A Little Clouder For Everyone In The Back, Please
There is something earth-shatteringly incredible about new technology that leaves generations new and old in sheer awe, and nothing is more astounding than cloud computing. Living in a world where data storage is cheaper and more globally more accessible than clean drinking water has created a phenomenon surrounding how we can manipulate and innovate to make data more efficient. For you non-tech savvy fans out there, let us take a brief ride through the wonders of Disney’s newest attraction, “It’s A Small Cloud After All.”
Consider your home computer. Most likely, it has a hard drive with storage capacity using words like “gigabyte” or “terabyte” to indicate how much data you can store. When you download a file or upload a photo, its broken down into little, digital pieces of information called “bytes.” Cloud computing allows for the storage of personal data and use of software without the files taking up space on your hard drive. Popular cloud programs like Google (GOOG) Docs stores word processing files on their servers, and you can access your files whenever you want. Entertainment-streaming companies like Netflix (NFLX) or Amazon’s (AMZN) ‘Prime Video’ allow users to stream hours of content without the hassle of storing video files on their computers.
The techie sex appeal of cloud computing is that computer manufacturers can make simpler, sleek-looking devices because they no longer need to include a physical hard drive in the build of the computer. Long story, short, people love the possibilities that the “cloud” presents.
IBM (IBM) Loves Some Good Turbulence
While tech consumers are in a state of confounding shock, industry executives are hungry to launch their companies into the heavens by investing in cloud-computing technologies. IBM (IBM) is the latest sector giant to upload their business to the cloud as they just completed a massive $34 billion deal to acquire open software company Red Hat (RHT).
IBM’s (IBM) chief executive officer Ginni Rometty told CNBC in an interview on Monday that she felt the acquisition price was more than fair given the value of Red Hat (RHT).
“This is a very fair price…(Red Hat CEO Jim Whitehurst) has built a great company, and unlike others, high growth, high profit and cash and so this is why I think really those are important things for our investors.”
–Ginni Rometty, CEO, IBM
Rometty, in an interview with Reuters, spoke on consumer demand for cloud services and IBM’s (IBM) decision to get their foot in the door, as the rise of the “hybrid cloud” becomes widely used as a means for companies to run software store their data. Companies like Amazon Web Services (AZMN) and Google Cloud (GOOG) have data centers that utilize “hybrid cloud” technology, and IBM’s (IBM) acquisition of Red Hat (RHT) gives them access to this new market.
Industry investors reacted positively to the news of IBM’s (IBM) new deal, as shares in Red Hat (RHT) flew above the clouds over 50%, selling at $167.68 per share in premarket trading. Analysts are amazed that IBM, (IBM) after years of recent decline in industry relevance, took action to boost their performance in a key business segment.
Nomura’s Jeffrey Kvaal shared his thoughts on the deal:
“We consider Red Hat’s Linux container software OpenShift the key to the deal; it accelerates IBM’s ability to help enterprises migrate workload to and between multiple clouds, including AWS, Google, and Microsoft’s Azure. The deal is pricey. However, we believe it works both financially and strategically…This is as transformative as it gets for IBM.”
–Jeffrey Kvall, Analyst, Nomura
IBM (IBM) is not the only tech giant looking towards the future. Early last week, Microsoft (MSFT) announced their plans to acquire SF-based developer platform, GitHub for $7.5 billion. GitHub has become an industry icon due to its collaborative online presence where developers can share code and assist each other in creating new and innovative software.
The future of the tech industry is bright. As IT-executives build out their companies to adapt to the growing needs of the space, investment opportunities may follow suit and share healthy growth as well.
The key to this potential success: keep your feet on the ground and your heads in “the cloud.”
