Barclays: “Market is Still Excited” for Cloud
2014 hasn’t been the same type of year for cloud as 2013. If you go back into 2013, it’s almost as if cloud could do no wrong. Was 2014 the wake-up call that cloud needed? Box’s IPO is now on hold after the company admitted that it was hemorrhaging 9 figures. Cloud companies that were seeking investments in the stock market or by drumming up venture capital have been met with a cold shoulder since the beginning of the year. When will the investing mood cheer up for cloud companies around the globe?
Laurence Goldberg, who works for Barclays mentions, “Valuations got a little bit ahead of themselves through March.” Goldberg goes on to say that, “The market is still excited about these types of companies.” Large cloud players such as Microsoft, Amazon and Google haven’t been hit nearly as hard as the smaller players such as RackSpace, Fusion-IO or other smaller IaaS providers that are traded publically.
Cully Davis, analyst at Credit Suisse, stresses that software providers and SaaS companies will thrive in the cloud. Davis says, “The cloud has made software much easier to write, deploy and maintain, and therefore much easier and cheaper to sell.” Davis goes on to mention that, “If you can deploy software up in the cloud, you don’t need armies of consultants to make it work with your existing infrastructure.”
Perhaps this is why SaaS vendors are poised to do well whereas smaller IaaS providers are being left behind? As the big three public cloud providers race to the bottom in terms of price, development platforms will help distinguish each service from one another. PaaS will become the bridge and the main selling point for many of these cloud services providers in the future. In fact, this is already true for Microsoft Azure. If you are a Visual Studio Online developer or a Microsoft SQL database administrator, it would probably make more sense for you to use a service such as Azure versus a smaller IaaS provider such as RackSpace based on what you are trying to accomplish. The market is picking up on this trend which is why some cloud companies are getting rewarded while other cloud players are feeling squeezed by their shrinking stock values.
