Can the iPad and iPhone Rescue the Cloud?

The hype on the cloud is just as loud as the hype on mobile computing. Both appear to be gold rush destinations for vendors seeking to capitalize on all the stuff that buyers allegedly can't get enough of. But if you look at the numbers, you see that mobile is where the money is being made, while the entire cloud market pulls in about 1 or 2 percent of what mobile does.

It seems to me that the cloud needs to be rescued, and perhaps mobile à la iPad, iPhone, and Android is the technology to do it.

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The numbers overwhelmingly point to mobile's bulging bank account
But first, let me detail the numbers. Cloud services brought in about $3 billion in 2010 from its three main components: infrastructure (IaaS), platform (PaaS), and software (SaaS) offerings. In IaaS,'s Amazon Web Services (AWS) made about $500 million in 2010, and Rackspace -- the No. 2 IaaS provider -- raked in about $100 million. SaaS did better: pulled in $1.3 billion in 2010, with the other four major SaaS providers -- NetSuite, RightNow, SuccessFactors, and Taleo -- earning about $200 million each. Revenues for PaaS offerings -- exemplified by's and Microsoft's Azure -- aren't broken out but are widely believed to be minuscule.

I'm not counting sales of so-called private cloud technology, as that means pretty much anything in a data center, which covers most of what IT's expenditures ($1.5 trillion on tech last year). Whether you think a private cloud is a real cloud or just marketing buzz for the same old server, storage, and network gear (using virtualization, of course!), it's money that IT would be spending anyhow. Even if you decide that virtualization spend should be counted as cloud spend, that adds "only" about $5 billion to the cloud total, bringing it to $8 billion.

Now to some real money: Mobile technology brought in $173 billion in 2010 from its major sources: $62 billion in 3G data plans, $99 billion in smartphone sales ($29 billion to Apple, $20 billion to Nokia, $15 billion to Research in Motion, and $9 billion to Samsung), $10 billion in tablet sales (almost all iPads last year), and $2 billion in app sales ($1.7 billion to Apple alone). Note that I'm not including iTunes and similar music, book, and video sales via mobile devices, as they can be accessed on both PCs and mobile devices. If you're curious, they added up to $8 billion, with $4.1 billion going to Apple and $3.3 billion going to, including for the Kindle hardware.

How the cloud can hitch itself to the mobile bandwagon
As these numbers show, when you look at the whole mobile market, the cloud appears downright sickly as a business. Maybe mobile can help. After all, what other computing platform is more dependent on the cloud concept than mobile?

Let's start with the obvious: storage. Although mobile devices have local storage, they're not anywhere near as capacious as PCs -- and a lot of that space is taken up by all your music. Mobile users should be helping drive the cloud storage business, to companies such as and Dropbox.

On the consumer side, Google is moving in that direction as well for its Music Beta service, and rumors are rampant that Apple plans an iCloud service that will merge its MobileMe storage/collaboration service with a new iTunes-in-the-ether service. In the not too distant future, you may have most of your data living on a personal storage cloud and a business storage cloud service for access anywhere by pretty much any computer or mobile device. Here's an opportunity for an to grow its IaaS business.

Then there's SaaS, which is where the big money (relatively speaking) is today in the cloud. With HTML5 now widely deployed, it's time for SaaS and traditional providers alike to get cracking on really usable Web apps that auto-adjust to your mobile device of choice. Rather than sell an app once for $5 or so, developers could charge subscriptions for mobile Web apps and have that recurring revenue to keep making them better. Given that updates are free to iOS and Android apps, at some point native-app developers are going to run out of customers and, thus, income to pay for continued enhancements. Switching to SaaS could fix that -- and help both developers and the cloud market.

Apple could be an ally here, as it already has a subscription model in place. Sure, it'll charge you 30 percent, but that gives it a huge vested interest to encourage app purchases -- it makes more money when developers do. There's a reason Apple made 16 times as much money from app sales as Google did last year, despite the Android smartphone sales surge. Imagine if Apple's revenue-sucking magic were applied to SaaS apps!

Beyond SaaS are all the other possible services that mobile users would need a cloud to access: navigation, for example. AT&T charges $10 a month for its mobile navigation service. That model could be extended to almost anything: videoconferencing -- after all, you're already paying for voice and data subscription, so why not video? -- radio and TV streaming, travel information and management, and expense reporting, especially if mobile payments happen. It's too bad Google is all about destroying competitors with free services and then selling ads to deliver to us -- it could drive a lot of cloud revenue if it put together a monthly Google Mobile service that included a Yellow Pages-like facility and a collection of such services.

OK, I'm being a little facetious, but on the serious side, the whole cloud mentality is about charging people to rent resources rather than buy them once. That's why vendors love the idea; they can make a lot more money if you keep paying for a service rather than buy -- er, license software. Long ago, enterprise software vendors realized they could collect rent on the software they sold by instituting (required) maintenance plans. Now consumer software makers are getting a clue: Adobe Systems recently unveiled subscription offerings for Creative Suite that effectively double or triple the price.

That is where mobile can perhaps help the cloud the most: It's trained people and companies to pay a monthly fee for access (your $30 or whatever a month additional cost for data access), as well as to keep an active credit or debit card for impulse shopping (such as via the iTunes Store, Kindle Store, and Android Market). Mobile and cloud are more aligned on the business model side than I suspect most people realize.

That may not be good for individuals and businesses -- you'll have several strangers' hands permanently in your pocket -- but it could be what makes the cloud as big a business as mobile. Otherwise, I'm not sure the cloud will be meaningfully more than what it is today.

This article, "Can the iPad and iPhone rescue the cloud?," was originally published at Read more of Galen Gruman's Mobile Edge blog and follow the latest developments in mobile technology at Follow Galen's mobile musings on Twitter at MobileGalen. For the latest business technology news, follow on Twitter.

This story, "Can the iPad and iPhone Rescue the Cloud?" was originally published by InfoWorld.

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