New buyers opting in to Apple cloud strategy

In addition to sales figures that surprised even the most optimistic analysts, Apple has also announced that iCloud -- its new cloud-based syncing service -- and iOS 5 have done well with the Apple base, reaching 20 and 25 million users (respectively) already, only five days after their release. The rapid adoption rate along with strong sales of the iPhone 4S may predict a continued acceleration as the products become more widely available outside the US.

Maynard Um of UBS, in a note to investors, points out that the potential for sustained record numbers remains high even after initial pent-up demand is met -- given that the iPhone 4S has launched seven countries rather than just five for the iPhone 4, and will branch out to 22 countries by the end of the month compared to 17 countries five weeks after launch for the iPhone 4. He along with other analysts believe that iOS 5 and iCloud represent significant additions to increase customer loyalty to Apple's mobile platform that will continue to improve "stickiness" to iOS and additional hardware sales due to the "halo effect," which should continue to help Apple fend off rivals such as Android.

Um maintains a $510 target stock price and "buy" rating on Apple stock, and predicts 25 million or more iPhones sold in the remaining months to the end of the year (Apple's FY2012 first quarter). The four million 4S iPhones sold in the first three days more than doubles the 1.7M sold in the initial weekend of iPhone 4 availability.

Despite some initial confusion about the service along with some scattered connection issues the day after launch, iCloud was always likely to be a popular product, taking some of the most highly-regarded features of Apple's previous Mobile Me service and making them free of charge. Because the service works with Windows and Mac as well as iOS devices, using a cloud service to keep email, calendars, contacts, reminders, notes and bookmarks in sync wirelessly, analysts have long expected the service to reach up to 150 million users eventually.

The service's 20 million user base indicates that a significant portion of the Mac user base that is eligible for the service -- they must be running the latest Lion operating system version as well as iTunes 10.5 (along with an upgraded iPhoto 9.2 to use the Photostream feature) -- have done so. As the MobileMe service winds down (it is scheduled to end completely on June 30th, 2012), more current MobileMe users will likely jump on board as well (current MM users can actually take advantage of iCloud immediately without fear of losing services that will eventually be discontinued; it will retain access to me.com and all MM services except e-mail, contacts and calendar syncing).

Apple's claim of 25 million iOS 5 users would also indicate a healthy and early adoption rate, with 21 million of the number coming from upgraded devices rather than the iPhone 4S, which shipped with iOS 5 on-board. Despite some early server traffic issues slowing down the ability of upgraders to move up to iOS 5, problems have receded and general reports on forums and other websites indicate strong user approval of the changes and improvements the new version brings over iOS 4.x.

By Electronista Staff