This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Server Design Finally Adapting to Cloud

NEW YORK ( TheStreet) -- One of the strangest business trends of the last decade has been companies such as Google (GOOG) making their own servers.

It was good economics. Google took cheap PCs, broke them down into racks and found it saved money. Commodity chips were more cost-effective in cloud architectures than traditional server chips. Google bought in bulk, it had "just in time" capacity, and pretty soon the rest of the cloud world was copying them. Google became one of the country's largest PC makers.

In some ways it made no sense. Hardware and services are different businesses. Start-ups like Sea Micro arose to meet the need, but until it became part of AMD (AMD) it couldn't deliver what the new market demanded.

Now, apparently, it has, and the first big orders have been placed by Verizon (VZ) for its vCloud.

The deal is important for two reasons. First, it shows that a server company can meet the economic demands of cloud by using a lot of low-power chips and designing around them. Second, it makes cloud a much easier business to get into.

I wrote last month about how AT&T (T) thinks it has cracked the sale side of cloud, through a network of re-sellers. Verizon now thinks it has cracked the delivery side of cloud with Sea Micro.

Both telcos are trying to build what the former Qwest bought when it was acquired in 2011 by CenturyLink (CTL). Since the merger CenturyLink is down about 20%, but that company lacks the mobile assets AT&T has and Verizon is acquiring.

Their vision, of course, is the old "one throat to choke" idea, where you get all your computing and communications systems from a single source. Verizon, which got into cloud by buying Terramark a few months before the Qwest-CenturyLink deal was finalized, calls what it is creating a "hybrid cloud," delivering the economics of public cloud with the security of owning your own hardware.

There is a danger in letting the telcos into this game, however. Verizon has been aggressively fighting FCC "net neutrality" rules, which some see as a direct attack against consumer Internet services such as Netflix (NFLX).

1 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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $126.60 0.15%
FB $80.00 -1.48%
GOOG $567.68 -1.33%
TSLA $193.88 -3.36%
YHOO $43.44 -1.63%

Markets

DOW 17,856.78 -278.94 -1.54%
S&P 500 2,071.26 -29.78 -1.42%
NASDAQ 4,927.37 -55.4390 -1.11%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs