6/21/2011 1:34 PM ET|
How to invest in the cloud
"The cloud gives companies an easier way to manage all their technology," says Sinha, of Google Apps for Business. "It moves all the hard, boring parts into the sky and makes it invisible." Companies seem to like this. Sinha says Google Apps for Business sales have tripled over the past year. The company doesn't break out numbers, though, so it's hard to know how big an impact it is having on overall revenue growth.
Still, Google's cloud efforts are part of what makes it a buy right now, say analysts. Trading at about $490, down from above $640 earlier this year, Google looks cheap, says Michael Scanlon, a stock analyst at John Hancock Asset Management. Down here, the stock trades for less than 10 times expected earnings, if you take out its $36 billion in cash. Scanlon believes the contributions to growth from cloud computing and mobile search are being overlooked by investors. "Anything that can get people into their ecosystem benefits the wider franchise," he says.
Of course, by attempting to move business computing to the cloud -- and away from the PC -- Google and other cloud providers pose a direct threat to Microsoft, which makes a lot of its money by selling desktop operating systems and business software deployed inside companies.
But don't count Microsoft out, because it has cloud offerings of its own, known as Azure and Dynamics. "Its public cloud offerings polled the strongest of any vendor in our survey," says a recent report on the sector by Morgan Stanley. "Microsoft is likely to gain the most from a broader adoption of public cloud environment."
Besides, as useful and popular as the cloud is, it's not clear the PC is going away. "The cloud won't replace conventional computing, because it is still convenient to have your data and applications on one machine," says Michael Cusumano, a professor at Massachusetts Institute of Technology's Sloan School of Management and author of "Staying Power: Six Enduring Principles for Managing Strategy and Innovation in an Uncertain World." "And remote access doesn't always work well. It may be at least 10 years before we have such ubiquitous broadband wireless connectivity that people will want to give up their desktops or laptops. It may never happen."
Amazon, through offerings called the Elastic Compute Cloud and Simple Storage Solutions, is another major player that provides a combination of software services, and the platforms and infrastructure to run it all.
Unlike these giants, which are involved in a lot of different businesses, several smaller companies represent more-focused ways to invest in the cloud.
Salesforce.com serves as a nearly pure play. It offers software that helps corporate sales teams track leads and sales as well as share developments inside their companies, all from the cloud.
This is a stock that traders love to short, or bet against, mainly because of a rich price of 74 times earnings. But the company has defied such investors. "They own their market. They are taking share," says Rudow, at Thrivent.
On the infrastructure side, VMware plays a big role by selling software that helps cloud providers subdivide servers for private use by customers. "It's like two kids sharing a room, and not knowing it," says Scanlon.
And of course, EMC is a major cloud play because it sells storage devices and the virtualization and security software that make them run. "They have a lot of the key technology. When you are setting up cloud servers, it is hard not to buy something from EMC," says Abhi Gami, senior analyst for the Invesco Van Kampen American Franchise Fund (VAFAX), which has beaten the Standard & Poor's 500 Index ($INX) over the past year.
Among the "enablers," Accenture and IBM stand out as public companies that should continue to get meaningful business by helping companies set up in the cloud.
Of course, among the big risks here are concerns about the safety and privacy of data in the cloud. Openshaw, at Deloitte, says such fears are overblown. "Security is good, and probably better than what most individual organizations can muster on their own."
Besides, having all your data up in the cloud and not on your laptop can be a blessing, says Google's Sinha. "Your data can't just get up and walk out the door with the device."
At the time of publication, Michael Brush did not own shares of any company or fund mentioned in this column. Brush is the editor of Brush Up on Stocks, an investment newsletter.
Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.
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access via the internet, rather than dedicated point-to-point lines. In my mind SECURITY should be your main concern if you are considering moving your data to the 'Cloud' ... if the Pentagon and several other branches of the government ... and major companies like Microsoft and Apple and CitiBank ....etc ... can be HACKED ... then your data can be hacked too ... especially if someone gains access to a site 'hosting' multiple companies ... BEWARE THE CLOUD ...!!!
Cloud Computing = big money in data recovery and anti-virus companies.
Ahem, Ahhh, the cloud. Just another form of control. It don't mean jack! Did you notice that "we are coming full circle....." comment!? Oh, back to the olden days again!
The question you should ask yourself is: Do I want to turn control of my personal data over to someone or someplace I know not much about? What about security? Another place for the hacks to get to your personal life! More social BS stuff. Hey, think this: are you better off today with the cloud than you were without it? Think Big Brother and I don't mean the government I mean BIG BUSINESS!
Cloud = Server Farms = Intel Chips = Invest in Intel. Pretty fricking simple isn't it.
How big of a player in servers is intel?
I'm pretty sure their core is selling processing chips, for mobile smart phones, for laptops, pcs, and now tablets.
The companies he mentions are good, IBM is probably the most diversifed and safe value stock that will benefit from the cloud.
I put all my porn and passwords on some remote server farm and rely on Verizon to keep me connected? Oh Heeeeeeeeelll no. Then I have to worry about some zit face kid living in mom's basement trying to defeat someone else's security? Oh Heeeeeeeeeelll no. I put all my illegal activities on a mystery server to make it easier to subpoena? Oh Heeeeeeelll no. I will however,
do some research and invest in this new activity. May as well make a few bucks off the knuckleheads using it.
When a gov that is prohibited from accumulating personal data can use all personal data that is commercially available, does the constitutional protection still exist? Where does government end and industry begin? We are in pretty murky waters these days!
But don't count Microsoft out, because it has cloud offerings of its own known as Azure and DynamicsWindows Azure puts all Microsoft applications on a global cloud for private or public access. Microsoft Dynamics, an ERP, actually has nothing to do with cloud computing but can be put it the cloud using Azure. Office 365, Exchange email, Sharepoint websites SQL databases and any applications developed with Visual Studio can also put put in an Azure cloud architecture. Don't count Microsoft out is a ridiculous statement since Microsoft is the leader in providing for enterprises to put applications and content in private and public clouds. The author better hire some researchers before publishing articles about subjects beyond his understanding.
Warcat, the internet is a series of routers. If something goes down than within seconds the internet is rerouting around the problem. Most of the time it happens so fast you will not even know there was a problem. The internet itself is very robust.
As for server farms imploding, the technology is still emerging, but redundancy is one of the benefits. You can bring a server down for maintenance and distribute the load to other servers seamlessly. Of course redundancy comes at a performance price. What I think you are using the term imploding to describe is when performance deteriorates to a crawl. The technology has been improving along with the skills of the work force.
People that understand load balancing real well are in high demand, but very rarely paid what they are worth. Only a few are able to leverage their way to $250,000 or more per year, but I know two. Most stay at a company to long locked in between $80,000 and $120,000 with the same skill set. Most companies will not even acknowledge their worth until they are gone and cannot find replacements.
You people should be due for you first salary reviews now.
I want to know about this. Tell me how well your doing.
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