With iCloud, Apple's iPhone pulls away from Android

Apple announced on Tuesday that it will roll out significant software upgrades at its developer conference next week, changes that some analysts believe will keep it ahead in the growing arms race against arch-rival Android from Google.

The consumer electronics giant said yesterday that CEO Steve Jobs will return to the stage at its World Wide Developer conference next Monday to present Mac OS 10.7 Lion for computers and the iOS 5 for the iPhone.

Most important of the pending announcements is the service dubbed iCloud -- a new cloud-based platform that will mesh together the many Macs, iPads and iPhones.

JMP Analyst Alex Gauna told clients that software advancements with iOS 5 and iCloud could be much more revolutionary than a fifth-generation iPhone, while also setting low expectations for new hardware at WWDC.

He believes Apple is in a unique position to shock and awe with enhancements, extensions and harmonization of Lion, iOS 5 and iCloud. Because of that, he hopes Apple's announcements are substantial, and make the company capable of distancing itself from Android's gathering momentum.

Apple has embarked on what could be the largest data center in the world in Maiden, North Carolina in recent months. The half a million square feet center, expected to go live this spring, will give Apple massive computing to accomplish a number of things not possible before.

The Cupertino, Calif.-based Apple has already roped in some major music companies and has a wide array of music that can stream to its customers. Unlike Google's cloud-based digital locker, where users would need to upload their songs, Apple's solution can scan a user's library and make mirror copies available instantly.

This would not only boost sales from existing Apple existing 200 million iTunes customers, but might also attract new customers in the coming days.

We believe the iCloud improves Apple's ability to provide customers a wider range of music, strengthening its position versus major companies like Google and Amazon, stock researcher Zacks said today. Both of these have a similar sort of a service but they do not have licensing deals with music companies.

The iCloud will also allow Apple to further leverage its licensing and digital rights management, consumer friendliness, and a massive existing installed base, argues RBC's Mike Abramsky

Apple's licensing relationships and 'controlled' platform may appeal to studios/publishers seeking to minimize piracy, while protecting their economics in a hosted model, Abramsky told clients on Wednesday. iCloud may also be differentiated via Apple's trademark user experience for convenience, simplicity, and discoverability.

The analyst said that the cloud music deals would push Apple further ahead of rivals , which in the last 10 have failed to put even a minor dent to iTunes.

Apple's WWDC will take place from June 6 to June 10.