The Apple iPhone Contribution in Cloud Computing

Abstract

Innovation is essential to counter the current wave of change. Most companies are working very hard to minimise the operation cost by outsourcing cloud services. The need to reduce the cost of transaction is the reason why iPhone 6 Apple Pay is becoming more and more popular among businesses today.

This paper will provide general information in relation to cloud computing services and the reason behind its growing popularity in the corporate world. In addition, the paper will carry out a case study analysis to explore the contribution of iPhone 6 Apple Pay to E-Commerce.

Introduction

The last one hundred years saw Information Communication Technology (ICT) turning out to be a core business enabler (O’Brien & Marakas, 2011, p. 6). The “dot.com” recession of 2001 followed by the Great Recession of 2007 saw an increasing demand for information technology systems to maintain a competitive advantage at a low cost.

At the same time, technology and connectivity evolved very fast with the introduction of numerous cloud platforms and high speed internet. Nevertheless, the impact of these technologies cannot be viewed from a narrow perspective. ICT has been one of the most unsettling technologies over the last four decades. It has transformed how individuals and business entities operates (KPMG, 2011, p. 5; O’Brien & Marakas, 2011, p. 6).

The continuous evolution of ICT has helped businesses to automate their systems and discover new products and, therefore, attain a competitive advantage in their respective industries (KPMG, 2011, p. 5). A number of studies have shown that the growth of multinational corporations is highly attributed to their capacity to speedily leverage ICT for commercial purpose. On the other hand, small and medium size organizations are very slow in leveraging ICT. Therefore, they lack a level playing ground (Laudon & Laudon, 2012, p. 10).

However, with the emergence of cloud computing, everything has totally changed (KPMG, 2011, p. 5). Cloud Security Alliance defines cloud computing as a system that facilitates shared computing resources. The term resources refer to networks, servers, applications, services and storage with easier provision and release.

Therefore, cloud computing is a method that involves outsourcing computer resources with the potential for expendable enterprise scalability and on demand provision (Cloud Security Alliance 3).

This paper will provide general information in relation to cloud computing services and the reason behind its growing popularity in the corporate world. In addition, the paper will carry out a case study analysis to explore the contribution of Apple Pay to E-Commerce. Apple Pay is one of the fastest growing cloud services delivered through iPhone 6.

Cloud Services and the Growing Popularity

Before we discuss cloud computing, it is necessary to dive into the history for a better understanding. Cloud computing is a new term that has emerged in the computing world, but it is not a new concept.

In the early 60’s, John McCarthy envisaged an infrastructure where computers and data could be accessed from any place in the world, delivering it as a public utility where users are allowed only to pay for what they use. Cloud computing uses a similar concept of centralized computing, where users can access services within a particular network (Cloud Security Alliance, 2009, p. 4).

During the fifties and seventies, centralized computing was used to overcome low storage capacity in local computers. Devolved computing was later developed in the eighties due to limited networks and the need for improved computer storages. This led to the abolishment of centralized computing, which paved way for the development personal computers. This was made possible through the availability of applications that could be stored and ran on computers (Omtzigt, 2008, p. 1).

Greater improvements in the local area network (LAN) and wide area networks (WAN) were made in the late 1990s. These improvements allowed institutions to start using a centralized storage as a way of saving money. This enabled institutions to manage their information technologies on dumb terminals through improvements in virtualization and networks.

Cloud computing is more or less similar to a previous computing procedure known as time-sharing. The time-sharing computer connected several users to an isolated computer processor by means of a dumb terminal, which is also connected to the main server (Cloud Security Alliance, 2009, p. 5).

Cloud computing offers vast benefits to users with three types of delivery models, namely: Platform as a Service (PaaS), Software as a Service (SaaS) and Infrastructure as a Service (IaaS).

SaaS gives users the ability to access applications over a network. With this service, users only have control over the application on a pay as you use rate, and no control over the hardware and the operating systems. PaaS is a service, which offers a platform for users to develop web applications without the need to buy and manage specialist software and hardware required to create such applications.

The user is limited to selecting an application and cannot control the hardware. Some of the key providers of this service include Google App Engine. IaaS is the supplier offering storage, network components, hardware and servers, which are housed and maintained. The client can control the operating system and tweak settings in the hardware. The service is also referred to as Hardware as a Service (HaaS) (Omtzigt, 2008, p. 5).

