Category Archives: Cloud Computing
Alibaba’s Post-Earnings Update: Cloud, Mobile Users, Brand Rights PART 5 OF 16
In Alibabas (BABA) fiscal 1Q18 earnings, you can see that its Cloud Computing business only supplied 5.0% of the companys total revenues. Despite the tiny contribution to the companys top line, its Cloud Computing revenues grew 96% year-over-year, making it one of Alibabas fastest-growing businesses.
Alibaba identified the top priority in its Cloud Computing business as market expansion. The company is adding more cloud capacity and rolling out new cloud products and services to support themarket share expansionthat it seeks.
According to estimates by Synergy Research Group, Alibaba is subdued by Amazon (AMZN), Microsoft (MSFT), Alphabets (GOOGL) Google, and IBM (IBM) in terms of worldwide cloud computing market share.The chart above shows the rankings of various cloud providers by market share.
In the cloud computing industry, Alibaba has thrown its hat in the ring for a multi-billion-dollar prize. According to Gartner, the worldwide public cloud services market could grow 18% to reach $246.8 billion in 2017 before expanding to $383.4 billion by 2020. The market was worth ~$209.2 billion in 2016.
Cloud computing has the potential to transform Alibabas financial profile if the company can succeed in this sector. Alibabas overall revenues in fiscal 2017 totaled $23 billion, up 56%. Cloud revenues for that year reached $968 million, up 121%, and represented about 4.2% of the companys total revenues.
The global cloud services market is expected to grow from 18% annually to $246.8 billion this year, according toGartner’s latest estimates. Wikibon expects enterprise cloud spending to grow at a compound annual growth run rate of 16% between 2016 and 2026.
Those figures make the cloud computing market a lucrative one for tech investors, but it’s tough to narrow down the best buys in the industry. Today, I’ll focus on three “no brainer” stocks in that market, which will benefit from the growth of the cloud computing market over the next few years.
Source: Getty Images.
Amazon (NASDAQ:AMZN) is the 800-pound gorilla of cloud computing, since its AWS (Amazon Web Services) platform is the biggest cloud infrastructure service in the world. AWS stores data and hosts content for companies, and its tools enable developers to create and run cloud-based apps. It added over 400 new tools to AWS in the last quarter alone.
During thatquarter, AWS’ revenue rose 42% annually to $4.1 billion and accounted for 11% of Amazon’s top line. That gives the segment a run rate of $14.5 billion over the past four quarters. Wikibon expects AWS to generate $43 billion in annual revenues by fiscal 2022 — which would account for 8.2% of all cloud spending worldwide.
AWS’ operating profit rose 28% to $916 million last quarter, compared to just $628 million in operating income for the entire company. Therefore, the growth of the higher-margin AWS unit easily offsets bottom line declines at its North American and International marketplace businesses — which are using low-margin and loss-leading strategies to lock in customers. That virtuous cycle enables Amazon to continue dominating both the cloud computing and e-commerce markets.
Microsoft (NASDAQ:MSFT) rules the software-as-a-service market with consumer-facing products like Office 365, Dynamics CRM (customer relationship management), and Skype. Its cloud platform, Azure, is the second largest cloud infrastructure platform in the world after AWS. Microsoft reported that all these services generated a “commercial cloud” annualized run rate of$18.9 billion last quarter.
That puts Microsoft on track to exceed CEO Satya Nadella’s goal of hitting $20 billion in annual cloud revenues by the end of fiscal 2018. That figure would represent nearly a fifth of its projected revenue for the year, and reduce its overall dependence on traditional Windows licenses.
Microsoft missed the shift toward mobile operating systems, and itrecently killed off Windows Phone. But it’s clawing its way back in the mobile market with mobile versions of its flagship apps (Office, Outlook, OneDrive, and OneNote) for iOS and Android. By tethering its cloud-based ecosystem to those two operating systems, Microsoft can remain relevant in the “mobile-first, cloud-first” market which Nadella highlighted in hisfirst email to Microsoft employees.
Salesforce (NYSE:CRM) is thelargest provider of cloud-based CRM services in the world. These services help companies retain and organize relationships with customers. Salesforce controlled 18.1% of that market in 2016, according to IDC, while its closest rivals — Oracle and SAP– respectively controlled just 9.4% and 7.2%.
Salesforce is still firing on all cylinders. Its revenue rose 26% to $8.39 billion last year, and analysts anticipate 24% growth this year. Its non-GAAP earnings also jumped 35% last year, and Wall Street expects 30% growth this year. However, the bears often note that Salesforce isn’t consistently profitable on a GAAP basis. They also point out that Microsoft’s Dynamics is gaining ground in the CRM market with the support of Outlook, Skype, Azure, LinkedIn, and other applications.
Nonetheless, Salesforce remains the go-to vendor for CRM solutions, and new features like Einstein — which uses AI to crunch customer data into business predictions — should further widen its moat against the competition.
