Earning period begins next week as the Christmas season nears these coming months. This is projected for the giant US cloud computing companies as fast growing Web and social networking players increase their purchasing behavior of media hardware to prepare for the expected swell of customer buying in the coming months.
This trend, however, may not be the same with PC owners because corporations are now focused on turning to the new cloud technology and not with additional technology equipments. The social networking and e-commerce proves to be an invaluable means to boost business enterprises in spite of the global economic crisis that continues to stay out of the loom. On the other hand, giant cloud vendors continue to have steady growth as companies depend on their business IT solutions.
That is definitely good news for companies like VMWare and EMC, which manufactures “cloud computing infrastructure” that is vital to storage and transmission within the cloud; Intel Corporation is an important player in this new trend as they continue to supply the microchips that are major components in building the new cloud server.
This is, however, not a welcome news for hardware manufacturers like Hewlett Packard Company and Dell, Inc. They had to compete by selling very low priced PCs to keep the business moving on even if it means they had to struggle to make sales against smartphones and tablet PCs.
Chief analyst Kevin Cassidy of Stifel Nicolaus said, “The area of strength is still data centers, the cloud. You have Facebook building out their data centers … five football fields large.”
Facebook continues to battle against its rivals China Baidu and Amazon.com as it purchases massive equipments that will place their data centers at Oregon and North Carolina on the forefront.
Patrick Wang, an analyst for Evercore Partners said “Companies tied to the cloud and data centers are doing relatively better, there’s no question.”
While news on the huge sales of cloud manufacturers and vendors are everywhere PC sales stay on the shelves with only 3% increase compared to last year’s revenue. As proof of this tremendous sales trend, in spite of the economic crisis Apple reported its sales record last week that astounded Wall Street.
Because of the dive in PC sales Gartner trimmed down its projection by 3.8% from its earlier 9.3% prediction. The sales plunge continues to hurt companies like Intel with its microchip and Microsoft with its Office product sales.
Kim Forrest, a senior analyst at money manager Fort Pitt Capital Group’s Microsoft’s outlook said, “I expect little or no growth from the consumer and I just want to know that companies are still spending for the refurbishment of the existing PC fleet.”
According to Wall Street their revenue report expects the following records for Microsoft at 6%, IBM at 9% and Intel at 12%. Apple on the contrary, is again expected to set a record high in revenue at 57% net profit.
VMWare, a small but a trend-setter in cloud virtualization is expected to record a 30% increase in their net profit.
Ross MacMillan of Jefferies & Co analysts said, “VMware is making a legitimate move to become the next major enterprise software stack. On placing stocks at VMWare he said, “It is a bold strategy, but one with significant rewards if successful.”
EMC, the world’s largest data storage company that owns major stocks of VMWare is also projected to record a 27% net profit, according to analysts.
Cassidy of Stifel Nicolaus said, “I think companies with higher exposure to the cloud will do better. You build these new high-speed servers and you need to have highways or networks that keep them connected at higher speeds.”