Apple Pushes Into the Cloud

Apple cloud story updated with additional analyst commentary.

MAIDEN, N.C. ( TheStreet) -- Apple's ( AAPL) massive new data center in Maiden, N.C. may provide the key to the tech giant's technology roadmap and could herald a major push into future cloud-based services, say analysts.

The notoriously secretive gadget maker has provided scant details of its new facility, which reportedly cost $1 billion to build and, at 505,000 square feet, dwarfs the company's existing data center in Newark, Calif.

Last year Apple CFO Peter Oppenheimer told analysts that the North Carolina project was on schedule, and was expected to be complete by the end of December.

Avi Cohen, an analyst at Avian Securities, says that Apple's data center expansion is a clear indication of future on-demand and hosting services. "They are going to open their new data center in North Carolina and push less local storage on their machines," he told TheStreet.

Bill Kreher, senior technology analyst at Edward Jones, says that Apple's Maiden site is laying the foundations for a slew of new services. "They are certainly readying for something -- I think that a new cloud computing initiative is likely" he told TheStreet. "It would be a platform that would allow content streaming to Internet-connected devices -- it seems obvious that in the future, Apple expects its customers to store their files in the cloud."

There have certainly been big hints as to Apple's cloud plans. The tech giant dispensed with hard disk drive storage on its new MacBook Air, in favor of Flash and "Internet services." Apple also overhauled its Apple TV offering last year, adding content streaming for Netflix ( NFLX) , Google's ( GOOG) YouTube, Flickr and MobileMe.

Kreher says that a cloud-based version of iTunes is on deck, letting users stream content to any Internet-connected device. "If there's anything that we have learned with Apple, it's that they like to proceed at a measured pace -- it makes sense to start with iTunes," he said.

Apple declined to provide comment for this story when contacted by TheStreet, although there was plenty of chatter about a cloud-based announcement before the company unveiled the Beatles on iTunes in November.

Gene Munster, an analyst at Piper Jaffray, says that there is a 90% likelihood of a cloud-based iTunes service in 2011. "Apple has largely failed in cloud services to date -- its first major push into Web services for its connected devices, MobileMe, was riddled with issues surrounding the July 2008 launch," he wrote in a recent note. "We believe iTunes streaming represents Apple's largest opportunity in services with an addressable market of 160 million iTunes active accounts, each with a real problem that Apple can solve (accessing music on portable devices)."

Munster also expects Apple to beef up its longer-term cloud strategy. "Other web services could include expanded support for document storage in the cloud, or even remote computing capabilities using the cloud to access your Mac and all its files and settings from another Mac (or an iPad) via the cloud," he said.

Video may also feature in Apple's cloud story, and the company is rumored to have been in discussions with Hollywood about streaming movies via iTunes.

Ezra Gottheil, an analyst at Technology Business Research (TBR), thinks that the FaceTime video calling technology that was introduced on the iPhone 4 could also feed into the cloud strategy.

"Integration of face-to-face video could enhance business apps, conferencing, education apps, social networking apps and multi-player games," he said. "If Apple was providing the cloud platform and the tools for developers to create these apps, then they have the opportunity to go and get a bigger subscriber base."

Additionally, Netflix has been touted as an attractive acquisition target for Apple, a move that would also place a massive strain on the tech giant's back-end hardware. "I think that it's a compelling idea -- Netflix is a unique property that would not dilute Apple's premium brand," said Kreher. "I think that it's a possibility, but, at the same time, regulators would be interested in that deal as well."

--Written by James Rogers in New York.

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