This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Destruction of the American Server Sector

The other newcomers are mainly Chinese companies called Original Design Manufacturers, or ODMs. They are doing to Dell what Dell did to other PC makers in the past, using mass customization and build-to-order strategies so cloud companies don't buy PCs until they need them.

You have barely heard of these guys. They include Quanta Computer, SuperMicro (SMCI), the only one publicly traded in this country, and a unit of Wistron called Wiwynn.

Just as the Chinese are starting to dominate the old PC business with companies like Lenovo, they now dominate the server market because they seized the cloud opportunity while American companies kept trying to sell their old stuff.

IBM has survived this change. The real damage is being done to HP and Dell, both of which took their eyes off the cloud ball and kept them on the old "enterprise computing" paradigm, to their shame and that of shareholders.

Five years ago Dell was worth three times what it is today, a loss of $35 billion in market cap. As late as 2010 HP was worth three times what it is today, and has lost nearly $70 billion in market cap. Microsoft has become a dividend stock, its price going nowhere fast.

The cloud should have begun a new American golden age in technology. In terms of hardware it has, so far, been a huge missed opportunity. Investors have been big losers from this failure to anticipate change.

At the time of publication, the author was long INTC, IBM, MSFT, GOOG and AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
AAPL $94.99 -0.02%
INTC $28.81 -0.03%
HPQ $9.19 -1.92%
FB $99.54 -0.21%


Chart of I:DJI
DOW 16,014.38 -12.67 -0.08%
S&P 500 1,852.21 -1.23 -0.07%
NASDAQ 4,268.7630 -14.99 -0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs