{"id":28576,"date":"2012-03-26T13:06:05","date_gmt":"2012-03-26T17:06:05","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2012\/03\/26\/investing-in-cloud-computing-companies\/"},"modified":"2012-03-26T13:06:05","modified_gmt":"2012-03-26T17:06:05","slug":"investing-in-cloud-computing-companies","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2012\/03\/26\/investing-in-cloud-computing-companies\/","title":{"rendered":"Investing in Cloud Computing Companies"},"content":{"rendered":"<div align=\"left\"><script type=\"text\/javascript\">\ntweetmeme_style = 'compact';\n<\/script><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/tweetmeme.com\/i\/scripts\/button.js\"><\/script>\n<\/div>\n<div><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-28535 \" title=\"Investing in Cloud Computing Companies\" src=\"http:\/\/www.investmentu.com\/wp-content\/uploads\/2012\/03\/cloud-computing-companies.jpg\" alt=\"Investing in Cloud Computing Companies\" width=\"220\" height=\"220\" \/><\/p>\n<p>Cloud computing is simply any technology service, such as an application, infrastructure or platform that is offered to customers over the internet.<\/p>\n<\/div>\n<p>[<strong>Editor\u2019s Note<\/strong>: <em>I\u2019d like to introduce our readers to one of our new writers, Gary Spivak. Gary has almost 20 years of I.T. experience along with about 15 more as a tech and software analyst for a handful of Wall Street firms. He also holds a programming degree from NYU and an MBA from Columbia Univerity. Needless to say, he knows what he\u2019s talking about when it comes to investing in the technology and computing sectors.<\/em><\/p>\n<p><em>But Gary was tired of all his top research going to fatten the pockets of wealthy institutional investors, so he\u2019s decided to share his expertise with individual investors like us. I hope you enjoy his insight.<\/em>]<\/p>\n<p>When I started in IT in the mid 1980\u2019s, all computer applications ran on the mainframe \u2013 a large computer that was efficient and well-managed.<\/p>\n<p>I recall\u00a0 watching \u201cin horror\u201d in the late 1980\u2019s and early 1990\u2019s as individual departments began to embrace \u201cclient-server\u201d computing, where a \u201cserver\u201d, which was equivalent to a large PC, began to run critical applications.<\/p>\n<p>There were some benefits \u2013 better, graphical user interfaces and greater control \u2013 but distributing the computing power to hundreds of locations was destined to be a maintenance nightmare.<\/p>\n<p>As individual devices became more powerful, the computing power got pushed further down to the end-user \u2013 PC\u2019s, laptops and now smartphones and tablets.<\/p>\n<p>But put everyone on the same network and it seems destined that the pendulum would have swung back to the centralized environment.<\/p>\n<p>From the perspective of a former IT guy with plenty of gray hair, <a title=\"Cloud Computing: An Unstoppable Yet Vulnerable Force\" href=\"http:\/\/www.investmentu.com\/2011\/June\/cloud-computing-unstoppable-yet-vulnerable.html\" target=\"_blank\">cloud computing<\/a> is a natural progression\u2026<\/p>\n<h2><strong>What Cloud Computing Really Means<\/strong><\/h2>\n<p>Cloud computing is simply any technology service, such as an application, infrastructure or platform that is offered to customers over the internet.<\/p>\n<p>With the proliferation of devices connected to the internet, why not keep key resources in a centralized location? This centralization allows everyone to use the \u201cpublic utility\u201d called the internet to access these resources.\u00a0 There are certain benefits to centralized resources \u2013 such as cost efficiencies and a better customer experience.<\/p>\n<p>But what does that mean to me?<\/p>\n<p>The typical Internet-savvy consumer has been using services in the cloud for years.\u00a0 If you\u2019ve ever bought anything from Amazon.com, you used your browser and the Internet to get on that site and order your goods.\u00a0 That was a transaction occurring in the cloud.<\/p>\n<p>So, it is easy to see how consumer-facing businesses have already adopted cloud computing for their own purposes.<\/p>\n<p>But what is now changing is a migration of business-to-business (B2B) transactions also occurring in the cloud. \u00a0Also, greater trust in the cloud leads to more activity.<\/p>\n<p>The question is \u2013 if a company sells products over the cloud, are they a cloud company?\u00a0 The answer is, in this writer\u2019s opinion, no.<\/p>\n<p>When a <a title=\"Why Gold Mining Stocks Are About to Skyrocket\u2026\" href=\"http:\/\/www.investmentu.com\/2011\/September\/why-gold-mining-stocks-will-skyrocket.html\" target=\"_blank\">mining company<\/a> loaded coal onto a railroad car, were they a railroad company? No!\u00a0 When PETS.COM \u2013 now part of <strong>Petsmart<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=PETM\" target=\"_blank\">PETM<\/a>) \u2013 began selling pet supplies over the Internet, were they an Internet company?\u00a0 No!\u00a0 They were a pet supply company.<\/p>\n<h2><strong>Finding the \u201cArms Suppliers\u201d<\/strong><\/h2>\n<p>Investors typically want to find the winner in \u201cthe war\u201d.\u00a0 Will <strong>Amazon<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=AMZN\" target=\"_blank\">AMZN<\/a>) sell more books over the internet than <strong>Barnes &amp; Noble<\/strong>\u00a0 (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=BKS\" target=\"_blank\">BKS<\/a>) ?\u00a0 If yes, then Amazon is the winner, right?<\/p>\n<p>The smarter investor will look to the \u201carms suppliers\u201d in \u201cthe war\u201d.\u00a0 Don\u2019t pick a side in the war, pick companies that sell services to all of the war\u2019s participants.<\/p>\n<p>And THIS is what makes cloud computing so interesting.\u00a0 There are many different levels of \u201carms suppliers\u201d in these wars.<\/p>\n<p>What are some of the weapons required?