AMZN, GOOGL, MSFT: Which Is the Best Stock?

All three companies reported stellar earnings, blowing past estimates and laying out exciting plans for the future. All three are cloud infrastructure providers, although that's not their bread and butter (yet). All operate on a huge scale across the world and all are growth oriented (so in investment mode and no dividends). But there are some big differences too: @Amazon #AMZN stands out because it's mainly a retail company. #Alphabet #GOOGL and @Microsoft #MSFT are both technology companies, but one drives most of its revenue from effective content distribution on its software platform, while the other directly licenses/sells its software, increasingly, as a service. So after the solid earnings reports and positive estimate revisions, one might wonder which one to invest in. The following metrics might help take a decision: Revenue Growth   While all the companies have grown revenue over the last few years, Amazon's growth has been truly meteoric as it clocked huge sales mainly in retail (taking share from rivals) but also in technology (being a first mover in infrastructure as a service, or IaaS). Microsoft's graph illustrates the company's ongoing transformation from an old tech company to a new age one. Its enterprise licenses ensured that a lot of revenue was annuity-based. But Microsoft is building momentum around its Office 365, Dynamics 365 and Windows as a service offerings, so even more of its revenue should become annuity based. In the interim, revenue growth can appear to flatten out as some revenue that was earlier recognized upfront is now deferred. In Alphabet's case, revenue growth has been consistent because of Google's dominance in search and the fact that its "Other Bets" are still a very small part of the business Operating Expense Control Amazon's revenues are coming at a huge cost to the company mainly because of rising technology and content costs as the company tries to eat into the market that Netflix created. Microsoft, on the other hand, saw a spike in opex because of its ill-advised acquisition of Nokia's hardware business. But the company has exercised very good discipline over the years as far as cost is concerned. Also, its geographical breadth and the fact that already offered some enterprise software in what is today called the cloud meant that Microsoft has had to spend relatively less than the others on its IaaS rollout. Most of Alphabet's cost increase comes in R&D although marketing costs have also risen as it repositioned its brand as Alphabet and started selling an increasing amount of hardware. It has been very disciplined about G&A. Earnings Growth Amazon's earnings have seen several ups and downs depending upon its need to build fulfillment centers, costs to finance its warehouses for fulfillment by Amazon (FBA) services and infrastructure buildouts for AWS, or its need to provide for taxes (Sep and Mar are usually down quarters for taxes). Share count increases have been more or less consistent. In Microsoft's case, earnings fluctuations are driven by taxes but non-operating income also influences the number. The share count has declined steadily over the years indicating that it has been one of the factors helping earnings growth. Alphabet's earnings picture is similar to Microsoft's. The share count has also declined steadily, so like Microsoft, it has been one of the factors helping earnings growth. Free Cash Flow (Cash Flow Less Capex) Retail is typically a lower-margin business than technology and Amazon's margin is the lowest of the low because it prices aggressively to capture ever growing market share. AWS is far more profitable for the company, but requires significant investment at this point. So Amazon's FCF growth isn't too exciting. Microsoft's cash cow was Windows, the operating system used by most PCs in the past. Today there are other options, but Windows still commands a dominant share. Microsoft is even more strongly positioned in productivity software (Office) and has leveraged this strength in its shift to a cloud-based model. Its R&D prowess and enterprise relationships are further supporting this move. So cash flow should remain strong. Alphabet owns the dominant search engine all over the world that it continues to improve to date. In recent years, its YouTube platform has also been growing very fast. The company's core business is not threatened by the growing competition from Facebook FB , Amazon and others for advertising revenue, but it has several interesting diversification plans such as self-driving cars, Fiber, Internet-beaming balloons, Calico, Sidwalk Labs, etc that can transform it into quite the conglomerate. Alphabet brought in Ruth Porat to introduce cost discipline given the many projects it is in and the result has been good thus far. So cash flow, while not as robust as Microsoft, should remain strong and growing. Valuation The following valuation is on the basis of price to free cash flow and price to sales. Amazon is undervalued with respect to the S&P 500 on a P/S basis but overvalued on the basis P/FCF. Microsoft is undervalued on the basis of P/FCF but overvalued on the basis of P/S. Alphabet is slightly undervalued on the basis of P/CF and but it is overvalued on the basis of P/S. Conclusion While all the companies offer strong growth, Microsoft is particularly attractive on the basis of its cash flows. That's why it's the choice with the lowest risk. Amazon generates strong revenue but it's making huge investments that aren't yet translating to solid cash flows. So there's more risk involved. Alphabet is a stock we should probably hold on to because it is relatively less attractive than the others.