Cloud computing delivers these models through four deployment forms, namely: private cloud, public cloud, hybrid cloud and community cloud. A private cloud is restricted to a user. On the other hand, public cloud allows users to rent space on the virtual servers. With this design, customers are only liable to pay for what they use as compared to other local data storages and data centres where a client pays for a set amount of storage.

Hybrid cloud is a deployment that combines different modes, such as the private and the unrestricted model. Each model still maintains its identities, but are bound together. The last model is the community cloud where the cloud resource infrastructures are shared by a number of users with a shared responsibility and interest, such as security requirements and compliance considerations (Omtzigt, 2008, p. 5).

Cloud computing has numerous characteristics, which distinguishes it from other computing paradigms. The basic characteristics are: (a) on demand self-service, which allows the specification of computing resources (b) broad network access, which is access to cloud resources over the network using standard mechanisms in heterogeneous matters through thick and thin clients, such as smart phones and mobile phones (c) resource-pooling, which allows the capacity to be pooled and serve multiple clients through a multitenant model (d) rapid elasticity, which allows rapid capacity provisioning for rapid scaling, and (e) measure service, which allows for control, monitoring and reporting of operation, as well as allowing transparency between the users and providers.

Besides the underlying cloud computing characteristics, there are other common characteristics, such as resilient computing, large scale availability of storage and computing capacities, pay as you use mechanism, homogeneity and the use of virtualization technology. These are the characteristics that have made cloud services so attractive among businesses today (Cloud Security Alliance, 2009, p. 6).

Cloud computing offers a variety of deployment method and, therefore, numerous benefits to the market. The benefits include economics of scale, which leads to reduced costs of information technology infrastructure. Secondly, it has low maintenance and administration costs. It also offers other benefits, such as enhanced performance due to access dynamic, scalable computing, storage and memory capabilities based on their demand.

Cloud computing also offers easier data monitoring and lower costs of security measures and quick incident responses. Other benefits include better collaborations and universal access to computing resources (Kemerer, 1997, p. 20; Omtzigt, 2008, p. 5). At the moment, cloud computing services can be accessed through a Smartphone, thus the name I-cloud. I-Cloud describe cloud services that can be accessed through an iphone, for instance, iphone 6 Apple Pay.

IPhone 6 Apple Pay

Apple Pay is a mobile payment platform developed by the Apple Company and is available exclusively on iPhone 6. The system security is designed in such a way that both the platform and the hardware are secure across all its components. In other words, iPhone 6 Apple Pay is designed to safeguard all the private information. IPhone 6 Apple Pay has five distinct components, namely: secure element, Near Field Communication controller, passbook, secure enclave and touch ID and Apple Pay servers (Apple Inc., 2014, p. 24).

The secure element denotes the approved chip running the Apple Pay platform. It complies with the standard set in the financial industry for all electronic transactions. The Near field communication (NFC) controller handles information protocols and directs communication between the secure element and the processor, and the point of sale terminal. Passbook is used in adding and managing credit/debit cards and making payments using the platform.

It enables users to view their cards and other supplementary information linked to the transaction. It also makes it possible for users to add new credit cards and debit cards to Apple Pay through the available settings and set up assistance. As a result, financial transactions are basically made using the passbook within the platform (Apple Inc., 2014, p. 24).

Any payment made through Apple Pay is validated using Touch ID, and or the user’s password. The secure enclave manages the process of validation and ensures that the transaction takes place. Last but not least, the Apple Pay Servers manage the state of all the cards used in the transaction and the account numbers stored in the Apple Pay Platform. The Apple Pay Severs communicates with the phone and the payment network servers. The server is also in charge of encrypting transaction information within the application for security purpose (Apple Inc., 2014, p. 25).

The contribution of iPhone 6 Apple Pay for E-Commerce

Numerous studies, particularly management and marketing studies have been carried out on inter-business relationship. Goles and Chin (2005, p. 47) integrated the concept of outsourcing and partnering and came up with the definition of inter-business outsourcing relationship.

