Thanks robiobosco... a gazillion comments here and this is the smartest ... at the end of the day, this is simply common sense and basic economics, but first you have to get your definitions squared away; Private cloud is nonsense, a way for the established players to maintain their margins. It's FUD-time for IBM sales force (fear, uncertainty, doubt).
This is what IBM and Oracle and HP say. Don't believe it, it's not true. The security issue is FUD talk (fear, uncertainty, doubt); the move to the public cloud has already begun and the dollar savings is so massive for FT500 co's that it'll be a competitive disadvantage to be heavy on-premise.
YES...very good... and investors should know this, an incremental move to the cloud is all that is needed to waylay IBM's model, a $220Bil mkt cap on $105Bil of revenue, there is no room for error.
IBM, And The Private Cloud, Will Get Here [View article]
The evidence is piling up that there are headwinds in IT... it's not just IBM, it's ORCL, Accenture, and now VM Ware... note that VMW is all in on the private cloud. RAX has lost 1/2 - it's 75% private cloud and that's where the trouble is. The key for investors is the incremental change - everything doesn't have to move to the cloud, if IBM has another 10% risk to revenue, it will be a disaster (5% decline last quarter).
This piece from InfoWorld is from Dave Linthicum (among the best on the subject): "The Cloud is Killing Traditional Hardware and Software"
Actually, IBM is not a major player in "equipment" for the Cloud... even Dell and other lower-cost manufacturers are getting clipped; every public cloud host I know of now builds their own servers, at about 1/3rd the cost of Dell's.
You'd think Netflix would have some concerns about the public cloud after the Christmas Eve outage... not even. They're all-in and saving tens of millions in expense... here's what Adrian Cockcroft said in his blog (Netlfix CTO) one month after the outage (he's talking about IBM, HPC, ORCL, et al), and their inability to adapt to the new paradigm.
"Taleb makes the point that big companies become increasingly fragile as they lose agility and the ability to move with the markets, and we are seeing that play out in the Enterprise Computing space. There is still money to be made from the late adopter customers, but the trend is clearly towards development using exclusively open source tools, with applications and infrastructure delivered as a service. There is zero revenue for traditional Enterprise Computing vendors in this model."
We're talking about different things, downtime for maintenance, updates, etc. don't happen in the public cloud; "outages" happen in both the private and public clouds, of course. As Netflix CTO explained it (a former IBM customer), they're able to configure and update and test 500 servers on the public cloud while simultaneously running 500 servers for the site; once the testing is complete, they seamlessly transition to the updated set...scalability, elasticity, and price, the public cloud wins. This is a paradigm change that's well underway.
This is what I'm afraid of, given my position in Berkshire - that WB accumulates more IBM stock. This is about a paradigm change in how computing power is distributed, and IBM has the wrong model for the paradigm change. Can they adapt? The problem is their high-margin operating model doesn't fit what's rapidly becoming a lower-margin environment.
IBM tried to play in the public cloud hosting market, but it couldn't compete on price... it's still there, but it's an irrelevant player.
Everything IBM sells is being commoditized, including software. It's a rent v. own debate and their customers have a financial incentive to consider renting.
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
http://seekingalpha.co...
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM, And The Private Cloud, Will Get Here [View article]
This piece from InfoWorld is from Dave Linthicum (among the best on the subject): "The Cloud is Killing Traditional Hardware and Software"
http://bit.ly/10dPf9w
IBM: A Disaster In The Making [View article]
"The cloud is killing traditional hardware and software"
http://bit.ly/15KrDRX
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
"Taleb makes the point that big companies become increasingly fragile as they lose agility and the ability to move with the markets, and we are seeing that play out in the Enterprise Computing space. There is still money to be made from the late adopter customers, but the trend is clearly towards development using exclusively open source tools, with applications and infrastructure delivered as a service. There is zero revenue for traditional Enterprise Computing vendors in this model."
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
Everything IBM sells is being commoditized, including software. It's a rent v. own debate and their customers have a financial incentive to consider renting.