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Does Cloud computing scares you?

Why is cloud computing so bad for IBM?

  • Recently, Stan Druckenmiller revealed that he has shorted IBM stock because he feels that IBM will be seriously hurt by cloud computing. He calls it one of his higher-probability shorts. http://www.bloomberg.com/news/2013-11-22/druckenmiller-shorting-ibm-in-bet-cloud-computing-to-win.html I find this puzzling. Firstly, IBM is also a cloud computing player. Secondly, IBM thrives in providing IT services. One still needs technical support with cloud computing. Thirdly, Warren Buffett has invested billions in IBM which is one of his rare technology bets.

  • Answer:

    I think it's worth noting that even though IBM is a cloud computing player, a substantial amount of its business is still based on making more old-fashioned computing hardware, which Mr. Druckenmiller likely believes will become less and less profitable as cloud computing gains market share. What will be interesting is to see how IBM addresses this over the next few years, and your mentions of its already existing cloud computing unit and IT services are certainly ways the company can do that, and perhaps Mr. Buffett's investment in the company demonstrates his faith in these and other company initiatives.

Ben Huang at Quora Visit the source

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IBM is more of a private cloud player, and perhaps Stan feels that increased movement towards public cloud is hurting IBM. Also, IBM doesn't have the strongest private or hybrid cloud offering, but is rather middle of the pack. I think the future is most companies having a small private cloud with extensions into public clouds such as AWS when needed. IBM doesn't excel in any one area (networking, storage, compute) so perhaps they are at a disadvantage in this future state of affairs. I think it is a little too early to write off such a big company, especially when the widespread adoption of cloud is likely to be a rising tide that lifts all boats.

Peter Lamar

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