As described in two recent year-end blog posts, personal computing is not dead, and neither is enterprise software. In fact, these two markets are where information technology (IT) investment opportunity remains for the foreseeable future, especially for companies such as Google (GOOG) and Microsoft (MSFT) with the underlying technology and overriding market power to address both markets simultaneously. No question, this involves investing in a mature market where you have to think in terms of long-term returns rather than of the sorts of tide-raises-all-boats returns experienced in the 1990s.
To a lesser extent the continuing strength in personal computing and enterprise software is also good news for IBM and Oracle (ORCL). That's because the two are primary players in two separate markets related to personal computing and enterprise software, and not just because they are secondary leaders in PC and enterprise software. IBM is strong because it provides related business and IT services to those using all kinds of enterprise software, not because it is second in the enterprise software market itself (that's purely a statistical quirk of its legacy systems business). And Oracle is strong because it provides underlying technologies to services companies that do not want to be beholden to Google and Microsoft technologies (IBM also provides such technologies as a tertiary line of business).
I wish I could tell you where HP (HPQ) fits in this reordering of the IT market structure but I don't think it knows itself. Hopefully HP will figure that out before people stop using paper.
What this all adds up to is that the much touted cloud computing concept is not an investment opportunity. That's true for two reasons:
- Cloud computing is a technology, not a market. And so far, and perhaps forever, the technology is applied more privately than publicly according to Gartner.
- All of the players named above offer the technology, and IBM and Microsoft in particular are technological leaders in it.