<\/p>\n<ul>\n<li><strong>Centralized data centers<\/strong> \u2013 the cloud is perfect for the re-centralization of IT resources.\u00a0 Companies like <strong>Rackspace<\/strong> (NYSE: RAX), Amazon Web Services, <strong>Equinix<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=EQIX\" target=\"_blank\">EQIX<\/a>), OpSource and SunGuard.\u00a0 Others include <strong>DELL<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=DELL\" target=\"_blank\">DELL<\/a>), <strong>Hewlett-Packard<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=HPQ\" target=\"_blank\">HPQ<\/a>), Cisco (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=CSCO\" target=\"_blank\">CSCO<\/a>), <strong>Verizon<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=VZ\" target=\"_blank\">VZ<\/a>) and <strong>AT&amp;T<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=T\" target=\"_blank\">T<\/a>).<\/li>\n<\/ul>\n<ul>\n<li><strong>Storage<\/strong> \u2013 The files you have on your computer are moving to the cloud.\u00a0 Storage, once unthinkable to be moved to the cloud (people want their data near them) is now significantly being used in the cloud.\u00a0 Vendors like <strong>Apple<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=AAPL\" target=\"_blank\">AAPL<\/a>) , Dropbox, Mozy (owned by <strong>EMC<\/strong>, NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=EMC\" target=\"_blank\">EMC<\/a>) and <strong>Riverbed Technologies<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=RVBD\" target=\"_blank\">RVBD<\/a>) facilitate cloud-based storage solutions.<\/li>\n<\/ul>\n<ul>\n<li><strong>Security<\/strong> \u2013 Security remains a concern when accessing resources through the Internet.\u00a0 Many companies boast of cloud security solutions.\u00a0 Among them are Qualys, <strong>Trend Micro<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=TMIC\" target=\"_blank\">TMIC<\/a>), Webroot and <strong>Websense<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=WBSN\" target=\"_blank\">WBSN<\/a>).<\/li>\n<\/ul>\n<ul>\n<li><strong>Applications<\/strong> \u2013 Perhaps the best-known services delivered via the cloud are applications, or Software-as-a-Service (SaaS).\u00a0 Among the best known in this category are <strong>Salesforce.com<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=CRM\" target=\"_blank\">CRM<\/a>), <strong>Taleo<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=TLEO\" target=\"_blank\">TLEO<\/a>) and <strong>Keynote Systems<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=KEYN\" target=\"_blank\">KEYN<\/a>).<\/li>\n<\/ul>\n<ul>\n<li><strong>Virtualization Technology<\/strong> \u2013 Cloud-based solutions typically deploy some kind of application or desktop virtualization technology.\u00a0 Vendors leading this charge include <strong>VMWare<\/strong> (NYSE: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=VMW\" target=\"_blank\">VMW<\/a>) and <strong>Citrix<\/strong> (Nasdaq: <a href=\"http:\/\/quote.morningstar.com\/Stock\/s.aspx?t=CTXS\" target=\"_blank\">CTXS<\/a>).<\/li>\n<\/ul>\n<p>Beware of companies that claim, \u201cWe are a cloud company.\u201d\u00a0 Look at what they offer and see if it takes advantage of this secular shift and is not just using the latest jargon to inflate its market capitalization.<\/p>\n<p>Good Investing,<\/p>\n<p>Gary Spivak<\/p>\n<p>P.S. Of all the companies I\u2019ve listed above, there\u2019s one that I think has the best potential for investors looking to take advantage of the cloud. It benefits from a number of the trends listed above.<\/p>\n<p>To find out which company is leading the charge in my opinion, <a href=\"http:\/\/oxfordclub.com\/oxf-research\/IU\/IU5Bucks1211.php?code=WIUPMA05&amp;n=IUP\" target=\"_blank\">click here<\/a>.<\/p>\n<div>\n<a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=pfi7xSIcKeM:zHVkFn2Lc-8:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=yIl2AUoC8zA\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=pfi7xSIcKeM:zHVkFn2Lc-8:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=pfi7xSIcKeM:zHVkFn2Lc-8:V_sGLiPBpWU\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=pfi7xSIcKeM:zHVkFn2Lc-8:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?d=qj6IDK7rITs\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=pfi7xSIcKeM:zHVkFn2Lc-8:gIN9vFwOqvQ\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=pfi7xSIcKeM:zHVkFn2Lc-8:gIN9vFwOqvQ\" border=\"0\"><\/img><\/a> <a href=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?a=pfi7xSIcKeM:zHVkFn2Lc-8:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/InvestmentU?i=pfi7xSIcKeM:zHVkFn2Lc-8:F7zBnMyn0Lo\" border=\"0\"><\/img><\/a>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~r\/InvestmentU\/~4\/pfi7xSIcKeM\" height=\"1\" width=\"1\" \/><\/p>\n<p>Article by <a href=\"http:\/\/www.investmentu.com\/\" target=\"_blank\">Investment U<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Cloud computing is simply any technology service, such as an application, infrastructure or platform that is offered to customers over the internet. [Editor\u2019s Note: I\u2019d like to introduce our readers to one of our new writers, Gary Spivak. Gary has almost 20 years of I.T. experience along with about 15 more as a tech and &hellip; <\/p>\n<p class=\"link-more\"><a href=\"https:\/\/www.investmacro.com\/fx\/2012\/03\/26\/investing-in-cloud-computing-companies\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Investing in Cloud Computing Companies&#8221;<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-28576","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28576","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=28576"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/28576\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=28576"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=28576"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=28576"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}