Apple's iCloud to rule them all

Apple outlined a number of talking points Steve Jobs is expected to tackle at WWDC next week, with the most notable being the cloud-based service infrastructure dubbed the iCloud.

A number of competitors are taking aim at the cloud space this year but Apple's upcoming service has important features that may distance it from the rest. Coupled with the expected roll out of the new mobile OS, iOS 5, the combination may prove hard to beat for competitors.

Of the features, the most anticipated of is a digital locker service, allowing users to store their music and possibly other multimedia into the cloud for access anywhere.

But Apple is doing it differently than competitors.

RBC's Mike Abramsky said that iCloud would let Apple exploit licensing and digital rights management, consumer friendliness, and a massive existing install base of more than 200 million iOS devices, plus iTunes users.

Apple's licensing relationships and 'controlled' platform may appeal to studios/publishers seeking to minimize piracy, while protecting their economics in a hosted model, Abramsky wrote in a note to investors on Wednesday. iCloud may also be differentiated via Apple's trademark user experience for convenience, simplicity, and discoverability.

One key strength is the ability for the iCloud to synch with a user's iTunes account. This means Apple can quickly scan customers' digital music libraries in iTunes and mirror their collections on its own servers.

This automatic track mirroring is in sharp contrast to Amazon's Cloud Drive and Google's Music Beta digital lockers. Those services require users to upload their whole libraries for remote access -- a process that could take hours.

With the purchase of Lala, the streaming music service Apple bought in late 2009, users will be able to stream high-quality iTunes Plus versions of the songs, even if the user originally encoded the tracks as lower quality AAC or MP3 files.

The high-bitrate streaming would be the fruit of Apple's efforts to reach licensing deals with record labels. The company is believed to have already signed deals with EMI, Warner Music, and Sony, leaving Universal as the lone holdout among the big four.

Google tried for a year to set up a cloud music service that included licensed sales and other features, but launched its unlicensed Music Beta when talks broke down over the fact that Google searches link to pirated music.

Amazon reportedly launched its service without seeking licensing at all, arguing that all the music belongs to users, and that Amazon simply provides a cloud-based storage service.

We believe reaching cloud music deals would be a great start and further distance AAPL from GOOG, AMZN, MSFT, and others, which in the last 10 years or so have failed to put even a minor dent to iTunes, says Shaw Wu at Sterne Agee.

Apple's WWDC will take place from June 6 to June 10.