The main driver for cloud-based services today is data safekeeping, but as content libraries grow, so will demand, both explicit and implicit, for solutions to organize, manage, and retrieve data, files, and media. Additionally, allowing consumers easier ways to share content with friends and family as well as across multiple devices can be differentiating factors in a developing market. Consumers will quickly tire of uploading photos to individual sites (Facebook, Flickr, etc.), so having the ability to select specific hosted files and share them with select friends or family members could also distinguish an early-generation cloud-based service. 9% of U.S. broadband households are using cloud-based storage in the form of online backup From the starting point of data backup and synchronization, personal cloud services over the next few years will increasingly focus on media access and storage. Although services such as Sony's Qriocity are brand-specific, most initiatives are aimed at multibrand/multidevice access to media content. Efforts such as Microsoft's advertisements, with the catchphrase "to the cloud," will also help increase consumer awareness and demand. Lifestyle and Media Management Users need to manage online profiles, social networking accounts, and personal contacts as well as music and video libraries. Lifestyle management or "lifestyle organization" services such as Microsoft's Live Mesh and media management services such as Lala, purchased by Apple in 2010, and RealNetworks "Unifi" center more on the user than the data. Users can organize everything from media to purchases to personal accounts from one centralized hub. Providers of these services are increasingly doing so under white-label arrangements with carriers and other connectivity or media service companies; however, several offer direct, consumer-facing solutions. Services such as Apple's MobileMe and Deutsche Telekom's Connected Life and Work are designed to bring lifestyle and media management services to mobile devices, and as a result, they tend to be more personalized and customizable, with some designed to "learn" user preferences and usage patterns and use these data to create a more individualized offering. Cloud-based Synching, Storage, Backup, and File-sharing Services The need for secure, remote backup was a major motivating factor for the initial movement of files and media into the cloud, so for early market entrants, their principle offering was secure backup and storage. Later market entrants perceive data backup to be only an aspect of what cloud-based storage services can become and have expanded their services to include file sharing, remote access, and file synching. In terms of differentiation, some virtual storage services are focusing on a specific market segment, i.e., business usage or home use accounts, while others are adding attractive lifestyle features such as streaming music. Online Backup and Synching for Mobile Phones The popularity of smartphones means consumers will be capturing and storing increasing amounts of data and media on them, which heightens and intensifies the dangers of loss from a damaged, lost, or stolen phone. Significant percentages of mobile phone users experienced these incidents in the past year. As a result, security-related features top the list of desired mobile-related support software and services. Unfortunately (but predictably), consumers often have to experience a phone disaster before showing significant interest in such services. Mobile backup solutions today protect data such as contact lists, calendar information, notes, and text messages, and there are elements of media backup and synching also coming into play. For this foothold, handset developers are expanding their attention on how the smartphone and other CE can access premium content via digital locker services. For example, Motorola Mobility recently announced an investment in Catch Media, whose Play Anywhere® platform enables retailers, operators, and CE vendors to offer access to premium digital content from many different types of CE, including smartphones, tablets, set-tops, and connected TVs. Consumer Electronics-based Cloud Solutions Not all cloud storage solutions rely on a remote server or a monthly subscription. Recently, several big names in the storage industry have launched utilities that enable a "private" or "personal" cloud. The private cloud is a hybrid of hardware storage and cloud-based access designed to address consumer concerns over the security level, privacy, access, and long-term stability of cloud-based storage backup services. The cloud-based utilities, integrated into storage hardware such as Buffalo Cloudstor, come courtesy of partnerships with technology and device developers like Cloud Engines, the producer of Pogoplug, a multimedia device and software system. The software allows users to create their own private cloud, making stored files accessible via Internet browser or mobile device. There is growing consumer consensus-CDs and DVDs are a hassle. As personal clouds evolve, they will incorporate access to premium content offerings. There is an ongoing migration away from physical media in favor of electronic formats for music, photos, and video. However, most homes lack the storage capacity and distribution ability to keep and fully enjoy libraries of high-end media files. Cloud-based hosting of content presents a possible solution, and the digital locker concept can resolve copyright issues by storing the user's rights along with the content in the cloud. Industry efforts like the Digital Entertainment Content Ecosystem (DECE) have boosted familiarity with the digital locker, and despite consumer hesitation to fully abandon physical media, there is growing acknowledgement that CDs and DVDs are inconvenient, risky for loss or damage, and difficult to share. There is also a generational gap in attitudes. U.S. consumers 18-34 are significantly more likely to consider packaged media such as CDs and DVDs a "hassle" to carry, and twice as many in this age range are interested in digital locker services for video and videogames. Cloud Music Services For the most part the "cloud media" services for video and music are still "push" solutions. Cloud-based streaming services are far less common than subscription or a la carte access, but the cloud-based music market is slowly maturing. Sony, with the launch of its Qriocity service, is moving in the direction of two-way push and pull services, combining access to a content provider's catalog and streaming from a user's library. Amazon launched its Cloud Drive service in March 2011, giving users 5 GB for free and giving 20 GB a year for free when a customer buys an MP3 album. Others to watch include mSpot, Microsoft, Apple, and Google. Cloud Video Services Carriers and CE players, as well as independent entities such as Netflix and mSpot, hope to monetize the growing consumer desire for anywhere, anytime premium content access through cloud-based video services. Consumer desire, coupled with the recent influx of mobile devices (e.g., the iPad) well suited for displaying high-end video, will drive uptake of cloud-based video. Cloud Gaming Services Cloud gaming services such as OnLive and Gaikai offer consumers the ability to play popular game titles from multiple devices without requiring a download. This "gaming on demand" model has not gained a great deal of traction yet, but it does have the potential to impact console sales in the future. For the consumer, immediate availability on multiple devices drives appeal, and it does not require a massive download or massive CPU power to play high-end games like Assassin's Creed or Mafia II. In time, the cloud will may present a real threat to the Microsoft Xbox and Sony PlayStation, but that day is still a few years away. ABOUT PARKS ASSOCIATES Parks Associates is an internationally recognized market research and consulting company specializing in emerging consumer technology products and services. Founded in 1986, Parks Associates creates research capital for companies ranging from Fortune 500 to small start-ups through market reports, primary studies, consumer research, custom research, workshops, executive conferences, and annual service subscriptions. The company's expertise includes digital media and platforms, entertainment and gaming, home networks, Internet and television services, digital health, mobile applications and services, support services, consumer apps, advanced advertising, consumer electronics, energy management, and home control systems and security. Each year, Parks Associates hosts industry webcasts, the CONNECTIONS™ Conference Series, and Smart Energy Summit: Engaging the Consumer. ABOUT THE AUTHOR Kurt Scherf Principal Analyst Kurt Scherf studies developments in home networks, residential gateways, digital entertainment services, consumer electronics, and digital home technical support services. IINDUSTRY EXPERTISE: Home Networks & Residential Gateways, Home Networking Media (Wi-Fi, UWB, HomePlug, HomePNA, MoCA, etc.), Media Center PCs, Set-top Boxes, Networked Consumer Electronics, Consumer Storage, Media Server Hardware and Software, Consumers and Digital Entertainment, Television Services, Broadband Video, Digital Home Customer Support Issues.
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