http://m.nasdaq.com/article/amzn-googl-msft-which-is-the-best-stock-cm871680

Why HPE No Longer Wants to Sell Cheap Servers to Cloud Giants

The recent decision by @Hewlett Packard Enterprise to stop selling commodity servers to companies that operate the world’s biggest cloud platforms and focus its efforts on selling hardware and services to smaller cloud companies, other types of service providers, and enterprises is a smart strategy, industry analysts say. With commodity servers, “there is no money to be made in the Super 7 cloud providers, [but] the tier 2 market is the fastest growing [portion], percentwise, of the cloud market,” said Patrick Moorhead, president and principal analyst of Moor Insights & Strategy. Companies that make up the “Super 7” (an Intel expression) are Alphabet, Microsoft, Facebook, Amazon, Apple, Alibaba, and Tencent. Related: Taiwanese Firms to Sell Latest NVIDIA AI Hardware to Cloud Giants HPE this month announced it is exiting the business of selling commodity Cloudline servers to these companies, also often referred to as tier 1 service providers. But it will continue selling its higher-margin products, including high-end Apollo servers, 3PAR storage systems, and networking equipment to these large providers, a company spokesperson said. The company will continue selling a standardized set of Cloudline servers to smaller cloud companies and service providers, such as Salesforce and eBay. “We are shifting our resources and doubling down on tier 2 and tier 3 providers,” the spokesperson said. Related: HPE Says Storage, Networking Gear Sales Rising Industry analysts say HPE’s decision to abandon the hyper-scale commodity server business is a sound strategy, because the vendor is no longer getting a return on investment from its partnership with original design manufacturer (ODM) Foxconn, which built the custom commodity servers for HPE. HPE and Dell used to sell a lot of servers to the tier 1 providers, Moorhead said. But in recent years, their sales have plummeted, as cloud providers began designing their own servers and buying them directly from Asian ODMs – the likes of Foxconn. HPE partnered with Foxconn in 2014 to get a piece of the action, analysts say. But earlier this year, HPE chief executive Meg Whitman said her company faced significantly lower demand for the commodity servers from one tier 1 customer, which was reportedly Microsoft. The heavy competition from Asian ODMs has forced traditional server vendors, such as HPE and Dell EMC to decide how best to serve these customers or walk away entirely from the low-margin business, said Jeffrey Fidacaro, senior analyst of data center technologies at 451 Research. While HPE is pulling out of the hyper-scale custom commodity server market, Dell has no plans to do so anytime soon, said Ravi Pendekanti, senior VP of server solutions, product management and product marketing, at Dell EMC. “We continue to ship and keep our customers happy,” he said, responding to a question about Dell’s plans in selling hardware to the biggest cloud companies. Aiming at Smaller Providers The smaller providers don’t have the staff to design their own hardware and service it in their data centers like the hyper-scalers do, so they need the hardware and services OEMs like HPE provide, Fidacaro said. The same goes for enterprises. “For second- and third-tier service providers, colocation companies that aren’t very large, and enterprises, the services ecosystem that includes design, procurement, testing, and validation is still important,” Fidacaro said. “It’s something they can’t replicate internally because they don’t have the resources. This is where HPE can offer a lot of value.” Ashish Nadkarni, IDC’s program director of computing platforms, said HPE’s move resolves the awkwardness of having Foxconn build its custom commodity servers while competing with the ODM for the same business. The move is also part of HPE’s continuing effort to focus on higher-margin businesses, he said. Last year, HPE spun off and merged its non-core software with Micro Focus in a deal worth $8.8 billion. “It cleans up their business model,” he said. “HPE is shedding all the low-margin products and becoming more streamlined and nimble and only focusing on areas where it can make money.” For example, the company in 2017 has beefed up its product portfolio and now offers customers hyper-converged infrastructure, technology it gained through its SimpliVity acquisition in January, and flash storage hardware gained through its Nimble Storage acquisition in March. HPE can bolster revenue through its broad portfolio of products for smaller providers and enterprises, Nadkarni said. “There is money to be made with the whole solution.” HPE is a member of the Open Compute Project, the organization through which Facebook, Google, Microsoft, and others open source custom specs and have suppliers compete among each other for large orders of data center hardware. An HPE spokesman didn’t immediately respond when asked whether the company plans to stay in the organization. Moorhead, however, still sees value in HPE staying put. “I still see the value of HPE’s continued participation in OCP, as it can drive specifications for Cloudline, [which is] very much still an entity in tier 2 providers,” Moorhead said.

http://www.datacenterknowledge.com/hardware/why-hpe-no-longer-wants-sell-cheap-servers-cloud-giants

