One of the hottest sectors in technology right now - the Mesh Report

One of the hottest sectors in technology right now

the Mesh Report Staff May 23, 2011 0

One of the hottest sectors in technology today is cloud computing.  The basic definition of cloud computing is using the Internet for the tasks you usually perform on your computer. Most people mainly use their computer as a tool to store different types of data; documents, pictures, music, etc. Cloud computing is the process of taking this data storage service to the web, rather than your PC.

The benefit of cloud computing is that individuals can then access their information from anywhere in the world with an internet connection, rather being tied to an office or home computer. Cloud computing solves the problem for many individuals and companies who have too much stored data on their computers and servers. Also, it can be a safer way to store important information.

Have you ever used kodakgallery.com or shutterfly.com? What these companies do are examples of how you are already using cloud computing in your day-to-day life. Both of these companies offer you the ability to store and share your photos.

You can access your photos on either of these websites from any computer or smart phone in the world that is connected to the internet. Instead of saving your pictures on your home computer’s hard drive and then burning them on to compact discs, these companies allow you to share them with your friends and family through email.

Also, these companies provide you with data security. If you keep your photos on your home computer, what happens if your hard drive crashes? You’d better hope you backed them up to a CD or a flash drive. By uploading the images to Kodakgallery or Shutterfly, you are providing yourself with data security by creating a backup on the web.

The large technological companies are willing to pay a huge premium to get their hands on cloud computing names. We’ve seen many acquisitions in this sector over the past year – EMC Corp. (EMC) bought Isilon Systems Inc. (ISLN), Hewlett-Packard Co. (HPQ) bought 3Par for $2.4 billion, and International Business Machines Corp. (IBM) bought Netezza Corp. for $1.7 billion.

Not only we will see the data storage industry significantly grow in the future but I believe there is a good chance the merger and acquisition wave continues for the next couple of years.

Here is a list of some companies in the cloud space –

EMC Corp. (EMC)

EMC is the data storage “giant.”  Through its acquisitions over the years the company is expanding its strategy and has become a competitor with big names such as IBM, Hewlett-Packard, and Oracle.  Though the stock has a market cap of $44 billion there have been many reports that it could be an acquisition target of the software behemoth Oracle (ORCL).  EMC trades at roughly $28 and has relatively low volatility, compared to the other companies in this sector.

VMware, Inc. (VMW)

VMW is a dominant provider in this industry and is the “middle man” of the cloud space between the desktop and the data center that makes sure a company’s servers are running at their highest capacity.  VMW owns 100 percent of the virtualization market for the Fortune 100.  What many people don’t know is that VMW is actually 80% owned by EMC and as of last month, EMC is actually buying back more shares of the company it spun out to investors in 2007.  EMC used almost $1 billion of its $10.5 billion cash hoard over last summer buy back VMware shares.  That’s quite a show of confidence in the company.

Citrix Systems (CTXS)

CTXS, whose main rival is VMW, is especially well-positioned in its virtual desktop offerings.  Reports have emerged over the past year that Microsoft could have its eye on acquiring CTXS so that they can too have a competitive edge in the cloud computing field.  This acquisition could make sense because CTXS technology could provide the ability to run Microsoft Window’s entire desktop virtualized on Cisco Systems (CSCO) new tablet, the Cius.

Acme Packet (APKT)

This stock has been on quite a tear over the past year.  APKT offers services and platforms for interactive communications across multiple networks — from voice over Internet protocol to residential services and mobile convergence.  In its sector, the company has over 62% of the market share and is a dominant supplier.  If the mobile market worldwide grows substantially in the near future, APKT will be a main beneficiary of that as operators deploy more 4G networks.

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