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Made up predictions about Apple's NC data center from (surprise!) an analyst


photo by raneko on Flickr

Friend of the blog Philip Elmer-DeWitt with Fortune Tech uncovered a gem of a note from Bernstein Research's Toni Sacconaghi wherein, after a "meeting with Apple executives," he came up with quite the sampler platter of predictions for Apple's North Carolina data center. As DeWitt points out, the data center was supposedly slated to be ready last year. Sacconaghi seems to think that it will open in the spring, which jibes with a rumor we heard in February. It makes sense, particularly in-between iPad 2 and iPhone 5 announcements. But what will the thing do?

DeWitt says that Sacconaghi believes the data center could "transform Apple from a hardware company to one that excels at what he calls 'differentiated services.'" I don't know about that, but it's nebulous enough to mean anything. Here's what Sacconaghi claims is coming and here's my take on each one.

Scaled-up downloads of things like e-books, video, even advertising. Well, maybe. If you've had the pleasure of seeing the iTunes store crap out on you as I have and many of our readers have reported, it's pretty clear Apple needs more server capacity. I'm not sure they are dumb enough to throw the white gas of HD video downloads onto an already-hot fire. Maybe they are just ramping up capacity to provide an impeccable experience -- you know, in line with their core competencies.

Cloud sync and storage. Well, again, they've got this. The argument goes that "more" would somehow make them "more" competitive with Google's offerings. Guess what? Optimizing code, creating better, universally accessible (like supporting Firefox) web apps would do that without needing to build a gigantic server farm. Cloud storage is of course possible, because if MobileMe were to go free or get cheaper or store your first 1,000 photos free (sort of like the free vs. paid versions of Flickr) they would indeed need more capacity. This is hardly a new concept, however. What could be new is a completely revamped MobileMe service, reliant upon a new data center for tons of storage by freeloaders.

Streaming music service. Ah, this old chestnut again! Ever since the iTunes Music Store debuted, people have argued Apple should offer an alternative to merely "buying" their music. I love DeWitt's phrasing on this: "Sacconaghi thinks $5 per month is about right." Does he? And what, pray tell, magical insight did he pull that number from? You know, while we're making up numbers, $6.95 sounds "about right" to me. Just don't go buying stock based upon my completely made-up number.

It's entirely possible Apple could introduce a streaming music service. They did, after all, buy Lala. Apple rarely buys a company to then does nothing with it (have they ever done this?). We've speculated that they might not offer a streaming service, opting instead to stream your already-purchased music. But again, that's just a guess. Personally I'm not a fan of streaming subscriptions, but there is definitely a market there. Apple could easily capture it with the flick of a switch, but in the end their question remains: does this improve the user experience? If it doesn't, they likely won't do it. Not yet.

Cheaper streaming video. Here Sacconaghi appears to suggest they will either compete with Netflix or buy them. First off, don't go betting on Apple buying Netflix. That's preposterous. Not that they couldn't but they won't. As far as competing... well, again, what's to stop Apple from allowing you to stream movies you've already purchased, no matter where you are? I think this moderate improvement in service makes more sense than Apple suddenly going up against Netflix -- a service which works well enough on all of their hardware.

Voice controls and navigation. Aside from merely beefing up current offerings from iTunes and MobileMe, this is the only one I can get excited about. As DeWitt points out, Apple bought Siri (which was awesome) and Placebase (which seems pretty good). Android users already enjoy voice-to-text built-in to their phones. For iOS, you must use a third-party app and even then you're talking about enough taps on a touchscreen to have you face down in a fountain if you walk and text. Apple may not be first to market with features, but when they decide to catch up they typically leapfrog. I can imagine they are putting those companies to good use and we'll see some seriously beefed-up voice commands in the next major iteration of iOS -- and yes, that will require some heavy processing on the back end.

For example, let's say you're walking around a new town and you are wondering where the most popular pizza place is. Using Siri and Placebase tech, you could ask your phone a natural language query, "where's the best pizza restaurant around me?" and it would offer an answer and directions on how to get there. Magical? You bet, and exactly the sort of thing Apple loves to offer its customers.

Sacconaghi's prognostications seem to be mostly hyperbolic if you read them without thinking. It seems like he's saying Apple is going to offer services to demolish Google, Amazon, Netflix, myriad streaming music services and more. All that from one data center! My best guess (and we're all still just guessing here) is that the NC data center is more about improving the experiences for several existing services, beefing up MobileMe significantly and possibly preparing for "one more thing."

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