3 Reasons Why The 'FANG' Phenomenon Will End Badly

Summary The 1999-2000 tech balloon was not an online-only phenomenon. The "Four Horsemen" that controlled more than half of the market capitalization for the ill-fated @Nasdaq - @Microsoft, @Intel, @Cisco and @Dell - were exceptionally profitable. The notion that @Facebook, @Amazon, @Netflix and @Google/ @Alphabet represent something entirely different in terms of profitability is flawed. The ratio of American households’ net worth to disposable income in 2000 hit 620%, due in large part to tech stock euphoria. Now we have "FANG" stocks emulating the "Four Horsemen" and real estate prices in key parts of the country stretching affordability. Should investors really be dismissive of the ratio in 2017? Those who do not wish to draw any parallels between today's stock market and the 1999-2000 tech stock bubble typically claim that "all of those turn-of-the-century dot-coms weren't making any money. Today's 2017 superstars - Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX) and Google/Alphabet (GOOG, GOOGL) - make money hand over fist!" The problem with this rationalization is threefold. First, the 1999-2000 tech balloon was not an online-only phenomenon. The "Four Horsemen" that controlled more than half of the market capitalization for the ill-fated Nasdaq - Microsoft (NASDAQ:MSFT), Intel (NASDAQ:INTC), Cisco (NASDAQ:CSCO) and Dell (NYSE:DVMT) - were exceptionally profitable. They also were extremely overvalued at a combined price-to-earnings ratio (P/E) of 60. It follows that the notion that Facebook, Amazon, Netflix and Google/Alphabet represent something entirely different in terms of profitability is flawed, especially when one considers an average P/E of 130 for "FANG." Second, the ratio of American households' net worth to disposable income in 2000 hit 620%, due primarily to an 18-year old secular bull market and tech stock euphoria. It was unsustainable, however, largely because the ratio had rarely deviated more than 1 standard deviation from its mean and because asset prices had frequently correlated with after-tax wage growth. Similarly, the ratio hit 650% on residential housing jubilation prior to the financial collapse in 2008. That too was unsustainable. Now we have "FANG" stocks emulating the "Four Horsemen," the median stock bubbling over with froth, and real estate prices in key parts of the country stretching affordability. Should investors really be dismissive of the ratio in 2017?

https://seekingalpha.com/article/4114497-3-reasons-fang-phenomenon-will-end-badly

Nvidia, Intel, Broadcom To Ride Improving ‘Cloud Capex,’ Says RBC

Estimates have been on the upswing, slightly, for how much money #Facebook ( #FB ), #Apple ( #AAPL ),  #Amazon ( #AMZN ), #Alphabet 's ( #GOOGL ) #Google unit, and other cloud companies may spend to build those clouds, according to a note today from RBC Capital’s Amit Daryanani, who regularly tracks estimates and actuals for a group of 18 of these cloud companies.

An expected $60 billion in cloud capital spending this year could be a positive development for #Intel ( #INTC), #Nvidia ( #NVDA), and Broadcom(AVGO), Daryanani believes.

The overall trend is that after 17% growth in cloud capital spending last year, for a total of $52.48 billion, the total should rise 15% this year and rise again to 17% growth in 2018, according to his own models, and data from FactSet.

In addition, the growth rates have been improving of late, based on spending in the June quarter of this year, and what’s expected for Q3:

Over the past 3 years, average/median y/y growth rates have been on a downward trajectory from the 30-60% range to the 0-20% growth range in the past year, however as of June/September, there appears to be some picking up of growth. In the Jun-qtr, the mean y/y change was positive at +38%, while the median y/y change was also positive at +20%. The Street expects mean y/y growth to be 54% in the Sep-qtr, while median y/y growth to be +19%, indicating some positive skew in the data. Over the past 8-9 months, Street estimates for CY17 have risen to ~$60B, while CY16 capex spend at ~$52B was slightly higher than initial estimates. Street estimates for 2017 have risen by ~$4B over the past year.

Daryanani explains some direct benefits to the three chip makers:

HDDs and Semis Have The Most Significant Exposure to Cloud CapEx in Our Coverage: Within our coverage, HDD companies and select semiconductor companies have significant exposure to cloud capex spending. Within semiconductors, we highlight Intel, Nvidia, and Broadcom. For Intel, cloud and hyperscale spending is a fast-growing portion of Intel’s NAND and Data Center Group business and could account for ~1/3 of DCG revenues ($6B of ~$17B in 2016 DCG revenues). Nvidia has exposure through their Tesla and Quadro businesses. Broadcom has exposure to the cloud through their Enterprise Storage segment (HDD controllers) and general data center buildouts in their Wired Infrastructure segment. Within HDDs, enterprise units are 15-20% of the business on a unit basis and 20-30% on a revenue/profit basis. We estimate cloud/hyperscale buildouts contribute to 65% of the segment. Cloud and hyperscale spending is probably the fastest growing subsegments within the enterprise businesses of the HDD manufacturers.

In case you were wondering, among the 18 companies that spend on cloud that Daryanani tracks, Apple is the single biggest spender, at 24% of the total spent in 2016. Google was next at 19%. Microsoft (MSFT) was third at 17%.

Daryanani has an Outperform rating on Nvidia stock, and a Sector Perform rating on Intel shares

http://www.barrons.com/articles/nvidia-intel-broadcom-to-ride-improving-cloud-capex-says-rbc-1504733541

Google parent Alphabet forms holding company, XXVI, to complete 2015 corporate reorganization