Amazon, Microsoft, and Salesforce are all smart ways to invest in the growing cloud computing market, but investors shouldn’t ignore the risks. Amazon and Salesforce’s valuations are high relative to their peers, so a market downturn could sink both stocks. Microsoft’s cloud growth is impressive, but those investments are also weighing down its bottom line growth.Investors should weigh these risks against the potential rewards to see if these cloud-oriented stocks are right for their portfolios.
Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. Leo Sun owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon and Gartner. The Motley Fool owns shares of Oracle. The Motley Fool recommends Salesforce.com. The Motley Fool has a disclosure policy.
Follow this link:
3 No-Brainer Stocks to Buy in Cloud Computing – Motley Fool
With cloud computing popularity on the ascent, Ben Chen has to think big. Chen is president of business development at a U.S. branch of China Unicom, a state-owned telecom and the second-largest wireless carrier in the worlds most populous country. I spoke to him at the Gartner Catalyst conference in San Diego earlier this month.
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
Based in San Jose, Calif., Chens division helps U.S. companies moving to China get set up with telecommunications, connecting their facilities abroad with stateside headquarters. And it does the same for Chinese companies building outposts in the U.S.
With the steep and rapid increase in the number of cloud adopters, especially in the U.S., Chen wonders, how relevant will a traditional telecom remain to customers?
Maybe they will rely on more cloud services, because they have all their content on the cloud, and the cloud can be synchronized, so maybe they wont need real connectivity between China and their headquarters anymore, Chen said. So we have to think about what role we are going to play.
In China, China Unicom offers mobile and traditional voice and data services very similar to AT&T, Chen said. China Unicom, though, offers public cloud services, unlike AT&T and other U.S. telecoms, which have left the cloud market because they couldnt compete with the likes of Amazon and Microsoft.
But China Unicom also cant compete with the research-and-development power of providers like Alibaba Cloud, which are pouring money into innovative new technology and features, Chen said. Instead, it needs to find another way to take advantage of the current mass migration to the cloud.
China Unicoms big differentiator is its vast mobile infrastructure, supporting approximately 300 million mobile customers, Chen said. Many users of mobile devices in China have no landline telephones just handsets packed with mobile apps and reliant on connections to the internet and public cloud providers. Such a network can be leveraged in the face of accelerating cloud computing popularity, he said.
That can play a more important role, working with the cloud providers and the users, Chen said. This is our value now rather than the traditional phone service and the other services. We should leverage our value to create more value thorough mobile.
The internet of things (IoT) presents another market for growth, Chen said. China Unicom is working with technology vendors on smart homes, myriad smart devices, machines and vehicles; for example, it partnered with Cisco IoT division Jasper on a service to help automakers build connected cars.
Big data is a third area, Chen said. By collecting information on how its hundreds of millions of mobile customers use their devices, China Unicom can determine where service is concentrated and can put in a new cell tower, for example.
Of course, cloud adoption, especially in China, which lags a few years behind the U.S. in taking on new technology, Chen said, isnt 100%. So carriers like China Unicom that do traditional connecting with dedicated circuits arent feeling the heat of rising cloud computing popularity.
Maybe we have a few years. [Companies are] in migration not everyone has moved to cloud yet, Chen said. But we have to be ready.
To learn about what IT professionals at Gartner Catalyst said about cloud strategies at their organizations, read this SearchCIO report.
The attractions are obvious: in todays data-saturated world, cloud computing allows large institutions to rapidly expand their IT capacity, boost efficiency and slash infrastructure costs. The downside? New security threats, amplified by stricter rules on protecting customer data, and a dependence on third-party providers for potentially vitalservices.
It is with an eye on the downside that banks have been slow in adopting cloud computing, which involves on-demand access to a shared pool of computing resources, such as servers andapplications.
Earlier this year, the European Banking Authority (EBA) set out to change this in Europe, publishing draft recommendations for firms to enable them to reap the benefits of cloud computing, while ensuring that risks are appropriately identified and managed. The second objective is to harmonise, across the European Union, supervisors expectations of banks using the cloud. The EBA tells Risk.net it plans to publish final guidance in the fourth quarter of thisyear.
Cloud enthusiasts say such measures as well as ongoing work by cloud providers to meet banks unique needs are all steps in the rightdirection.
Luke Scanlon, Pinsent Masons
There is light at the end of the tunnel, and this [EBA] consultation will help a lot, says Luke Scanlon, who advises clients at law firm Pinsent Masons on newtechnologies.
The proverbial tunnel islong.
Take cyber security. On the one hand, cloud providers such as the leader of the pack, Amazon Web Services are likely to have security processes and technology that are at least as advanced as those of their banking clients, thanks to their technical expertise and economies of scale. On the other hand, providers can pass on a banks data or system management to yet another contractor, increasing security risks present in traditionaloutsourcing.
