"Cloud computing -- using networks rather than local computers to manage data and run software -- represents an architectural shift," said Chai, who works in Fidelity's Hong Kong offices.
The beneficiaries of cloud computing's growth "will include platform providers, whose value-added will likely be in the management software to run large-scale virtualized systems," Chai said. "And given their complexity, competition from new players will be limited and early providers are likely to capture the majority of market share."
Providers of Internet infrastructure, applications, and security also will benefit from the trend toward aggregated off-site centralized computing, as will software firms capable of providing software as a service.
That service eliminates the need to buy proprietary IT infrastructure, as users can access it when they need it over the Internet and only pay for what they use.Big data refers to new types of large data sets, everything from correspondence to confidential customer information, have emerged because of advances in technology, including mobile computing. Driving these changes is the growth of mobile computing. Data transfer from that sector alone is expected to grow at a cumulative annualized rate of 92% between 2010 and 2015, according to Fidelity's research. IDC said in its outlook for next year that 2012 will be a battleground for those offering cloud services "as the strategic focus shifts from building infrastructure to the creation of application platforms and ecosystems." "The key to investing in long-term winners in the big-data space is identifying companies that will have 'escape velocity,' " writes Chai. In other words, "companies that reach a certain critical size ahead of their competitors will likely continue to command a dominant share of the market." IDC said the list of leaders includes International Business Machines (IBM), Microsoft (MSFT) and Oracle (ORCL). But they will be challenged by Amazon (AMZN), Google (GOOG), Salesforce.com (CRM) and VMware (VMW) in cloud computing and software services. Big firms will look for an edge by buying smaller firms with complementary technology. "Look for Microsoft to buy a content/media cloud, like Netflix (NFLX), to provide a marketplace for its apps and content," IDC said in a research note. Other prime targets for acquisition, IDC said, are cloud applications/software-as-service companies, such as privately held Workday, an on-demand financial-management and human-capital-management software vendor; NetSuite (N), which delivers enterprise software over the Internet; and Taleo (TLEO), a human-resources software company that provides an on-demand, Internet-based software product. Fidelity identifies the stocks it thinks will benefit from these trends, but the detail in Chai's report is such that we picked several that we thought matched his generic profile and most of them are also named by IDC as potential big winners. The six stocks that follow are among those that are already among the leaders in the IT industry expected to benefit most from IT's changes:
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