An analyst imagines everything it might be when — and if — it opens this spring
Among the people who follow Apple (AAPL) closely, the massive server farm the company is constructing in Maiden, N.C., has achieved near mythic status. It has become the answer to every unanswered question about Apple’s troubled online strategy, from what Steve Jobs was thinking when he green-lighted Ping to how MacBook Air users are supposed get by on 64 gigabytes of flash storage.
It comes up so frequently in the Apple-related podcasts on Dan Benjamin’s 5by5 network, that Benjamin has devised a new corollary to Godwin’s law of Hitler analogies: As Apple discussions grow longer, he says, the probability that someone will invoke the North Carolina data center approaches one.
Which brings us to the note to clients issued Tuesday by Bernstein Research’s Toni Sacconaghi. Although the 500,000-sq.-ft. project is behind schedule — it was supposed to come online in 2010 and is still mysteriously invisible on Google Earth — Sacconaghi came away from a meeting with Apple executives convinced that it will open this spring and could transform Apple from a hardware company to one that excels what he calls “differentiated services.” Among the changes he sees in store:
- Massively scaled-up downloads: Allowing Apple to do for e-books, video and online advertising what it did for digital music and mobile apps.
- Cloud-based synchronization and free cloud based storage. Enabling MobileMe to finally gain the consumer traction that Google (GOOG) has with its online offerings (Mail, Docs, etc.).
- Low-cost music streaming. Sacconaghi thinks $5 per month is about right.
- Aggressively-priced video streaming. Either competing with or buying Netflix (NFLX).
- Voice interface and navigation service. Using Siri and PlaceBase, two recent Apple acquisitions, to compete with Google’s “free and very popular” voice-based navigation system on Android.
The problem is, delivering services via the Internet has never been one of Apple’s core competencies. Quite the opposite, according to Ars Technica’s John Siracusa, who spent an hour last Friday in his 5by5 Hypercritical podcast trying to get at why Apple’s online offerings — from Ping to MobileMe — have failed to take off.
He concludes that all the things that make Apple so great at hardware and applications — self-reliance, attention to look and feel, tight vertical integration, a device-centric ecosystem in which everything just works — makes them bad at the kind of Internet services at which Google excels.
Google knows how to run a server farm. Siracusa is not convinced that Apple does. And given the company’s sorry history in the online space, putting one of the world’s largest data center in Apple’s hands, he says, is “like giving a machine gun to a baby.”
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