The EUs General Data Protection Regulation, coming into force next year, will up the ante on data security. The new rules require, among other things, that bank customers are able to request that their personal data held is deleted. One practical outcome, say lawyers, is that banks will have to clarify to cloud providers exactly how they should handle and categorise data to ensure it can be easily isolated and deleted ifrequired.
Of more concern are potentially punitive fines up to 4% of annual global turnover for firms found guilty of data breaches caused by neglect. The size of the potential fines is attracting a lot of attention from both clients and cloud service providers, says Peter George, partner at law firm Baker McKenzie, and responsible for the firms annual cloud computing survey. There will be contractual disagreements over where liabilitylies.
One way to spot and mitigate such outsourcing risks is to undertake regular audits of third-party providers, as banks in most EU countries are already required to do. The EBAs consultation now closed sets out similar guidance with a specific focus on cloud suppliers, and Scanlon at Pinsent Masons welcomes what he sees as a flexible approach to a difficulttask.
Cloud computing involves distributing data across any number of physical locations. Scanlon says that, given the largest cloud providers host services for thousands of banks, regular physical audits would be inefficient, costly and would create risks for other banking clients, related to the security of theirdata.
Rahul Prabhakar, in charge of regulatory compliance for financial services in Europe, Middle East and Africa at Amazon Web Services, puts it another way: A constant stream of people walking through our premises presents securityrisks.
Peter George, Baker McKenzie
The EBA recognises these challenges in its document and endorses alternative options where an outsourcing institution does not employ its own audit resources. These options are pooled audits, performed jointly with other banking clients, and third-party certifications or audits, provided they conform to widely recognised standards and meet the needs of the outsourcingbank.
This is a really positive step, Scanlonsays.
Prabhakar also welcomes the EBAs stance on audits but says the order of preference should be reversed. The EBA and other regulators should consider clearly stating that, one, logical [de-facto] access is more appropriate than physical access and, two, that third-party reports and certifications or pooled audits are more preferable than individualaudits.
Some regulators have been more prescriptive. Canadas Office of the Superintendent of Financial Institutions insists on being able to audit banks across their functions, says Robert Paolino, the former chief risk officer for Canada at Japanese bank MUFG. This effectively requires that data is stored within the country especially data considered as sensitive under Canadas PrivacyAct.
Oversight of cloud providers is even harder if they employ subcontractors. This may keep costs low but banking clients may not have a direct relationship with the provider of significant parts of the cloud service as a result. Its been a struggle to square that circle, says Jonathan Kirsop, partner at law firm Stephenson Harwood in London.
One solution has been for cloud providers to give notice that they are appointing a subcontractor and give clients the right to terminate that particular service. This does provide theoretical control over the supply chain, saysKirsop.
The EBAs draft advice on what it calls chain outsourcing says banks dont need to pre-approve every subcontractor, and providers can simply give clients notice of any subcontractor changes rather than require each change to be approved by all clients.
The EBA also proposes that the outsourcing institution should carefully delineate which activities can be subcontracted, and that any subcontractors fully comply with the obligations placed on the original cloud provider. The outsourcing agreement should also require the cloud provider to notify any changes to subcontracting arrangements in time for its clients to carry out a riskassessment.
A strategy for severing the relationship with a provider is another hurdle banks have to clear before cloud computing can properly take off in theindustry.
How do you extricate yourself from a cloud computing contract when youre dependent on the provider? asks George at BakerMcKenzie.
Guidance on outsourcing to the cloud released by the UKs Financial Conduct Authority (FCA) last year suggests that banks should ensure exit plans are documented, understood by appropriate staff and fully tested. It says banks should monitor concentration risk and consider how they would respond if a service provider were tofail.
Peter George, BakerMcKenzie
However, the details remain largely untested. No bank has ever exited from a significant public cloud technology arrangement, the BBA, a UK banking trade body, and Pinsent Masons wrote in a January discussion paper. The report focuses on the cloud model that is available to the general public, with Amazon Web Services the best-knownexample.
As a result, frictions arise as to the contractual terms between banks and cloud service providers and other third parties leveraging public cloud. There is added pressure as parties do not have the benefit of experience to call upon, the paper continues. The BBA is therefore calling on the FCA to work with the banking industry to produce a due diligence checklist for banks migrating from cloudcontracts.
The draft EBA guidance also acknowledges concentration risk inherent in cloud computing, not only from the point of view of individual institution but also at industry level where large suppliers of cloud services can become a single point of failure when many institutions rely onthem.
Among other recommendations, the EBA advises banks to develop key risk indicators to spot deterioration in the cloud service to unacceptable levels, and to prepare alternative solutions and plans for transitioning to them from the out-of-favour cloudprovider.
