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Apple's Jobs makes big push into an everyday cloud

Apple Inc. CEO Steve Jobs gives a wave at the conclusion of the launch of the iPad 2 on stage during an Apple event in San Francisco
Apple Inc. CEO Steve Jobs gives a wave at the conclusion of the launch of the iPad 2 on stage during an Apple event in San Francisco

By Poornima Gupta and Noel Randewich

SAN FRANCISCO (Reuters) - Apple Inc CEO Steve Jobs unveiled services for people to store more of their photos, music and other data online, giving the iPad and iPhone maker the lead in a fast-expanding new consumer market.

Jobs entered to a standing ovation from more than 5,000 Apple faithful at its Worldwide Developers' Conference on Monday and showed off Apple products meant to help customers keep their iPhones, iPads and computers in sync.

The Silicon Valley icon and pancreatic cancer survivor -- animated but again looking very thin -- unveiled remote computing services that for now at least push Apple ahead of rivals Google and Amazon.com, which recently launched their own moves into music storage and streaming.

Jobs, whose decision to headline the event assuaged some concerns on Wall Street about his health, didn't say a word about his condition but strode briskly onstage after James Brown's soul classic "I Got You (I Feel Good)" blasted over the sound system.

"We're going to move the digital hub, the center of your digital life, into the cloud," Jobs said. "Everything happens automatically and there's nothing new to learn. It just all works."

In cloud computing, data and software are stored on servers, and devices like smartphones or PCs access them through the Internet.

With its knack for designing easy-to-use gadgets, Apple hopes to make cloud computing -- right now a term tossed about mostly by corporate IT departments and Silicon Valley geeks -- an everyday convenience for many people.

As more and more people use smartphones and tablets with limited storage, demand for cloud-based services is growing, and technology companies from Amazon to Zynga are rushing to stake out their turf.

Beyond storing music online, Apple's revamped operating systems for its Macs, iPhones and iPads integrate cloud storage in everything from word processing to calendars and to-do lists, going beyond what other companies have done.

"For the average consumer it makes cloud computing real," said Mike McGuire, a media analyst with Gartner. "What we saw from Amazon and Google were features, not services."

Apple's new iTunes Match service will also scan users' hard drives and automatically make the songs it finds available on the iCloud. In contrast, users of Google and Amazon cloud-based storage have to upload every song themselves.

"This is potentially game-changing," said Sterne Agee analyst Shaw Wu. "It's a whole new way of computing where you're less dependent on PCs and local storage."

PIE IN THE SKY

Monday was only Jobs' second public appearance since he went on medical leave in January. He shared the spotlight, letting his executive team showcase new features in Apple's mobile and computer operating software.

"He is looking thin but as energetic as usual," Current Analysis analyst Avi Greengart said, adding that Apple's expansion into remote computing "is very powerful stuff."

Apple's iCloud service is not a huge revenue generator for right now and it is tough to quantify longer-term impact, but it lays the foundation for future products with the push into cloud computing, Wall Street analysts say.

With that infrastructure in place, Apple can look to streaming video, a lucrative opportunity rivals also covet.

But complex licensing requirements for distribution of video content mean that the business may be farther off than music cloud services.

The most immediate impact might come from the iTunes Match feature that Jobs introduced with his signature "one more thing" line. Costing $25 a year, it yields a fresh source of revenue for Apple and the music industry -- and from songs that customers would be unlikely to buy again. Apple has been busy wrapping up negotiations with major record labels to secure licenses for its cloud service.

Apple's move to cloud services could also ignite more demand for devices from the iPhone to the iPad, while helping sales of music through iTunes.

"Relative to iCloud, Google and Amazon are far behind. Nobody else can do what Apple's doing today," said Brian Marshall, an analyst with Gleacher & Co.

"They are doing music, they are doing photos, documents. The next will certainly be video," Marshall said.

Jobs' decision to headline such events often is news in itself, and his appearance likely heartened investors worried about his health after the pancreatic cancer survivor went on his third medical leave for an undisclosed condition.

Apple's share price fell 1.6 percent to close at $338.04 on the Nasdaq stock market. The stock traditionally gains before a major event -- of which there are only a handful through the year -- before dipping on the day itself.

"They telegraphed in advance what they were going to say and that Steve Jobs was going to show up," said Daniel Ernst at Hudson Square Research. "It's pretty boring, which is, for Apple, bad. It's all good, but everybody always expects them to walk on water unfortunately."

(Additional reporting by Sinead Carew and Paul Thomasch in New York, Writing by Edwin Chan. Editing by Robert MacMillan, Gary Hill)

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