The company formerly known as #Google — before it rebranded its “collection of companies” to #Alphabet, in 2015, turning the main ad revenue business into a corporate unit wholly-owned by the parent entity — looks to have finally completed this process of business reorganization by forming a new holding company, called XXVI Holdings Inc. Bloomberg reported the move on Friday, picking it up via an FCC filing. The company confirmed the move in a statement, telling us: “We’re updating our corporate structure to implement the changes we announced with the creation of Alphabet in 2015. This includes a conversion from Google Inc. to Google LLC and the creation of a new intermediate holding company under Alphabet, XXVI Holdings Inc.” The creation of the new holding company — which is named, in typical Googley fashion, for the number of letters in the alphabet (displayed in Roman Numerals) — finally enables Alphabet to legally separate Google from divisions that were still technically subsidiaries, such as the self-driving unit it spun out in 2016 (as Waymo — which is currently embroiled in a legal fight with Uber), or its AI division DeepMind, which was acquired by Google in 2014. The new holding company will own equity in each Alphabet company, enabling the shifting of the so-called “other bets” subsidiaries, which had technically still been held by Google to Alphabet — putting them all on the same legal footing as Google, according to Bloomberg. Google is also switching status from a corporation to a limited liability company (LLC) — to reflect the new structure which sandboxes each business unit as a separate legal silo under the Alphabet parent. In the FCC filing, the company states: “As a result of the corporate reorganization, Alphabet and Google will be able to operate in a more efficient, economical, and transparent manner, allowing the companies to concentrate on their revenue generating activities.” While Alphabet claims the corporate reorganization will result in greater transparency regarding the operation of itself and Google, it does not necessarily follow that this is the case with Google’s operations. As Bloomberg notes, the new structure puts a wrapper around Alphabet’s revenue-generating engine (Google) which now has only one investor (Alphabet) and no obligations to publicly disclose financial performance — vs the prior situation when, as a public corporation Google was expected to make disclosures on financial performance to its investors. Although Alphabet’s spokeswoman also described the reorganization as a legal formality, and claimed it will not affect ultimate shareholder control, operations, management or personnel. While the timing is unlikely to be related to recent events, given the Alphabet reconfiguration had already been underway for several years, and would clearly require time for lawyers to work through huge complexities (e.g. tax implications), it’s notable that regulatory pressure has been hotting up for Google — which, in June, was found to have violated European competition law, and handed a $2.7BN fine. The European Commission has two further ongoing antitrust investigations, and has suggested it’s looking into complaints pertaining to other areas of Google’s business processes too. Another recent regulatory judgement that has impacted one of Alphabet’s divisions pertains to its AI unit, DeepMind, when, in July — when it was presumably still technically a legal subsidiary of Google — the UK’s data protection watchdog ruled that a data-sharing agreement the company had inked with a London National Health Service Trust had breached UK privacy laws by sharing 1.6M patients’ medical records without their consent. Criticism about a lack of robust legal safeguards in the original DeepMind-NHS data-sharing arrangement, which gave it access to millions of patients’ identifiable medical records, have been sharpened by the fact that ad giant Google is the parent entity of the division that’s being handed sensitive medical data for processing. Thus a legal separation of DeepMind from the Google ad business could help defuse some of the concerns around similar data-sharing arrangements DeepMind — via its internal ‘Health‘ division — seeks to ink in future.

https://techcrunch.com/2017/09/04/google-parent-alphabet-forms-holding-company-xxvi-to-complete-2015-corporate-reorganization/

Getting In Bed With Amazon Made Microsoft Stronger

Summary #Amazon and #Microsoft are fierce rivals in the #cloudcomputing infrastructure industry. They have decided to collaborate on voice-assisted #artificialintelligence. Amazon was the first commercial promoter of voice-first artificial intelligence services via #Alexa. Microsoft’s #Cortana can benefit from the thousands of Alexa skills already available. Microsoft’s #Bing search engine gets access to Amazon Echo users. Alexa is now available on mobile devices and on cross-platform browsers. Cortana-enabled devices can help Microsoft monitor the Amazon shopping habits of Cortana users. The always-on feature of smart speakers is a good way to study people in their homes. Microsoft can improve its advertising business by building a better profile of people's Amazon shopping habits/preferences. Microsoft (NASDAQ:MSFT) is the fastest-growing rival of Amazon (NASDAQ:AMZN) in cloud infrastructure. Azure and AWS are the two leaders in the $11 billion/quarter cloud infrastructure business. However, they have entered into a new partnership. Microsoft and Amazon agreed to let each other’s voice-based artificial intelligence platforms Alexa and Cortana work together. By collaborating, Microsoft and Amazon positioned themselves to better benefit from the coming $13 billion (estimate for 2024) market for smart speakers. This initial cooperation can also lead to Azure and AWS accessing each other’s user population. Microsoft is promoting Cortana for the enterprise. Alexa is also being proposed to help small businesses. Some of the 20,000 Alexa skills available today allow businesses to interact with their product/service users/buyers.  (Source: Motek Moyen/Amazon/Microsoft) This new alliance can help negate the looming threat of Alphabet’s (NASDAQ:GOOG) (NASDAQ:GOOGL) plan to offer its Google Assistant to third-party device manufacturers. Google Assistant is already considered as the best digital assistant. Amazon and Microsoft needed each other to keep pace with Google Assistant. Amazon and Microsoft both failed as a smartphone vendor. They can help each other become decent vendors of smart speakers. Bing has been providing the search engine requirement for Alexa-powered devices like the Echo. It could also become the default search engine for people accessing Alexa-enabled AWS services from their computers, tablets, and smartphones. Voice-based digital assistants can help Microsoft improve Bing’s low share in search engine usage (7% on desktop and 1.5% on mobile). People are now using Cortana as a search engine on Android/iOS devices and Xbox consoles. Going forward, voice assistants are important channels where businesses can interact with their customers. Instead of using touchscreen devices and computers to serve real-time AI services, screen-less devices like the Amazon Echo can be more convenient to ask about a company’s products/services. Instead of putting up expensive CRM solutions, businesses can code a Cortana or Alexa chatbot to build lasting relationships with their customers.