Not only will a smooth transition to another provider ensure the banks services are unaffected, but it will also spare the bank reputational damage from a failure by a thirdparty.
Neither the EBA nor the FCA guidance contains tips on negotiating contracts with cloud providers, which comes with its own unique challenges.
In traditional bespoke outsourcing, financial services clients tend to have a lot of bargaining power and are able to use their own master services agreements, says Kirsop at Stephenson Harwood. With a cloud service, its a one-to-many solution. Suppliers cant have lots of different terms or policies for different clients. Clients have to get comfortable with standard terms, with limited ability to negotiate around them. Thats the fundamentaldifference.
Finally, as with most banking activities in the post-financial crisis era, regulation can be a key determinant of the spread of innovativepractices.
The EBA wrote in its draft guidance that uncertainty among banks about how supervisors expect them to handle cloud computing poses a barrier to its adoption.
In Indonesia, banks are blocked outright from migrating to the cloud due to their regulators requirement that all critical services be hosted within the countrys borders. For banks, who could they find in Indonesia that could host those services? The big [cloud] providers dont want to set up data centres in Indonesia; its not viable for them right now, says Manish Chawda, partner at Singapore consulting firm Pragma, which specialises in cyber and technologyrisks.
Differences in rules between jurisdictions present another headache for banks.
Jonathan Scott-Lee, Standard Chartered
Standard Chartered, for example, has operations in 68 emerging markets. As the bank is ramping up its use of cloud computing, the answer is not as might be assumed to take a highest common denominator approach, says Jonathan Scott-Lee, the Singapore-based global head of compliance, data, technology, operations and outsourcing at StandardChartered.
For a start, a gold-plated cloud strategy would eliminate most if not all of the cost efficiencies of the cloud. Second, even the highest specifications can fall foul of some regulatory environments: China, for example, mandates specific regulatory standards on the commercial use ofencryption.
I advise our digital teams to develop technology as globally as possible but that is flexible enough to allow software to be deployed in local environments, Scott-Lee says. For example, a cloud-based system could be linked to a locally housed database for client information for jurisdictions where the regulator requires data on clients to be heldlocally.
However, the trend is now towards ironing out regulatory differences around cloud computing, as illustrated by the EBAinitiative.
Jeroen Prins, a London-based financial services technology risk expert at PwC, sums up: For key jurisdictions we believe that similar principles apply and it is now feasible for the larger banks to adopt cloud servicesglobally.
Continue reading here:
Heads in the cloud: banks inch closer to cloud take-up – Risk.net (subscription)
Walmart, which is building its own cloud-based data centers, will be using morea lot moreNvidia chips going forward, according to a research note from Global Equities Research.
In doing so, the retail giant joins a number of cloud computing providers like Amazon Web Services that are using more of what’s known as graphical processing units, or GPUs, to crunch data for machine learning. GPUs, the thinking goes, are better suited for analyzing huge data sets or controlling autonomous cars than more general-purpose chips that are used for more typical computing.
Over the next six months, Walmart (wmt) will go “full steam” into deep neural networks, using clusters of Nvidia chips, Global Equities analyst Trip Chowdhry says in a note released Tuesday, which Barrons first spotted. Neural networks, a subset of artificial intelligence (AI), are sophisticated computing systems that mimic how the human brain learns.
Chowdhry says that Walmart is building a “GPU farm” that will be about a tenth of the size of rival Amazon Web Services “GPU” cloud. He does not identify any sources.
Related: Walmart Gears Up Anti-Amazon Stance After Whole Foods Deal
The business context here is important. Walmart has seen AWS parent company Amazon (amzn) eat into its business for years and is thus loathe to use AWS cloud services for its own computing needs. That’s one big reason it built its own OneOps cloud while also making that OneOps core technology available for other companies to use.
Walmart is not the only retailer wary of putting its IT budget into AWS services. On Tuesday, the day after Amazon closed its $13.7 billion acquisition of grocery chain Whole Foods, CNBC reported that Target is scaling back its own use of AWS. What was most surprising to many about that report was the notion that Target used AWS to begin with. But then again, software developers at big companies often AWS to build test versions of their software without their bosses knowing.
A Target spokesman said that company has used and will continue to use multiple cloud providerswhich he did not name. Early this year it evaluated that lineup and decided to make some changes, he added, without additional detail.
Neither Walmart nor Amazon could be reached for comment.
Get Data Sheet, Fortunes technology newsletter.
Going further back, in June after the Whole Foods deal was announced, Walmart reportedly told its partners and suppliers to stop using AWS services. The good news for retailers that are wary of using a competitor’s cloud services is that Microsoft (msft) Azure and Google (goog) Cloud Platform are now seen as viable alternatives for many customers.
Note: (August 30, 2017 4:49 p.m. EDT) This story was updated to add comments from Target.
OTTAWACyber threats and ransomware attacks are no match for cloud computing design-built from the ground up for information technology security.
