When all is said and done, the cloud is time-sharing. It's "back to the future" for computing, back to an age when dinosaurs such as ADP (ADP) and CompuServe ruled the Earth.
That's being flip, but to some extent it is true. Having your applications or back-up hosted in a system that may be far, far away reduces your own need for hardware, software and (most important) services.
Thus, writes Charles Babcock at Information Week, the companies most threatened by the cloud are outsourcers like HP's (HPQ) Electronic Data Systems unit, Dell's (DELL) Perot Systems unit and Cap Gemini (CAPMF.PK), based in France.
So far Dell has been investing heavily in its global cloud network. HP has sought to become a bigger cloud software player, which is where it's pitching its Autonomy acquisition. The question in both cases is whether cloud successes can exceed enterprise losses.
Action on CAP stock indicates investors see the threat to outsourcing. While optimists may blame Europe's financial crisis for CAP's woes, the fact is you're down 26% year-to-date and 54% over its last peak in 2007.
Another industry threatened by the cloud, writes ReadWriteWeb, might be storage. Not companies such as EMC (EMC), which serve the cloud with storage, but companies that deliver storage within data centers. It's this type of spending that is moving most strongly to the cloud, according to IDC, and if it triples by 2015, as now expected, the list of defunct hard drive makers can only grow.
Over time IT spending is not a zero-sum game, but a less than zero-sum game. Prices are always declining, and the only way to grow is to offer even more to customers than what's reflected in those prices. As more enterprise computing moves to the cloud, there are going to be losers, and you are best advised to avoid them.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.