What Apple is buying and why …

Updated : Apple has just announced that they will shut down LaLa. So maybe we’ll see the beginnings of the cloud story sooner ?

These days Apple is constantly in the news for many things from emails sent by their CEO to loss of prototype phones. But among all of the news a couple of recent companies that it has bought with its cash seem to be pointing to some interesting directions.

First, late last year, just as Google offered to buy AdMob,  Apple announced its purchase of Quatro Wireless. Recently it has announced it mobile advertisement platform,  iAd,  based on on that purchase. The demos shown at the iPhone OS 4.0 announcement and the comments from people who have seen the recent demos from Apple all show that it is a very impressive mobile ad platform significantly ahead of what is available today. The ability to use information such as the user app purchases (e.g. send wsj.com advetisements to people who buy finance apps) and location (e.g send ads for Gap when the user is in a mall) to send the just the right ads must have advertisers salivating at the prospects.

Second, various blogs have reported on Apple’s purchase of Siri. Siri aims to be a “personal assistent”.   It can be viewed as a mobile search tool but it is much more than that. It is more a combination of mobile search, voice commands, mashups, and artificial intelligence. Now you may ask if it is mobile search can it be any better than Google ? Well, yes, because it isn’t really just search. It aims to figure out what you are interested in by using artificial intelligence. eg. you ask for restaurants in a town, and it will look for restaurants, also come up with reservation numbers, and transport options (potentially).  Another key aspect, is that unlike Google, it doesn’t try to be the all encompassing database by finding out everything and putting into massive servers, instead it searches in real time across the web. So in some ways it is a step beyond what is available in Google today. (Of course, Google is also going in that direction as it builds in its own voice interfaces and more intelligent search functions.)

Third, recently there have been reports that Apple has bought Intrinsity. This company is supposed to be behind the magic that enabled the iPad’s A4 chipset. This technology should allow Apple’s future iPhones and other mobile devices to run faster and with longer batter life than the competition. This will be the basis for the magic described above.

All of these show that Apple is focusing with laser like focus on enhancing its core product – the iPhone ecosystem.

1. iAd and Quatro : They are trying to find the best way to monetize their applications. Enabling and selling  mobile apps was the first revenue stream, now they are following on with advertisements.
2. Siri : They see that search on mobile phones is different from desktop searches and are trying to work towards optimizing it. While at the same time, trying to ensure that they are doing something very different against the presumed market leader Google.
3. Intrinsity :And against all comers they are trying to get a leap by making sure they have the best hardware basis.

These point to Apple’s overall strategy for maintaining its lead in the smartphone space against all comers including the Google + Android juggernaut. An impressive arsenal by any measure.

But if there is one chink in the armor, it seems that there is as yet no clear cloud strategy. I frequently wish there was some easy way to synchronize all of my contacts. An easy way to sync and use other cloud services such as Google Docs and merge with my other Apple apps. Yes, they do have MobileMe and  iTunes has potential.  Another company that they bought last year, LaLa, could be the basis for a streaming music offering. But as yet, it is unclear how these will be melded into a cohesive cloud strategy – compare this with their mobile ad strategy that seems to have become very clear and focused.

So how will Apple approach the cloud ? Will Apple enable file syncing in their own way ? Will Apple buy a file syncing company like DropBox ? Will they start music streaming with LaLa ? What about a Pandora like radio service ?

Or will they say “… the cloud is not my area of competence, let others fight it out. I’ll concentrate on making insanely great products..”