In physical security, particularly access control, the history of hacking formerly focused solely on stopping unauthorized users from duplicating or cloning information housed on cards and other devices. Now, its all about stopping criminals from gaining access to or attacking a customers network and its data through vulnerabilities in their physical security systems.
The mounting case for cybersecurity is real and escalating. Cyber threats and ransomware present a formidable threat across all businesses and vertical markets. In the example of ransomware an attacker manages to successfully place malware on the network with the intent of encrypting critical data or entirely locking systemsto hold the business ransom for payments, with the promise of releasing the information or unlocking the system. Much of the ransomware is coming from out-of-country hackers who are quite sophisticated in their attacks, often demanding bit coin as payment.
Online extortion had a banner year in 2016, according to Trend Micros annual security assessment report: 2016 Security Roundup: A Record Year for Enterprise Threats. In 2016 there was a 752 percent increase in new ransomware families, with $1 billion losses to enterprises worldwide.
Ransomware attacks are growing in frequency, causing devastating consequences to enterprises and organizations across the globe. Numerous, widespread breaches around the world occurred prior to and through Mothers Day weekend 2017 as the WannaCry ransomware spread. Britains National Health Service was hit by the cyber-attack and the same perpetrator froze computers at Russias Interior Ministry while further affecting tens of thousands of computers elsewhere.
Across Asia, several universities and organizations reportedly fell prey, including Renault, the European automaker. The attacks spread swiftly to more than 74 countries, with Russia worst hit and included Ukraine, India, Taiwan, Latin America and Africa.
The fact of the matter is that anything riding on the network is at risk. Physical security systems are vitally important to daily operations of every organization today. At many facilities any downtime of these systems may significantly affect the safety of people, property and assets.
Tackling data security risks
Cloud computing creates a solid path for customers to lower their total cost of ownership (TCO) with open architecture and other installation efficiencies that provide ready scalability. But it also provides healthy TCO in providing inherent safeguards that protect data regularly and automatically.
Cloud computing Access Control as a Service (ACaaS) Security Management Systems (SMS) offers respite to the practice of housing access control systems on premises, with inherently higher security. Many of the cloud-based solutions today redundantly store system data and video automatically or on schedule. In addition, most cloud providers are held to an extremely high level of cybersecurity with various levels of encryption and automatic disaster recovery. Acceptance of cloud solutions by organizations is at an all-time high and manufacturers are releasing cloud solutions for numerous technologies. Integrators need to take advantage of the opportunity to offer cloud solutions to customers for enhanced security and reliable network authentication.
What end users and security integrators are beginning to understand is that the cloud is much safer than a non-hosted environment. In the example of ACaaS SMS, there are multiple layers of safeguards and security in the technology available as opposed to on-premise software-based platforms using local servers. Cloud-hosted security management systems are purpose-built and designed with software security as a leading backbone. Hosted systems can follow what Microsoft refers to as SD3+C: Secure by Design, Secure by Default and Secure in Deployment in Communications.
Two-Factor Authentication and Password Policies
For those who have had their Facebook account hacked, the reality of the insecurity of passwords hits home. Secure cloud-hosted systems dont use default user names and passwords. Each hosted system is issued a unique password, providing the first step to an ultra-secure solution. In addition, the ability to create password policies for users that can be set for low, medium and high adds another layer of protection. Lastly, two-factor authentication, which is being used much more frequently with consumers, can be attached to the log-in credentials of any user.
With two-factor authentication, user accounts are linked with a second source of verification, such as a code generated for further authentication. Users must provide this code when entering their user name and password, while a potential hacker would need three things in order to access the system: user name, password and access to open the device which generates the two-factor authentication code. Two-factor authentication at the login for cloud-hosted access control reduces the risks of weak passwords while also simplifying password policy management for the IT staff.
Standards-based TLS 1.2 encryption
In addition to the SD3+C design concept, encryption further protects the transmission of data between the client and the cloud-based server using Secure Sockets Layer (SSL), a standards-based security technology for establishing an encrypted link between a server and a client. The SSL Transport Layer Security (TLS) 1.2 encryption secures the data connection to connected field hardware as opposed to using easily hacked Open SSL protocols. Further, TLS 1.2 encryption allows the server and client to authenticate each other and to negotiate an encryption algorithm and cryptographic keys before data is exchanged. Cloud computing takes this a step further: manufacturers auto-negotiate the TLS encryption with the access control controller boards as they initiate contact with the server.
Once logged in, SSL certifications further safeguard the communications between applications while TLS certificates protect the communications between field devices and the ACaaS SMS platform. Proactive and consistent vulnerability scanning also provides additional protection against emerging threats.
