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26-Oct-10
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National Broadband Plan -- The Cloud Computing Spark Plug?
The FCC's National Broadband Plan aims to build the world's largest, fastest, and most widely-adopted network. If enacted as envisioned, there is no question that it would indeed be a strong stimulating force in the telecommunications sector. The increase in capacity and coverage in the wireless spectrum would enable cloud computing applications of much greater impact than are now seen. However, the political environment will likely determine how effective the plan becomes and which recommendations are adopted given the demand, legal, financial and political hurdles that currently exist.
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15-Jul-10
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Cloud Computing Defined
The inevitable implementation of cloud computing will transform the entire information technology industry. In the process, many of the largest vendors of technology equipment will be hurt, as the paradigm shift makes much of the underlying infrastructure a commodity item. We believe that the cloud computing revolution, over the next five years, will cause value to accrue to application vendors and data distributors, and away from the more traditional giants of the technology industry. Professional investors can benefit by viewing this shift using our definition of "the cloud" and not the one presented by technology vendors.
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11-May-10
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Cloud Computing -- The Impact on Domains
The potential of the smartphone revolution is that all of the technology needs of an individual can be controlled and accessed through a single device. The iPad hints at this direction, but since it is really just a touch-screen version of the laptop model, it is more properly viewed as evolutionary, not revolutionary. This is the potential in the cloud computing revolution that nearly all of the mass media, most analysts, and many investors are missing: The current incarnation of smartphones is only a precursor to the soon-to-arrive new style of computing.
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25-Jan-10
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Cloud Computing -- Investment Premise
Cloud computing is the most transformational evolution of technology since the introduction of the PC. But to truly understand the transformational nature of the cloud computing concept, it is necessary to separate the meaningful from the minor and inconsequential aspects.
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24-Oct-11
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Pricing in the Potential for Cloud Computing
Traditional "giants" in technology are seeing their multiples shrink toward overall market levels if they do not have a clearly visible strategy toward the cloud. This valuation shift is not correlated to fundamentals: companies showing movement toward the cloud are receiving higher multiples than companies with similar fundamental growth trends, but no visible cloud strategy.
In this report, we illustrate this point looking at 15 selected stocks that are commonly viewed as "cloud computing" stocks.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part I
A review of the history of the telecommunications industry is helpful in understanding the trends in place today, most of which are essentially unchanged.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part II
The government's antitrust suit against AT&T claimed that while the company was complying with the "sale" of access to its network, it was not making it convenient or easy for those competitive services. The settlement between the government and AT&T set the stage for the telecom industry over the past 20 years.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part III
After the breakup of AT&T in 1984, the phone company became primarily a long distance provider and a computer manufacturer. However, in the late 1980s and early 1990s, a number of new technologies emerged that changed the entire landscape of the industry. These unforeseen events eventually drove the government to "guide" the industry again, with the Telecommunications Act of 1996. Today, we look at how the industry evolved in the 10 years after the AT&T settlement.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part IV
The breakup of AT&T in 1984 was intended to create competition for long distance, which happened. However, the unexpected growth in demand for data transmissions was driving a real need for massive enhancement of the telecom network. Eventually, Congress decided that the government needed to create incentives for investment and shape the emerging "information highway." Here is an outline of the primary conditions in the industry that would eventually drive the passage of the Telecommunications Act of 1996.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part V
In the mid-1990s, the telecom network clearly needed to be enhanced and expanded to accommodate the inevitable demands of the information age. Congress decided to alter the regulatory environment by passing the Telecommunications Act of 1996. At the time, this act was viewed as a revolutionary step toward deregulating the telecom industry. While that objective has certainly been reached, the unintentional results of the Act have proven been the most significant legacy of the "deregulation."
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part VI
Legal historians might view the AT&T settlement in 1983 as the most significant regulatory action in history. The most significant shaper of the telecom industry today, however, has been the Telecommunications Act of 1996. Ironically, the Act can only be viewed as having failed in its primary goal of creating brand new competitive telecom companies. Instead, the incentives given to the regulated RBOCs to encourage new competition are now the legacy of this Act.
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28-Jun-11
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How Regulation Has Shaped the Modern Telecom Era -- Part VII
After the passage of the Telecommunications Act of 1996, venture capitalists and the public capital markets funded an incredible number of telecom companies. The Act was viewed as the modern equivalent of the Oklahoma Land Rush, since the Act allowed anyone to have access to the RBOCs local networks at very low regulated rates. Even the most grandiose vision of the future potential for the telecom market was readily accepted. Yet, most of those companies are now long gone.
