A Decade After Steve Jobs Introduced The "Digital Hub

Larry Dignan has a smart piece over at ZDNet where he adds up how much money Apple will make from the iCloud service Apple Chief Steve Jobs will unveil Monday at Apple’s annual developers conference. Dignan figures Apple's iCloud service will make Apple about $1.2 billion in annual revenue if half of new iPad and iPhone users and a third of new iPod users sign up for the service. You can quibble with his assumptions, however his logic is solid.

What Dignan doesn't factor in

What Dignan doesn't factor in: how many more devices Apple will sell by building products that no longer rely on PCs. In a note to investors this week, Mike Abramksy at RBC Capital Markets argues cloud services will let consumers who don't have PCs, or don't want PCs, buy iPhones, iPads, and iPods without the need for a computer to manage software updates, store their music collection, or manage their photo libraries. Ambramsky figures this will up the size of the potential market for iPhones alone to 5.1 billion handsets from just the 1.3 billion people who own PCs now.

Far from being an offering that’s a “nice add-on,” to Apple’s business, iCloud seems poised to replace the PC as the hub in Apple’s "digital hub.” For instance, Dignan argues that Apple could boost sales by introducing a "working-class" iPhone. Nevertheless by making the PC obsolete, the $199 iPhone becomes a "working-class" netbook, and the $499 iPad a "working class," laptop. Apple's move to put its iWork productivity on the iPhone this week is only the latest sign that Apple is slowly shifting the load once carried by the Mac onto more mobile devices.

It’s but another sign of a major shift at Apple. On January 9, 2001, Apple Chief Steve Jobs outlined Apple's "digital hub," strategy. The iMac would become the center of a user's digital life, managing content on cameras, video cams, mobile phones, and media players. It's a plan that put Apple's new OS X at the place where the Internet and the rest of a user's digital life meets. It's worked out so then: over the past decade Apple shares have risen 2917.9%.

Brian Caulfield joined our Silicon Valley bureau in 2007. Between covering covering chips and personal tech, he has tried to feed a laptop to a tiger, staked out a warehouse filled with Apple computers, tested a wide range of firearms, interviewed a porn star, raced cupcake cars, and searched Silicon Valley for Steve Ballmer. In previous lives Brian has written for The Oakland Tribune, Wired, WebWeek, Red Herring, and Business 2.0. He has as well worked as a parking attendant and a construction worker.