IP Client, versus IP Server, are also characteristic of cloud-computing which greatly reduces risk from outside threats. IP Client uses outbound ports at the users site instead of inbound ports, circumventing the possibility of security breaches and data compromise. With IP Client, IT staff does not have to open inbound network ports or set up port forwarding, keeping the network secure and lowering management workload on manual configurations and set up.
Advanced security safeguards
All software manufacturers have Quality Assurance (QA) departments inspecting their own software for bugs and issues. However, what are the risks if QA misses a critical issue with the code? Third party vulnerability assessments are not only becoming prevalent in the cloud-based solutions market, but expected by savvy end users who want support documentation to assure that the manufacturer has taken additional steps to further minimize risks. Veracode is one of those that provides these services in cloud-hosted ACaaS and tests for key application security risks to enterprise solutions. Software providers of all sizes use the VerAfied security rating to demonstrate their software has undergone stringent independent testing and certification against the latest industry standards.
Gartner predicts worldwide public cloud services to grow 18 percent in 2017 to $246 billion, up from $209 billion in 2016. ACaaS thats built for and hosted by the cloud provides the industrys most robust solutions for secure, connected environments in security and the emerging internet of Things. A major factor to consider for cloud-computing SMS today is the level of security a manufacturer provides for their application. The most robust solution should incorporate multiple layers of data and privacy protection to safeguard client information while delivering the highest end-to-end security, from system login to trusted field devices.
Paul DiPeso is executive vice president of Feenics, a company that specializes in cloud-based access control solutions including its Access Control as a Service (ACaaS) platform built specifically for and hosted in the public cloud.
That’s likely to change. All three main types of cloud computing markets–software as a service (programs people use), infrastructure as a service (virtual server space), and platform as a service (a virtual environment where companies can test their own apps and programs)–are expected to grow exponentially over the next few years.”There was a lot of hype around cloud computing a couple of years ago, but we’re still early,” says Margaret Vitrano, who co-manages ClearBridge Large Cap Growth , which earns a Bronze Analyst Rating from Morningstar.The software market will jump the most, growing from $39 billion in 2016 to an estimated $110 billion in 2020, but infrastructure and platform should soar as well, from $38 billion to $70 billion and $13 billion to $30 billion, respectively, according to estimates from ClearBridge Investments.This kind of growth should have investors salivating.”We think the single most important trend in technology remains the ongoing shift toward cloud computing, which is having ramifications for dozens of stocks across our coverage,” noted Morningstar analyst Brian Colello in his quarterly outlook.Indeed, many stocks have seen their prices climb thanks to their cloud efforts. The ISE Cloud Computing Index is up 35% since January as of this writing, compared with the S&P 500’s 8.5% gain. As more companies adopt this technology, investors are likely to see even greater gains.Slow to AdoptAs familiar as people are with cloud computing today–most consumers use some sort of cloud program, such as email or online file storage–enterprises have taken their time with adoption, says Walter Price, comanager of the Bronze-rated AllianzGI Technology .Many companies had been worried about security and whether they should store sensitive information on third-party servers. Plus, switching from expensive on-premises technology, like a server located in a company’s office or software that has been installed directly on a computer, is a slow process.”Trillions have been invested in existing infrastructure,” says Price. “That investment has to be depreciated and companies have to think about how they’re going to transition to a more on-demand or subscription-based cost stream. Like all revolutions, it takes time for people to agree that it’s ready for prime time, but once it’s ready it starts to move faster than expected.”Rodney Nelson, a Morningstar analyst who covers several cloud companies, says that it could take a decade for larger companies to shift their business processes to the cloud.”We’re talking about massive shifts of technology,” he says. “This is a story that’s going to play out over the next 15 years.”Cheaper and More EfficientMake no mistake, though, cloud computing is the future, says Nelson. The cost benefit to companies is too attractive to pass up. Rather than buying software for thousands of dollars that only some employees might use, companies can pay an annual fee based on the number of people who actually use a program. That fee covers software updates and technical support–things that companies used to have pay additional fees for.The same goes for storage space. In the past, companies would build internal servers that were often not used to their full capacity. Now, companies can buy server space from a third-party vendor and use onlywhat they need. If they want more space, they can easily add to what they have. Again, maintenance and upgrades are included in the price.”Companies are increasingly realizing that operating on-premises IT infrastructure is inefficient,” wrote Nelson in a recent white paper. “They’re turning to cloud … computing to streamline their processes and drive product and service innovation. We believe public cloud is a strategic shift that all companies will eventually embrace to varying degrees.”Profits Ramping UpJust as it has taken companies a while to embrace the cloud, it has also taken a while for cloud computing companies to generate profits. For the last several years, cloud operations have been focused on building products that are better than the non-cloud offerings on the market, and that has meant sinking millions into research and development, says Price.Even when these companies started selling their cloud capabilities, revenues were low–people paying $50 