https://seekingalpha.com/article/4103989-getting-bed-amazon-made-microsoft-stronger

Cloud drives Q2 growth for Google, Amazon, and Microsoft

#Alphabet, #Amazon, and #Microsoft continued to lean on cloud computing as the primary driver of revenue growth in Q2 2017. While Alphabet's revenue grew 20% year-over-year (YoY) to reach $26 billion in the quarter, $3.1 billion of that came from the segment that houses its cloud business. Amazon’s revenue reached $38 billion in Q2, with $4.1 billion, or 11%, coming from its AWS cloud segment. And Microsoft reported revenue of $23.3 billion, up 10% YoY from $23 billion, with $7.4 billion, or 32%, coming from its Intelligent Cloud segment. Each of the three tech giants offers a different set of core services, as they all jockey for an increasing share of the cloud market: Amazon Web Services (AWS) is the dominant cloud computing provider. Amazon continues its lead over the market, accounting for 34% of global public cloud services in Q2, according to Synergy Research Group. The AWS segment reported $916 million in operating income in the quarter, up nearly 28% YoY, and topping total operating income for the entire company, which hit $628 million in the quarter due to heavy operating losses in Amazon’s International segment. AWS’ Q2 performance helped Amazon gain 1% of total cloud market share in the quarter. Microsoft ranks second in the cloud computing market. The company accounted for 11% of the global market for public cloud services in Q2. Revenue from Microsoft’s Intelligent Cloud segment, which houses Azure, increased 11% YoY. Azure revenue, which jumped 97% YoY, was a key driver of that growth. Microsoft improved its cloud market share by 3% in the same quarter last year. Alphabet’s cloud business ranks behind Amazon’s and Microsoft’s. Alphabet’s Google Cloud Platform (GCP) accounted for 5% of the global cloud market in Q2. The company doesn't break out specifically how much of its cloud business drove revenue, but its “Google other revenues” segment, which includes Google cloud, saw 42% YoY growth in the quarter to reach $3.1 billion. GCP remains one of the fastest-growing businesses across Alphabet. Google boosted its share of the cloud market by 1% in Q2. These company’s efforts in artificial intelligence (AI) and machine learning (ML) will play an integral role in the future of cloud computing processes. Though the technology is still nascent, AI and ML are anticipated to shape future cloud-based enterprise solutions. Already, tech giants are working on infusing their products and platforms with the power of AI. For instance, GCP leverages ML to sort through the massive stores of data and automate virtual computer processes, allowing businesses to run complex computations remotely, rather than transferring data to a local server. As more companies are faced with larger data sets, the attraction of AI-related services to parse data into actionable insights will become a bigger draw. BI Intelligence, Business Insider's premium research service, has compiled a detailed report on cloud computing that: Explains the different cloud computing strategies and benefits of cloud computing. Evaluates key business considerations – security needs, demand predictability, existing infrastructure, and maintenance capabilities – for enterprises choosing between cloud implementations. Provides and outlook for trends and major players in the cloud computing market.

http://www.businessinsider.com/google-amazon-microsoft-q2-growth-cloud-2017-8

Google's Quantum Computing Opens New Front in Cloud Battle

For years, #Google has poured time and money into one of the most ambitious dreams of modern technology: building a working #quantumcomputer. Now the company is thinking of ways to turn the project into a business. #Alphabet Inc.'s Google has offered science labs and #artificialintelligence researchers early access to its #quantummachines over the internet in recent months. The goal is to spur development of tools and applications for the technology, and ultimately turn it into a faster, more powerful cloud-computing service, according to people pitched on the plan.

http://adage.com/article/digital/google-s-quantum-computing-push-opens-front-cloud-battle/309774/

Microsoft Takes Aim at Amazon and Google With Corporate Shakeup

The heavy layoffs expected as part of a #Microsoft Corp. (MSFT) reorganization could make the software company more fleet as it chases cloud leader #Amazon (AMZN) and tries to extend its lead over #Alphabet 's (GOOGL) #Google and others. Details of just what CEO Satya Nadella has in store are not yet available, though reports suggest he will refocus Microsoft's sales staff on its cloud efforts. Shares of Microsoft were up 1.3% to $69.09 by Wednesday's close. Gartner analyst Ed Anderson said that having a modern sales force is critical for Microsoft to succeed in the cloud era. "Most of Microsoft's sales teams have been trained and organized to sell traditional software products," Anderson said. "Microsoft has done a lot of retraining, and built new incentive and compensation to drive cloud sales, but it's hard to move a huge organization that was really built on the model of traditional software sales."