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28-Jun-11
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Cloud Computing: A Reflection on Telecommunications
The history of the telecommunications industry holds clues for the future evolution and potential winners. Growth of new telecom services has historically been enabled by leveraging an existing network, benefiting the owner of that network. In the digital age, convergence of telecom services onto a single network has proven to be an appealing product to customers. This network will provide the next generation transmission of data that will be integral in the cloud computing revolution.
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23-Jun-11
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Cloud Computing: A Note on Music in the Cloud
Major tech players Google, Amazon.com and Apple all recently announced cloud music offerings. Direct profits from digital music will be slim -- the overall U.S. music industry is expected to derive only $11.5 bln in revenue in 2011; $5.8 bln of that is digital. Instead, the moves are an effort by companies to increase customer integration with their products and services.
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11-May-11
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Cloud Computing: A Real and Measurable Trend
There is a very real transformational trend occurring in the technology sector that can be described as cloud computing. How you define the trend is important, however, as it is not the type of technology boom that will lift all boats. This transformation is large enough to change the current dynamics of the technology industry, which is very much focused on the IT networked-PC model.
Revenue growth is shifting away from the currently dominant technology companies who are still focused on the IT-PC model and toward companies involved in the cloud model. We believe that the current growth rates are only the beginnings of the major market shift that will occur, as evidenced by our analysis of 310 companies.
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28-Apr-11
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Cloud Computing: Not All "Cloud" Companies Are Created Equal
Earnings growth of so-called "cloud computing" stocks has outpaced non-cloud stocks by approximately 50 percentage points since 2007. Excluding Google and Cisco, the figure triples to more than 150 percentage points.
The fact that there is not a consensus definition of "cloud computing" in the marketplace has created an atmosphere where cloud has become the moniker for next generation growth in the technology sector. In this report, we will show the performance trend of a cloud computing index based on companies that the market commonly considers "cloud."
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11-Feb-11
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Searching in the Cloud -- Defining the Equity Universe
Cloud computing is the next potential transformation of technology. Our thesis for cloud computing as a strategic investment theme is it will be a strong driver of growth for the sector, as well as other groups from media to telecom. To determine what companies will benefit, we use fundamental data screening as our primary criteria, not preconceived ideas. Our research approach is explained in this paper. The actual results will follow in a subsequent report.
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22-May-12
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Microsoft -- Is It Still the Atlas of Technology? Part II.
There was a time when it was very clear who dominated the technology industry: Microsoft was the undisputed giant of technology. Today, however, it is becoming unclear who is leading the direction of technology.
In this report, part two of a two-part series, we reflect on the current state of Microsoft and cover the following main points:
- The importance of history and the lesson from Digital Equipment
- An overview of financial trends at Microsoft
- A comparison of Microsoft to other technology companies of importance
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21-May-12
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Microsoft -- Is It Still the Atlas of Technology? Part I.
There was a time when it was very clear who dominated the technology industry: Microsoft was the undisputed giant of technology. Today, however, it is becoming unclear who is leading the direction of technology.
In this report, part one of a two-part series, we reflect on the current state of Microsoft and cover the following main points:
- A historical review of how Microsoft got to where it is today
- A review of Microsoft’s strategy of leveraging Windows in other markets
- A summary of how Microsoft has missed some of the largest developments in technology over the past 10 years
- The potential of cloud computing to undo Microsoft’s position as the platform of choice for all technology
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19-Mar-12
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The Impediments to Cloud Computing
The cloud computing revolution will gain significant momentum when adopted by enterprise technology users.
The current model for cloud computing is a service model, where the cloud computing aspects are offered remotely, and as a subscription-based service. This model is actually unappealing to many enterprise users.
There are two major obstacles to adoption: 1) security of data and 2) the difficulty of upgrades. We feel these obstacles will be overcome when a vendor emerges who sells cloud computing tools and components that allow an enterprise to build a pure computing environment under the enterprise’s control.
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22-Feb-12
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Pure Cloud Computing has Arrived
In our initial research reports on cloud computing, we envisioned a pure cloud computing environment as a revolutionary and transformational step that would dramatically alter the nature of information technology.
At the time, however, that vision had not been fully enabled by technology. Now, with the arrival of agnostic input/output devices for the Droid Razr, the first manifestations of our view of pure cloud computing have become possible.
We are not under any illusions that this particular implementation will alter the technology landscape immediately and by itself. But as the first real implementation of a working model, we think it is historically significant.
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