helps keep Mac users being Mac users. Plus tying their future platform to iTunes is unsustainable in a world where everyone else will be cloud based.
TetOn 16y ago
>Apple rarely (never?) releases products as loss leaders Ever heard of the iTunes music store? Minimally profitable and repeatedly referred to as a driver for iPod/iWhatever sales rather than a profit center. Without the iPhone's popularity, the same concept would apply to the App Store as well. When announced, it was directly compared to the music operation, and not expected to make any measurable impact on the bottom line. This analysis (though obviously flawed by Apple's own sales data release policies) largely backs up these statements: http://seekingalpha.com/instablog/255967-timeline-strategy-consulting/1234-how-much-profit-is-apple-making-from-the-app-store http://seekingalpha.com/instablog/255967-timeline-strategy-c...
- JunkDNA 16y ago
  >Ever heard of the iTunes music store? That was the whole point of my post. Lots of companies would be tempted to operate something like the iTunes music store at a loss, since it would be seen as driving sales (a marketing expense if you will). For example: Amazon has is known to sell a significant number of ebooks at a loss to keep prices low to drive Kindle sales. My understanding from everything I have read is that Apple at least breaks even, and may make a small amount of revenue. They do not lose any money on the iTunes store. If there is going to be a free component to MobileMe, they are going to try and generate profits from it somehow.

by JunkDNA 16y ago

Glide 16y ago

The real value for most people with Mobile Me will be the calendar and contact sync. If Apple made that free it would offer a lot of value to iPad and iPhone users. Especially for the PC users, because there is no Address Book equivalent to manage contacts on Windows. But I do agree with you on your first point. Apple does not create products as loss leaders. It just doesn't seem to be a part of their culture to create a product that cannot be profitable on its own.

jonknee 16y ago

I see it sort of like the free support at the Genius Bar--it helps keep Mac users being Mac users. Plus tying their future platform to iTunes is unsustainable in a world where everyone else will be cloud based.

TetOn 16y ago

>Apple rarely (never?) releases products as loss leaders Ever heard of the iTunes music store? Minimally profitable and repeatedly referred to as a driver for iPod/iWhatever sales rather than a profit center. Without the iPhone's popularity, the same concept would apply to the App Store as well. When announced, it was directly compared to the music operation, and not expected to make any measurable impact on the bottom line. This analysis (though obviously flawed by Apple's own sales data release policies) largely backs up these statements: http://seekingalpha.com/instablog/255967-timeline-strategy-consulting/1234-how-much-profit-is-apple-making-from-the-app-store http://seekingalpha.com/instablog/255967-timeline-strategy-c...

JunkDNA 16y ago
>Ever heard of the iTunes music store? That was the whole point of my post. Lots of companies would be tempted to operate something like the iTunes music store at a loss, since it would be seen as driving sales (a marketing expense if you will). For example: Amazon has is known to sell a significant number of ebooks at a loss to keep prices low to drive Kindle sales. My understanding from everything I have read is that Apple at least breaks even, and may make a small amount of revenue. They do not lose any money on the iTunes store. If there is going to be a free component to MobileMe, they are going to try and generate profits from it somehow.