Cloud computing: The key determinants of share price in public cloud performance

The latest quarterly earnings show Amazon's quarterly loss of $7 million trillion, less than the 7 million-dollar earnings of the same period last year. But after the earnings, Amazon's share price set a record of 313.62 dollars. The biggest contributor to this anomaly is the public cloud. Earlier, Amazon's competitors in the public cloud, Oracle and other companies also announced their latest quarterly earnings, the results are not satisfactory. To improve their performance, they say they will increase their investment in cloud computing.

In the public cloud field, not long ago, VMware announced its new public cloud strategy, Google announced its IAAS services compute engine support hybrid cloud and its PAAs service App engine support PHP, Microsoft Azure in China Curve Landing, IBM with the capital online to enter China ... The industry has almost reached a consensus: the public cloud is becoming an enterprise-class service blue ocean.

VMware: Revenue Growth 11%

If you want to really feel the glamour of the public cloud, take a look at VMware's latest quarterly earnings. July 29, VMware, the world's largest virtualization and cloud infrastructure maker, released its financial results for the second quarter of fiscal year 2013, with a second-quarter revenue of $1.24 billion and an increase of 11% per cent. VMware's growth is largely due to its ability to help customers transform from client server mode to Mobile cloud computing mode. In the new hybrid cloud strategy that VMware recently released, the public cloud is a core part of the virtualization software that gives VMware the opportunity to provide customers with a common platform to connect internally deployed VMware management software and the new public cloud that VMware is about to release.

VMware CEO Patte Kissing said: "VMware also has huge market opportunities in the second half of 2013 and beyond. VMware will continue to succeed because we can help customers move from a client server ERA to a mobile cloud era. We want to pave the way for customers to the new world, to support the enterprise to further improve efficiency, control and agility. ”

Thanks to the development of VMware, EMC's latest earnings report in 2013 was also good, with a total revenue of $5.6 billion in the second quarter, up 5.5% per cent, net profit of $701 million, and 7.8%, EMC's president and chief executive, Jotus said While customers across the IT sourcing market are more cautious, EMC still finds many opportunities in areas such as cloud computing, large data, and trusted IT infrastructures. VMware is an important EMC layout in the cloud computing world.

Like VMware, Facebook is the way to make the most out of the public cloud service. Cloud based advertising Services is the largest public cloud service subclass. Third-party data show that the 2013-2016 "cloud-based advertising services" spending will be up to $677 billion trillion, accounting for the total public cloud expenditure of 48%. Facebook is one of the main providers of the service. Earlier, Facebook's latest quarterly earnings report showed revenue growth of 53% to 1.81 billion dollars a year, with a profit of 488 million dollars, higher than the average forecast by previous analysts.

Amazon: AWS helps push price innovation high

The blue sea effect of the public cloud is emerging. Although some companies have not reported market expectations for the latest quarterly earnings, we can still find a public cloud to drive their performance. July 26, Amazon released the latest quarterly earnings show that the company achieved net revenue of 15.7 billion U.S. dollars, an increase of 22%. As operating costs Rose, Amazon lost 7 million U.S. dollars in the quarter, a share loss of 0.02 U.S. dollars, the same period last year, a net profit of 7 million U.S. dollars, a share earnings of 0.01 U.S. dollars. Among them, the network services business growth rapidly, including Amazon Network Services (AWS), the cloud computing business, including the "Other business" category to achieve revenue of 892 million U.S. dollars, the year-on-year growth of 61%, the chain growth of 19%.

Amazon has not disclosed the profitability of its AWS business, which industry has speculated is expected to account for 5% of Amazon's total revenue this year, up from last year's 3.4%,2015 annual meeting to 8%. Earlier, Amazon chief executive Bezos had hinted that future AWS operations would be more revenue than traditional retail revenues.

Since the launch of Cloud computing Services in 2006, Amazon has expanded rapidly in this business and is well ahead of the industry because of its competitive strategy. Industry insiders expect about 90% of Silicon Valley startups to use Amazon's cloud computing services. Schacter, an analyst at Macquarie, says the rapid extension of AWS, benefiting from the widespread adoption of big businesses, will help boost Amazon's gross profit margins.

Amazon shares have hit record highs since investors are bullish on emerging businesses such as Amazon, which are not as profitable as market expectations.

Microsoft's cloud computing services Azure failed to catch up with the Amazon Cloud service AWS, but was also a giant in the public cloud market. Influenced by the PC market, Microsoft's latest quarter was not as profitable as market expectations, leading to a 11.4% per cent fall in its share price. "But our enterprise-class solutions and cloud products still show strong momentum and help us achieve our expected revenue this quarter." Amy Hood, Microsoft's chief financial officer, said, "We have focused our efforts on Ami Hud businesses like cloud services." ”

Oracle: Further increase "cloud" input

More and more it customers are putting more and more business on the cloud platform, and more and more large companies are increasing their investment in the cloud technology field. Oracle has lagged behind other companies in this area.

Affected by the customer's shift to using cloud services to reduce reliance on servers, databases, and related programs, Oracle's latest quarter's revenues were less than market expectations: In accordance with U.S. GAAP, the company achieved net profit of 3.807 billion U.S. dollars, a year-on-year increase of 10%, 80 cents per share, up 17%, in line with market expectations Revenue for the quarter was roughly unchanged from the same period last year, at $11 billion trillion, failing to meet market expectations. Its share price fell sharply by 9.3% on the day after the earnings announcement.

Investors are worried about Oracle's business prospects, but have taken new steps to further impact the broader cloud-computing market – in addition to the acquisition of cloud marketing software maker Eloqua, Oracle has established alliances with other major cloud-sector companies around the world-and not long ago, Oracle announced that Microsoft, Saleforce.com and other companies formed strategic alliances.

However, Nomura analyst Cherende that while Oracle's business is shifting to cloud services, it will not improve performance in the near term because it takes a long time for cloud services to generate revenue. He said Oracle's hardware business could slow down in the next quarter, and Oracle will soon unveil a new database product that will better support cloud services and help Oracle's hardware business begin to improve.

Editorial Reviews

The public cloud market presents a "group-style" competition

Nearly 50% of companies have embraced cloud computing, with at least some applications migrating to the cloud environment, according to Rightscale, a cloud management firm. In the application of cloud computing, large enterprises mainly adopt the model of mixed cloud--the combination of public cloud and private cloud. According to Rightscale's data, 29% of the companies currently use a hybrid cloud model, with 15% of the companies using public cloud services. Public cloud is becoming the blue Ocean of enterprise class service.

The public cloud service enables enterprise leasing, computing power, storage resources, and other services from data centers shared by other customers. Public cloud services are cheaper and more flexible than creating and maintaining their own data centers. Amazon's AWS Division pioneered the service in 2006 and became the market's hegemon. At present, the public cloud service business model is not clear, the vast majority of cloud service providers rely on traffic in support. Amazon's AWS, for example, is a typical value overflow that leverages e-commerce resources, and Google relies on other businesses to support its public cloud services. From the above results, the public cloud has a significant effect on the performance of the enterprise. While most companies are not expecting the latest quarterly results, we might as well interpret it as a painful transition to cloud computing, where the public cloud business is still a small share of the total revenue, even if it dominates Amazon.

It is worth mentioning that, with the increasingly fierce competition, the public cloud market is showing a "group-style" competition situation. Earlier, SAP and Amazon teamed up, Pivotal and GE announced alliances, and in recent days Microsoft and Oracle have announced alliances in cloud computing. It can be expected that the future of the public cloud market competition will be more intense.