Cloud Computing: Dinner Talk Makes Me Nervous
I believe in cloud computing. I know there are VARs and MSPs profiting in the cloud. But I’m also getting a bit nervous. During dinner at a local restaurant this weekend, one of my close friends asked me about cloud computing. He’s a financial advisor who’s hearing lots of noise about the cloud. At the table next to us, four middle-aged folks were talking about whether to invest in Apple our cloud stocks. Soon, the restaurant staff was listening in. When the check came, our waiter asked me if I thought Microsoft could succeed in the cloud.
As we settled the bill at our table, I started having flashbacks to the Information Super Highway, the Dot-Com Bubble and the Real Estate Bubble. In all three of those cases, I started hearing casual conversations — everywhere — about how to “get in” on the next big investment.
Those classic dot-com and real estate conversations occurred at block parties, Fourth of July barbecues, and during dinner at your local restaurant. Today, it seems, everyone wants in on the cloud — even Main Street U.S.A., where individual investors are noticing the M&A activity (Verizon buying Terremark, Time Warner Cable buying NaviSite).
But there’s an old saying on Wall Street: When everyone is buying start selling. Does that saying hold true right now? Not exactly: Cloud computing is real, it works, and plenty of cloud-centric companies are profitable. Just check our Talkin’ Cloud Stock Index, where the vast majority of publicly held cloud computing companies are growing and generating positive net income.
Still, cloud stocks have become overheated — up roughly 50 percent in 2010, and more than 11 percent so far this year. Some venture capitalists say a cloud bubble has arrived. The cloud won’t disappear. It won’t pop like the dot-com bubble. But a shakeout is coming. Some cloud pretenders won’t be here a year from now. For VARs and MSPs, that means choosing cloud service providers and cloud channel partner programs ever more carefully.
The cloud computing hype has reached a fever pitch. Just ask the clientele at your local restaurant…