Microsoft has used its leverage in products such as its Office software suite to lure corporate cloud customers. The shift in the sales force would fit with Microsoft global commercial business head's Judson Althoff cloud-first strategy, Anderson suggested. 

"With regards to [Amazon's] AWS and Google, Microsoft is already competing pretty well there. If this reorg really gets the sales teams more focused on the cloud businesses, then it will only make Microsoft even more competitive, which I'm sure is Microsoft's desired outcome," he said.

Amazon.com Inc.'s Amazon Web Services was the clear leader at the end of the first quarter, with 33% of the market for public cloud, private cloud and hybrid services that the combine the two, according to Synergy Research Group. Microsoft was second with 10%, IBM Corp. (IBM) had 8% and Alphabet Inc.'s Google Cloud Platform had 5%.

https://www.thestreet.com/story/14211742/1/microsoft-takes-aim-at-amazon-and-google-with-corporate-shakeup.html

Google deal with Nutanix shows its cloud strategy is broadening

#Google is ready to accept that some big enterprises need help getting their critical workloads to the cloud. Its parent #Alphabet on Wednesday announced a partnership with #Nutanix, whose data center hardware and software provides a hybrid approach that bridges the gap between on-premise servers and machines in big cloud data centers. The deal is another indication that Nutanix, which held its stock market debut last year, is now embracing the public cloud as a viable infrastructure choice. Simultaneously it reflects how Google is becoming more receptive to the needs of enterprises.

"With public cloud, you have to meet them where they are -- that's becoming increasingly clear," Nan Boden, Google's head of global alliances, told CNBC in an interview. She said that in recent years Google had not cut major deals with data center hardware providers.

In the public cloud, Microsoft Azure and Amazon Web Services represent Google's biggest competition. Microsoft has been working to make its public cloud and private cloud tools match, while AWS has developed hardware and even trucks to facilitate the migration of data into its cloud.

Google, to date, has been less active in supporting cloud architectures that involve companies' existing on-premises infrastructure.

Nutanix does intend to support application deployment on AWS and Azure, although at this point it's working most closely with at Google.

Nutanix CEO Dheeraj Pandey told CNBC that he's been particularly impressed with the head of Google's cloud, Diane Greene, who was previously co-founder and CEO of VMware.

"She always talked about VMware being the most non-disruptive disruptive technology company," Pandey said. Under Greene's leadership the Google cloud is more "aware of the mundane," he said.

The first integration resulting from the partnership, which will enable applications to move from on-premise data centers to Google's, will become available in the first quarter of 2018. Pricing details aren't available.

Most recently Greene announced that the consumer version of Gmail, which is available to businesses through the G Suite portfolio of applications, would not scan user input to personalize ads -- just like its G Suite equivalent.

And #Nutanix 's #Google partnership comes a few months after Google started offering the #SAP #HANA database software atop its cloud. Additional SAP-Google integrations are on the way.

Nutanix software will enable applications to be wrapped in digital containers -- many of which can run on a single physical server, similar to virtual machines -- and deployed on Nutanix hardware or the Google cloud using #Kubernetes, an open-source tool created by Google. Alternatives to #Kubernetes include #Docker 's #Swarm container cluster management software.

'We talked to a lot of folks and developers in the community and so on, and most everybody is saying it's going to be Kubernetes" as the top tool, Pandey said.

http://www.cnbc.com/2017/06/27/googles-nutanix-partnership-indicates-more-hybrid-cloud-interest.html

Google Stakes Its Future on a Piece of Software

Early in 2015, #artificialintelligence researchers at #Google created an obscure piece of software called ­#TensorFlow. Two years later the tool, which is used in building machine-­learning software, underpins many future ambitions of Google and its parent company, #Alphabet. TensorFlow makes it much easier for the company’s engineers to translate new approaches to artificial intelligence into practical code, improving services such as search and the accuracy of speech recognition. But just months after TensorFlow was released to Google’s army of coders, the company also began offering it to the world for free.

https://www.technologyreview.com/s/608094/google-stakes-its-future-on-a-piece-of-software/

SoftBank’s $100 Billion Vision Fund Eyes Quantum Computing

#SoftBank Group Corp.’s $100 billion Vision Fund is scouting for possible investments in #quantumcomputing, an experimental science being researched by companies such as #Google and #IBM to succeed current computer processor technology. Shu Nyatta, who helps invest money for the fund, said the group wanted to find and back the company whose quantum computing hardware or software that runs atop it would become the “de facto industry standard.” “We are happy to invest enough to create that standard around which the whole industry can coalesce,” Nyatta said, speaking during a panel discussion at a conference on quantum computing in Munich Thursday

The Vision Fund, which has attracted investment from the Public Investment Fund of Saudi Arabia, Apple Inc. and other large institutional backers, is investing in cutting edge technologies from virtual reality to the Internet of Things. It recently invested $500 million for a minority stake in Improbable, a London-based simulation and virtual reality software startup, that has few customers and little revenue.