a month for a subscription isn’t the same as getting them to pay thousands of dollars up-front for a product. Now, though, those monthly subscription fees are adding up. Cloud companies are investing less in R&D, and the clients that have embraced the cloud are buying more services every year.”It took a lot longer for these companies to get profitable off a subscription revenue base, but now they’re on the other side of the mountain,” says Price. “Their cost for renewal is much lower, and they now have superior features to the on-premises product. The model’s only going to get more profitable over time.”Pick Your SpotsInvesting in this sector may seem like a no-brainer, but not every cloud enterprise will come out a winner. There are so many cloud companies out there, especially on the software side, that not all will succeed.”It’s like the PC era years ago,” says Price. “The growth of the industry looked wonderful, but really only five or 10 companies associated with the PC generated most of the wealth for investors. That will be true in the cloud as well.”At the moment, Nelson sees the most value in infrastructure as a service companies, with Amazon and Microsoft leading the way. While the two companies do more than cloud computing, their cloud operations–Amazon Web Services and Microsoft’s Azure, both considered infrastructure and platform as a service companies–are growing like weeds. AWS, for instance, saw its operating income increase by about 37% year-over-year in the first six months of 2017, and it accounts for most of the company’s overall profits.The two do face some competition, mainly from Alphabet and Alibaba , but they’re much better positioned to succeed than the others.”Amazon and Microsoft have already outlaid tens of billions in investments,” says Nelson. “They’re the only two firms that have done that so far.”Amazon and Microsoft are also developing the most value-added services, such as machine learning, server-less computing, and artificial intelligence capabilities, and that will make them even more powerful going forward. It’s one reason why the companies both have wide moats assigned to them, says Nelson. Both are also trading in 4-star range as of this writing, which suggests that the shares are undervalued relative to Morningstar’s estimate of their fair value.On the software side, a few companies look promising, such as customer relationship management programs Salesforce (rated 3 stars as of this writing, which suggests it’s fairly valued) and ServiceNow (rated 4 stars). Salesforce in particular has great execution and has been able to “penetrate its customer base beyond its core product,” says Nelson.Nelson also likes Adobe (3 stars), which has successfully shifted from offering store-bought software to online cloud-based services. It’s a good example of the kind of software company that Vitrano likes to own. The best buys, she says, are the ones undergoing a shift from packaged software to cloud-based programs. It’s during the shift when revenues fall and investors get nervous, making these companies undervalued. Then, as more people start buying subscriptions, revenues start to climb–and stock prices presumably follow.”When Adobe made the transition from boxed software that cost several thousands of dollars to a subscription offering, it was an immediate negative for their earnings,” she says. “But over the long term it’s been positive in terms of earnings power. It’s helped them open up to the consumer market that would have never paid for its software.”While investors do have to be picky, it’s hard to go wrong with the bigger, more promising names as the cloud is only growing form here.”We like the whole sector,” says Price. “And we’re only in the second or third inning.” Bryan Borzykowski is a freelance columnist for Morningstar.com. The views expressed in this article do not necessarily reflect the views of Morningstar.com.
Read the original:
It’s Only the Early Innings for Cloud Computing – Morningstar.com
More and more businesses have been turning to cloud computing, which in turn provides consumers with huge benefits
Cloud computing, basically, is where computing based online rather than your physical computer or server. There are many applications that we use every day that are based on cloud computing. Even going on social media sites like Facebook involves cloud computing.
>See also:How to approach cloud computing and cyber security in 2017
When you go onto Hotmail to check your emails or log onto your bank account to check your balance its all down to the cloud. Even when you stream movies online, it is via the cloud. Some people dont even realise that they are using cloud computing but they are. So, what are the main benefits of cloud computing?
There are so many benefits to using cloud computing for businesses and consumers, which is why so many businesses and people have come to rely on it. Some of the key benefits of this technology include:
Improved accessibility: With cloud computing you are accessing information from the cloud and not from a particular server or device. This means that you can access it from any device and from anywhere. Whether you are a remote worker that needs to share information with colleagues or a personal user that wants to get online and check emails, it can all be done thanks to the increased accessibility.
>See also:10 trends that will influence cloud computing in 2017
Recovery of data: If you lose a laptop or device, there may be information that you cannot recover because it was on the device, which has been lost or stolen. However, if the information is on the cloud you can still recover that data from any device as long as you can get online.
Automatic updating: For businesses, one key benefit of using cloud computing is the ability to enjoy automatic updates. There are regular automatic software updates that are all taken care of, which means that there is one less thing for your business to have to take care of. It also means that businesses dont have to worry about investing in costly servers and equipment onsite.
Remote working: For employees and employers, cloud computing has made it simple to work from anywhere. This means that employees can enjoy far greater flexibility and can work remotely from another site or from home. It also means that employers can share information with employees from other sites without emails being sent back and forth.