They defined inter-business outsourcing relationship as a linkage between service providers and clients arising from contractual agreement. The contractual agreement highlights the benefits attained by each party. Therefore, the sound relationship/partnership between Apple Company and IPhone 6 Apple Pay users has helped to minimise risks, increase predictability and, therefore, reduce uncertainty (Apple Inc., 2014, p. 4).

The biggest concern among many organizations is security of different IT platforms. To understand the security issues surrounding iPhone 6 Apple Pay, it is important to look at the iOS (iPhone Operating System) security architecture. The figure below shows iOS reference model that integrates all the key components.

The security features include system security, encryption and data protection, App security, network security, Apple Pay, Device Controls and Privacy controls. The security system is designed in a way that both software and the hardware are protected across all key components of the Gadget used (Apple Inc., 2014, p. 4).

software and the hardware are protected across all key components

The security features in iOS model are nearly similar to those in the cloud computing reference model. However, it uses a different service model and functional model, which presents new types of risks. The business IT security is tackled in different faces ranging from physical security, network security, system security, and application security.

The service provider and the users have key security responsibilities. Apple Company is responsible for physical security, environmental security and virtualization security. On the other hand, users are responsible for their Touch ID or password (Apple Inc., 2014, p. 5).

Besides the architecture, Apple Pay tackles security from other domains, that is, governance domain and operational domain. Governance domain encompasses strategic and procedural issues, while the operational domain tackles technical aspects of the security and implementation within the architecture. Governance domain tackles business risks, legal and electronic risks, compliance and data management.

On the other hand, operation domain consists of operational procedures used to tackle security, operations of data centres, incident handling and forensics, application security, encryption and scalability management, and virtualization.

For these reasons, iPhone 6 Apple Pay provides the most secure and convenient means of payment for all users. In addition, it enhances the network effect of collaboration among different businesses using the service. Other security benefits include multiple locations, edge networks, instant response, and improved risk management (Apple Inc., 2014, p. 14).

According to porter (1980, p. 103), low cost production and product differentiation are some of the factors that could help a company achieve a competitive advantage in the industry. A company has a competitive advantage if it is capable of distributing its products or services at a relatively lower cost than its rivals in the industry.

IPhone 6 Apple Pay is a product of its own kind. It is the only mobile money transfer system that allows for contactless payment. It presents the user with a default card that can be managed through the setup assistance. In addition, it has considerably lowered the cost of transaction/payment among the users. For this reason, companies using Apple Pay usually enjoy high profit margins and a competitive advantage in the industry (Apple Inc., 2014, p. 27).

Conclusion

Innovation is essential to counter the current wave of change. Most companies are working very hard to minimise the operation cost through virtualization. The need to reduce the cost of transaction is the reason why iPhone 6 Apple Pay is becoming more and more popular among businesses today.

Apple Pay is the summation of Software as a Service, and other computing utilities. It is a new concept and is still at the infancy stage. The growing popularity of iPhone 6 Apple Pay is attributed to cost and security factors. The security system is designed in a way that both software and the hardware are protected across all key components of the Gadget used. In addition, Apple Pay has considerably reduced the cost of transaction/payment.

References

Apple Inc. (2014). iOS Security. Retrieved from http://www.iOS_Security_ Guide October 2014.pdf.

Cloud Security Alliance. (2009). Security Guidance for Critical Areas of Focus in Cloud Computing, New Jersey: Cloud Security Alliance, Inc.

Goles, T., & Chin, W. (2005). Information Systems Outsourcing Relationship Factors: Detailed Conceptualization and Initial Evidence. The Data Base for Advances in Information Systems, 36 (4), 47-57.

Kemerer, C. (1997). Information Technology and Industrial Competitiveness: How IT Shapes Competition, Boston: Kluwer Academic.

KPMG. (2011). The Cloud: Changing the Business Ecosystem, Mumbai, India: KPMG International, Inc.

Laudon, K., & Laudon, J. (2012). Management information systems: Managing the digital firm, New Jersey: Prentice Hall.

O’Brien, J., & Marakas, G. (2011). Management Information Systems, New York, USA: McGraw-Hill.

Omtzigt, T. (2008). Cloud Computing – Predominantly an IT Operation Outsourcing Trend. Eclipse – Developers Journal, 11 (4), 1-20.

Porter, M. (1980). Competitive strategy: Techniques for analyzing industries and competitors, New York: Free Press.