Quantum Science

Once considered purely theoretical, researchers have made strides in building functioning quantum computers based around a number of different designs and approaches. 

International Business Machines Corp ( #IBM )., #Alphabet Inc.’s #Google and #RigettiComputing, a San Francisco-based #quantumcomputing startup, have created working machines around one method, while #IonQ, a spin-out from the University of Maryland and Duke University, is working on technologies based on another. Microsoft is backing a third architecture, but has yet to create a working machine. 

#DWave, a Canadian company, is the only firm to sell quantum computers today. D-Wave’s system is based around yet another architecture, but its machine can only solve a limited set of problems compared to those Google, IBM and the others have been working on.

In conventional computing, information is encoded in bits that can have a value of either 0 or 1. In quantum computing, information is encoded in qubits that take advantage of quantum mechanical principals such as superposition, which allows the qubit to be both 0 and 1 simultaneously. In theory, a quantum computer could tackle complex problems in seconds or minutes that would take a conventional supercomputer many hours or days to complete.

Gene Sequencing

Nyatta compared what needed to happen in quantum computing to what has happened in genomics, where Illumina Inc.’s gene sequencing technology has become the technology around which an entire ecosystem of companies has been built, or what has happened in artificial intelligence, where Nvidia Corp’s graphics processors have become the preferred hardware on which to run neural networks.

“We are happy to do it alone and at massive size to facilitate the future,” Nyatta said, speaking of SoftBank’s approach to investing in these frontier technologies.

https://www.bloomberg.com/news/articles/2017-06-23/softbank-s-100-billion-vision-fund-eyes-quantum-computing

The tech bubble: how close is it to bursting?

There are signs that trouble may be brewing in the tech paradise. US technology stocks have been under pressure in the past week and struggling to recover. Apple, the world’s most valuable company by market capitalisation, saw $50 billion of its value wiped out in just more than a week as the stock price slid from its all-time high level at $155 to $142.

While many analysts believe that the correction in prices is overdue, the tech industry has been facing mounting challenges in the past weeks.

Uber, a ride hailing company, is still reeling from a series of scandals which led to its chief executive Travis Kalanick announcing his resignation.

Yahoo, once a mighty internet giant, is now officially part of Verizon with the completion of the $4.5bn ($3.5bn) takeover deal last week. CEO Marissa Mayer resigned in its wake, and the UK office laid off dozens of staff last Wednesday.

For years, analysts have warned that the tech bubble is bursting - yet it has persistently defied the odds and continued inflating. But, given the recent choppy water, are we any closer to breaking point?

How big is the current bubble?

Measured by market capitalisation, the top five listed tech companies - #Apple, #Alphabet, #Microsoft, #Amazon and #Facebook, are currently worth approximately $2.9tn (£2.2tn). This figure has been growing exponentially as stock prices rallied this year.

The Nasdaq Composite Index, where most tech companies are listed, is showing signs of overheating, with the price to earnings (p/e) ratio of the index increasing faster than that of the benchmark S&P 500. A higher p/e ratio provides an indication that the share price of a company may be overvalued. 

The current ratio is still nowhere near the level of the dotcom bubble in the early 2000s where stock prices can reach as high as 80 times the company's earnings. 

Bubbles are also brewing among private companies

Unlike the dot-com bubble, the current tech bubble is not confined to the publicly listed companies. Unicorns, or start-ups with private valuations of more than $1 billion, are currently dominating the scene with valuations larger than many countries’ GDP.

Twitter, another social media company, has seen its share price halved since its highest level four years ago. The company is perpetually struggling to generate revenue and grow its user base in the face of competition from other social media platforms.

Many of the unicorns have yet to be profitable. Uber, despite its skyrocketing valuation, is still loss-making after eight years of operation, according to its latest audited financials. However, the company said that it was on track to become profitable and is preparing to go public in the next few years.

Spotify, a music streaming company, is set to make a direct listing on NYSE in one of the most hotly anticipated IPOs this year. While the revenue of the Swedish company is growing, its losses also grew to €173m (£152m).

While there does not seem to be an impending dramatic burst, the industry's values may slowly be eroded as investments dry up. Pressures will come on listed companies to innovate, and unicorns would have to prove that their value to investors is more than just imaginary. 

http://www.telegraph.co.uk/technology/2017/06/22/tech-bubble-close-bursting/

Alphabet Just Sold Two Companies to a CEO Who Wants to Speed up the Singularity

This week, Japanese electronics and robotics giant #SoftBank, the company behind the #Pepperrobot, announced its acquisition of two robotics companies from #Google owner #Alphabet. The two firms now under SoftBank are #BostonDynamics, the brains behind Big Dog and the walking humanoid robots ATLAS and Handle, and bipedal robot maker #Schaft — they’re so secretive even accessing their website is difficult.

https://futurism.com/alphabet-just-sold-two-companies-to-a-ceo-who-wants-to-speed-up-the-singularity/

Dell Technologies Makes LinkedIn's Top 15 Companies of 2017 That Americans Want To Work At

