Fear, Uncertainty, Doubt and Apple's iCloud

NEW YORK ( TheStreet) -- Apple ( AAPL) dominates devices. Apple dominates the consumer market.

In the cloud, however, Apple is nowhere.

Not that the company doesn't claim otherwise. Apple even calls its Software as a Service, or SaaS, offering, designed to back up your important (and unimportant) files the iCloud.

But iCloud is not a cloud. The iCloud is a proprietary data center, run by Apple, owned by Apple, currently located in North Carolina.

Cloud, by contrast, is a specific set of technologies over which Apple has no control. Cloud is open where Apple is closed.

Cloud uses open source, or at least open standards, so you can address a whole host of computers -- or hosts of hosts of computers - as though you were addressing one. This is the infrastructure Google ( GOOG) and Amazon.com ( AMZN) spent the last decade building while Apple was working on its devices. They rent this stuff out. They call it Infrastructure as a Service (IaaS).

There's a whole industry, which Apple missed, dedicated to building on these platforms. Every big computer company, save Apple, now has a cloud strategy. You can even download, run and edit your own cloud software "stack."

Rackspace ( RAX) has placed this open source cloud, called OpenStack, into its own data centers. Hewlett-Packard ( HPQ) and Dell ( DELL) are building similar networks of OpenStack infrastructure around the world, investing billions of dollars. International Business Machines ( IBM) can build you a cloud right now, based on the same cloud technology it uses.

Add languages and other tools to a cloud IaaS and you have Platform as a Service, or PaaS. Create services on a PaaS, which is built on IaaS, and you have cloud SaaS.

SaaS, as Apple defines it, has been around for a half-century. IBM called it the Service Bureau. CompuServe called it time-sharing. But these offerings were always limited to single installations of hardware. They were always limited to specific software.

They were not, in other words, cloud.

Apple's SaaS system has been shown to be bunk. Apple's own customer service people gave away a reporter's identity to a hacker, CNN reported, who proceeded to trash it and destroy files. Apple co-founder Steve Wozniak came out and said, as Phys.org reported, "Cloud is scary."

No, Steve. Cloud is not scary. Apple is scary. Proprietary systems that call themselves cloud are scary. Lack of secure identity is very scary. But cloud is not scary.

Only iCloud is scary.

In Steve's defense, he's 61. (I am just a child of 57.) He hasn't worked at Apple since 1987. Maybe we should ignore him.

But a lot of people, and companies, are using similar arguments. They are trying to stall the adoption of cloud technology by specifying proprietary technologies, as OpenForum Europe revealed in a report last week. As Louis Sullivan wrote in Business2Community recently, corporate America is moving as slowly as it can into cloud technology, based in part on this kind of Fear, Uncertainty and Doubt, or FUD.

What investors should know is it isn't going to work. False claims and phony arguments designed to stop new technology from being implemented widely never work in the long run. Cloud technology is going to win, as surely as PCs overcame mini-computers, as surely as the client-server beat the mainframe, as surely as tablets beat the PC.

Cloud is going to win because it's better, it's more capable and it's cheaper than what has come before. The only question is when, and the only answer is (thanks to the Woz) not yet.

At the time of publication, Blankenhorn was long AAPL, GOOG and IBM.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.