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McIlwain: Tech investors need to tread carefully with IT giants

  • Only 5 of the 10 largest tech companies by market cap were on 2000's top-10 list, notes VC Matt McIlwain in a column highlighting the risks posed to tech investors betting heavily on IT giants.
  • McIlwain also observes 7 "big tech" names - IBM, H-P, EMC, Oracle, Cisco, Microsoft, and Intel - have collectively seen nearly flat sales/profit growth over the last two years. Recent industry sales figures - PCs, servers, storage - help explain why.
  • He argues recent trends - the mobile transition, the rise of subscription-based cloud apps, the migration of workloads to cloud infrastructures - makes him "a doubter in aggregate future value creation for current Big Tech companies."
  • The business model changes caused by the cloud shift, and a general pickup in the pace of change, especially worry him. Sales policies need to be overhauled to deal with subscription pricing; traditional "account control" is undermined as decisions shift from CIOs to individual departments; and companies with tens of thousands of employees have a harder time quickly reacting to change than smaller firms.
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