The Cloud Is Tearing Up Tech and Helping Amazon
April 30, 2016
Grazed from Barrons. Author: Tiernan Ray.
What ails tech? The last couple of weeks of corporate earnings have seen one disappointment after another, for companies large and small. Some of this is pressure on global economies finally hitting home, with the miracle of American tech giants making money off an expanding world marketplace now showing its unfortunate downside. But that’s not all. Read through the statements of the companies reporting, and there is evidence that their businesses are changing drastically because of cloud computing.
Cloud is displacing sales of traditional equipment and software. In a time of pressure on global economies, the move to cloud computing will only accelerate, given that it offers companies a chance to rent computing rather than buy it, thereby trimming their up-front capital budgets. That leaves some companies caught between a cloud and a hard place…
Barron’s wrote in October 2013 that providers of cloud computing, such as Amazon.com (ticker: AMZN), which runs Amazon Web Services, are eating away at the computing technology that companies traditionally bought to outfit their own data centers (“Building the Cloud: Who Wins, Who Loses,” Oct. 12, 2013). As we said at the time, the “nightmare” for technology vendors is that Amazon and other cloud vendors—including Microsoft (MSFT), which is widely perceived as No. 2 behind Amazon—“could end up as the new IT shop, replacing the internal data centers that enterprises have traditionally built.”…
Read more from the source @ www.barrons.com/articles/the-cloud-is-tearing-up-tech-and-helping-amazon-1461990763