… Apple sells the service for $99 per year, or $69 for the first year with the purchase of a Mac or qualifying iOS device. For that, the MobileMe subscriber gets services like IMAP e-mail, data syncing, photo and website hosting, an interminably slow iDisk, a questionable Backup, and Find My iPhone. They also get 20 GB of storage and 200 GB of monthly bandwidth. There’s also a MobileMe Family Pack for $149, providing more e-mail addresses, storage, and bandwidth.

In comparison, Google offers free e-mail, data syncing, photo hosting, along with a free office suite, and free Android device location. … Microsoft provides 25 GB of storage, along with free e-mail and other similar services, all for free. See where this is going? Apparently Apple doesn’t. Apple just recently  introduced Find My iPhone for free, but it basically had to because of what the competition is offering.

I think that Charles Jade has a point about MobileMe not being a compelling solution at $99 when compared to free but capable services from Google and Microsoft.  But I think his conclusion that Apple should use MobileMe as a loss leader to drive iOS device and Mac hardware sales is flawed.

I think that MobileMe’s value proposition is that all it’s services are well integrated with the FREE software that comes pre-installed on every Mac (or the integration services available from an iPhone or iPad).  Steve Jobs alluded to it in his speech during the Apple Q4 earnings call in October.   MacStories‘s  Federico Viticci has a good analysis of that.

Flickr provides unlimited photo accounts — Flickr Pro — for $24.95/year.  My favorite online backup service, Backblaze, provisions unlimited storage accounts for $5/month or $50/year.  Online storage is not too expensive.  To consumers it might seem that they are really paying $99/year for iDisk since Google Mail, Calendar and Contacts are free. I would agree. And $99/year is a lot to pay for 20GB.

But Lev Grossman, writing for TIME about the early days of Internet music sums up my conclusions about how MobileMe can compete.

It turns out that there is something that can compete with free: easy

Seamless and easy integration with the OS is MobileMe’s value proposition.  I don’t have any facts about the adoption rate of Find My iPhone but I would wager that it’s use has increased since it became free.  I think Apple gave away Find My iPhone to bring attention to MobileMe — very few of my Windows colleagues had ever heard about it — and as a way to test the waters and measure consumer adoption for what they are really planning.  Apple has completed building a large data center in North Carolina and there is a quite a bit of speculative coverage about what that data center is North Carolina will be used for.

What if MobileMe came in two versions?  A low cost (US $20-$30/year) or “light” version and a “pro” (US $50-$99) version.

The light version of iDisk would offer similar storage and syncing capabilities to Dropbox — 2GB.  You would also use the iDisk storage for iPhoto and iMove galleries and me.com address for iWeb hosting.  The email and calendar account would be limited to one user with 1GB of storage (separate to the iDisk storage). Apple could offer it free for one year with the purchase of a new Mac, iPhone or iPad.

When the year ends Apple could provide easy renewal (auto-renewal) and an option to upgrade to the “pro” version.  The pro version should have features that meet or exceed ( shared storage and multiple accounts ) the free services being offered by Google and Microsoft.  I think this would give Mac — and iOS device owners especially — a taste of what is possible and hook them into the Apple eco-system.

I’m not an analyst and I’m often wrong about a lot of things but I think what I suggest is quite possible and doable.