This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Server Design Finally Adapting to Cloud

Stocks in this article: AMD VZ T CTL GOOG AMZN NFLX HPQ

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

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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