Why Apple has to iCloud-ify the next version of iTunes

The next version of iTunes(s AAPL) is getting a pretty dramatic makeover, according to a brief report published Wednesday evening by Bloomberg. The changes will reportedly be the biggest the software has seen and will be implemented before the end of the year.
There aren’t a lot of details regarding specific changes Apple will make, but the few that are detailed are telling:

The company will more closely integrate its iCloud file-storage service with iTunes so users can more seamlessly access and manage their music, videos and downloaded software apps across different Apple gadgets, the people said. Apple also plans more features for sharing music, the people said.

So Apple is going to integrate iTunes with iCloud. That makes sense: Apple has made it clear that iCloud is a core company strategy “for the next decade.” But it’s also clear that Apple doesn’t really have a choice. It has to move iTunes into the cloud and into the future to more fully embrace its post-PC worldview.
iCloud is just over a year old and in that time it’s come a long way. Customers have signed up for it — 125 million so far — and Apple has been integrating more products into it. Last year it introduced music, photos, contacts, mail and calendar syncing, and iTunes Match with iCloud. At WWDC this year Apple says iCloud will be integrated with its browser, Safari, Documents and apps in forthcoming OS X Mountain Lion, and it beefed up Photostream sharing features. Apple is methodically expanding iCloud to its product lineup — iTunes is just one of the next products on the list.
The competition is also something Apple has to be keeping an eye on too. Amazon(s AMZN) and Google(s GOOG) are both coming for it with their cloud-based content services. Google showed on Wednesday that it’s starting to get serious about going after Apple’s iTunes strategy, by adding movies, TV shows and magazines to its Play store.
Plus, iTunes is aging and could use a good polish. It started as a place to discover and buy music, but Apple’s continued to tack services onto it over the years: it’s no longer just a place to discover and buy music, but TV shows, movies, digital books, online learning courses, podcasts and, of course, the massive and successful App Store. This isn’t spelled out in the report, but it’s also worth wondering whether Apple will use this opportunity to make the software more manageable. Perhaps by taking a page from the iOS team, which has successfully been able to split apart Music, Videos, App Store, iTunes Store, iBooks and most recently, Podcasts, into distinct apps.