In the U.S., the top five companies are, in order, #Alphabet, #Amazon, #Facebook, #Salesforce, and #Uber, with #Apple at No. 7. (For the record, and for the obvious reasons, #LinkedIn removed itself from the list, along with #Microsoft, which acquired LinkedIn last year.) Indeed, tech is strong through the entire 50-company list, with companies like #DellTechnologies (No. 14), #Workday (15), #Twitter (17), #Tableau Software (30) and #DropBox (42) all appearing.

https://www.google.com/amp/www.cnbc.com/amp/2017/05/17/linkedin-top-companies-of-2017-reveal-what-employees-really-want.html

Amazon’s AWS Revenues Rose 43% to ~$3.7 Billion

#Amazon as a target As the dominant e-commerce company, Amazon (AMZN) is targeted by competitors like #Walmart (WMT) and #Sears (SHLD). As the leading cloud computing provider, Amazon is also seeing growing threats from #Microsoft (MSFT), #Oracle (ORCL), and #Alphabet ’s (GOOGL) #Google. To cope with the increasing competition, Amazon must keep its wheels spinning faster wherever it has a presence. Its 1Q17 results offer a hint of what’s happening.

http://marketrealist.com/2017/05/amazons-aws-revenues-rose-43-to-3-7-billion/

Tech’s Titans Go From Big to Bigger

Today’s high-tech giants may not be monopolies in the most classic sense. But their outsize prominence is hard to deny, as demonstrated during the tech-earnings-palooza Thursday afternoon. The day’s closing bell saw quarterly reports from #Amazon .com Inc., #Microsoft Corp., #Intel Corp. and #Alphabet Inc., the parent company of #Google. Their combined revenue for the period—about $97.4 billion—comprises about 4% of the cumulative revenue.

https://www.wsj.com/articles/techs-titans-go-from-big-to-bigger-1493334016

Is It Time to Break Up Google?

In just 10 years, the world’s five largest companies by market capitalization have all changed, save for one: #Microsoft. #Exxon Mobil, #GeneralElectric, #Citigroup and #ShellOil are out and #Apple, #Alphabet (the parent company of #Google), #Amazon and #Facebook have taken their place. They’re all tech companies, and each dominates its corner of the industry: Google has an 88 percent market share in search advertising, Facebook (and its subsidiaries Instagram, #WhatsApp and Messenger) owns 77 percent of mobile social traffic and Amazon has a 74 percent share in the e-book market. In classic economic terms, all three are monopolies. We have been transported back to the early 20th century, when arguments about “the curse of bigness” were advanced by President Woodrow Wilson’s counselor, Louis Brandeis, before Wilson appointed him to the Supreme Court. Brandeis wanted to eliminate monopolies, because (in the words of his biographer Melvin Urofsky) “in a democratic society the existence of large centers of private power is dangerous to the continuing vitality of a free people.” We need look no further than the conduct of the largest banks in the 2008 financial crisis or the role that Facebook and Google play in the “fake news” business to know that Brandeis was right. While Brandeis generally opposed regulation — which, he worried, inevitably led to the corruption of the regulator — and instead advocated breaking up “bigness,” he made an exception for “natural” monopolies, like telephone, water and power companies and railroads, where it made sense to have one or a few companies in control of an industry.

https://mobile.nytimes.com/2017/04/22/opinion/sunday/is-it-time-to-break-up-google.html?_r=0&referer=https://www.google.com/

Arista Networks' Software Strategy Could Jar Cisco Even More

#Arista has been taking market share from #Cisco in the data center market by winning over customers such as #Microsoft (MSFT), #Alphabet' s #Google (GOOGL) and #Facebook (FB). Amid a festering legal battle with Cisco, Arista on Tuesday unveiled a new software technology. This "containerized" version of Arista's EOS operating system enables its networking software to run on so-called "white-box" computer hardware, built by lesser-known suppliers from Asia.

http://www.investors.com/stock-lists/ipo-analysis/arista-networks-software-strategy-could-jar-cisco-even-more/

Hewlett Packard Enterprise core server and storage challenges attributed in part to loss of business from Microsoft

#HewlettPackardEnterprise (NYSE: #HPE ) noted last week during its Q1 2017 earnings call that its revenues had been impacted (-10.4% Y/Y $670M below consensus estimates) by "significantly lower demand" from a principal tier-1 service provider. Bloomberg reports the provider as #Microsoft, noting that company's efforts to demand lower prices of hardware providers as competition for expansion of public cloud services continues to rise across a space also comprising major participation by #Amazon and #Alphabet. Given Microsoft's recently-unveiled internal cloud server designs and the mandate for adherence among hardware providers, Hewlett Packard Enterprise and its direct competitors, notably #DellTechnologies, are realizing increasing pressure from lesser-cost manufacturers as cloud adoption accelerates. Last week (February 23, 2017): Hewlett Packard Enterprise -6.5%; Q1 2017 revenue, outlook off

http://seekingalpha.com/news/3248124-hewlett-packard-enterprise-core-server-storage-challenges-attributed-part-loss-business