The Genie Is out of the Bottle--Applications Separating from the Network

June 11, 2009

But Driving NC Computing and Wireless Data

[Very informative Report with excellent viewable diagrams of who’s doing what in the industry and where we may be headed, imo.]

Some excerpts:

‘’We have written for several years that mobile data would ultimately be the driver of the golden age of NC computing, and in our view, we are now entering this stage. The ability to access stored data and processing power remotely through thin devices increases the utility of these capabilities. For this reason, we believe there will be dozens of new smartphones, netbooks and MIDs (mobile Internet device) deployed this year and thousands of new applications. These devices will drive $15 billion in advertising and search revenues in the U.S. in the next five years, with the carriers receiving $5 billion of

it. This will be the major driver of growth in the communications industry over the next five years, potentially doubling wireless data traffic (including traffic on smartphones, MIDs,netbooks, M2M) every six months or so.

Although most vendors like to claim they have an extensive cloud offering, given the highbarriers to entry (e.g., capital intensive, highly technical and need access to massive amount of energy), we believe only a handful of companies (i.e., MSFT, GOOG, CRM, AMZN, and IBM) are positioned to deliver a truly robust cloud platform. However, due to the attractiveness of this market, we expect a substantial ecosystem to develop around these vendors. We expect a myriad of new and existing (private and public) companies to emerge with new capabilities (i.e., management tools, apps, infrastructure) that cater to this market.

With the rapid expansion of next generation networks, coupled with the processing power of a smartphone, we believe there is meaningful opportunity in this segment of the market for the carriers.

This brings us to Microsoft. There is little question in our mind the company’s single

biggest miss of the last decade has been the mobile platform, as this was just an

extension of its PC business whereas search represented an entirely new category.

Management is cognizant of how far behind the company is in the smartphone race and is investing aggressively to close the gap. We are optimistic that Win Mobile 7, set for launch early next year, coupled with increased collaboration with hardware OEMs and carriers should enable MSFT to gain some share over the next 18 months.

Sri Anantha: Managed Hosting Providers–

Enabling the Third Generation of Computing Services One thing is increasingly clear: network-centric (NC) computing is happening. Over the next decade, many enterprise applications will migrate from inside the enterprise to network data centers just as they migrated from time-sharing facilities into the enterprise in the 1980s. This, to us, represents perhaps the most profound change that the communications and IT industries have undergone in more than a decade. It will create

large new IT industry sectors just like the last transition created the server, application

software, and systems integration industries. In our opinion, the transition will benefit

players at every level of the service delivery process: colocation providers, managed

services providers, data networking vendors, and all those who provide the IT services inside the data center.

The biggest payoff of cloud computing comes from its potential to consolidate millions of servers into dynamic meshes that are created on demand; transforming IT from hardware-bound silos into just-in-time IT services delivered at any time from the most advantageous location over the Internet. Cloud computing reduces costs and lowers capital expenditures since hardware is no longer purchased but rented in a “utility” fashion.

Mobilization of information was set in motion with laptops and, more recently,

cell phones.

In contrast to the status quo of local hosts with heavy computing power, computing in this framework occurs remotely, with the local client essentially just being a “thin” interface. Cloud computing will help to drive this ongiong mobilization of information, which has many benefits for companies looking to improve employee productivity.

This increases demand for communications connectivity, computer utilization and efficiencies. It also drives the convergence between communications, computing, media and CPE devices, greatly expanding the size of the market. We believe that the added utility from receiving computing/communication capabilities wirelessly on a thin device is the killer application. We believe the availability of broadband wireless speeds (both due to new technologies and increased spectrums holdings by the carriers), broadband penetration of 90% (indicating that Internet usage and application development have become commonplace), increasing popularity of smartphones (as scale and Moore’s law drive device efficiency) and substantial subsidies by carriers, and explosive growth of wireless applications (that provide productivity and entertainment) have all fallen in place for NC computing to thrive.

We have seen a lot of devices with computing capabilities, but the number of these that are networked was limited to mostly PCs and now smartphones. A thin client could just as easily be a Coke machine, kiosk, cash register, parking meter, etc. Mainframes limited users’ choices to a few models of rigidly defined “dumb terminals.” In NC computing, we expect the majority of access devices to be thin and wirelessly connected.’’

Check out Exhibit 18

How can Exhibit 19 not win out?

https://opco.bluematrix.com/docs/pdf...

emit…