>See also:How cloud computing can transform the pharmaceutical industry
Security of data: Both home and business users will know what a pain it can be when servers and systems go down, restricting access to information. If the information is on the cloud then this is an issue that you wont have to worry about because the information you want will be safely stored on the cloud.
More and more businesses have been turning to cloud computing, which in turn provides consumers with huge benefits. Another great thing to remember is that it is even considered eco-friendly because the infrastructure scales on demand in line with your business needs.
The UKs largest conference fortechleadership,TechLeadersSummit, returns on 14 September with 40+ top execs signed up to speak about the challenges and opportunities surrounding the most disruptive innovations facing the enterprise today.Secure your place at this prestigious summit byregisteringhere
Saudi Telecom Company (STC) has partnered with state-owned IT company ELM and the National Information Centre to create the Saudi Cloud Computing Company, which will drive the transformation of government services.
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
By grouping resources and focusing on one objective through the Saudi Cloud Computing Company, the joint venture aims to provide all government services under one roof and provide users with a unified experience.
STC, ELM and the National Information Centre are addressing this with the alliance launching the Saudi Cloud Computing Company, said Tarig Enaya, senior vice-president of enterprise at STC.
The Saudi Cloud Computing Company leverages the reach of STCs networks, fixed and mobile, its interconnected datacentres, its experience in building cloud ecosystems, and its huge network of technology partners and suppliers, he said.
STC said the deal is aimed at helping to power the Kingdom of Saudi Arabias digitalisation strategy and is in line with the countrys National Transformation Programme 2020 and Vision 2030.
Enaya said by having all government services under one roof, hosted locally, ICT infrastructure management is more secure and cost efficient.
It is more secure because of the governance framework enforced by the National Information Centre, the physical security at the datacentres, the physical and information security enforced on the network interconnecting these datacentres, and how the cloud environment is spread out across several different locations with redundancy, he said.
He added that there are two aspects to executing both the National Transformation Programme 2020 and Vision 2030. One is management based and involves restructuring and re-engineering processes inside the public sector, and the second relates to business automation and service digitisation.
For us, our contribution is to the service digitisation part, which involves adapting all the business rules inherent in government policies and processes into e-services, he said.
The majority of government services are already online, but not all of these services are integrated. There is some integration between services, especially sensitive ones, but more can and should be done, said Enaya.
He added that the new company will be involved in every element of the digitisation value chain, starting from connectivity, IT infrastructure and systems integration. In the past, we worked with government agencies and treated them as separate entities, he said.
According to Enaya, ELM provides the venture with experience of addressing public sector digitisation projects. He believes the patronage of the National Information Centre is important because with it comes the required governance framework and integration with the Ministry of Interiors identity management databases of citizen and resident data.
It is these databases, which provide the trust and validation needed to guarantee the security of transactions run through government e-services, he added.
Now with VMware and Pivotal, the Cloud Native Computing Foundation is becoming the hub of enterprise tech – GeekWire
(L to R) Pat Gelsinger, CEO of VMware; Rob Mee, CEO of Pivotal; Sam Ramji, vice president of product management at Google; and Michael Dell, chairman and CEO of Dell Technologies, discuss the decision of VMware and Pivotal to join the Cloud Native Computing Foundation at VMworld 2017. (VMware Photo)
The Cloud Native Computing Foundation, the industry group that directs the development of the Kubernetes container-orchestration product, gained two new members Tuesday at VMworld 2017: VMware and Pivotal.
The two companies joined the CNCF at the platinum level, which is the highest level of support offered by the CNCF and which requires members to donate time and money toward advancing the many projects under the CNCF umbrella. Kubernetes is the major project in that group, but it also contains several projects designed to make Kubernetes and containers easier to use, such as containerd and CNI.
VMware is definitely not the first company you would think of when listing cloud native companies, given its history. Before cloud computing, containers, and Kubernetes dominated the enterprise tech conversation, VMwares virtualization technologies revolutionized data center management by squeezing more performance out of existing hardware. But VMware knows the cloud is here to stay, inking a partnership with Amazon Web Services last year that resulted in the VMware Cloud on AWS product announced Monday during the first day of VMworld 2017.
Pivotal is a more natural fit. VMwares corporate sibling in the DellEMC conglomerate, Pivotal helps enterprise companies transition to cloud computing, and it was created from parts of EMC and VMware back in 2013 to further develop the Cloud Foundry platform-as-a-service.
As more and more companies join the CNCF (Amazon Web Services finally took the plunge earlier this month), the foundation could find it increasingly hard to manage contributors with a wide variety of business interests. So far it has avoided setting exact standards, preferring a light-touch approach toward developing and marketing the technologies it believes make for a cloud native experience.
Pivotal and VMware also announced a new container service in conjunction with Google called Pivotal Container Service. That service is a commercial version of Project Kubo, an open-source project for managing Kubernetes clusters between VMware on-premises hardware and Googles cloud services.