Cloud Computing Stocks

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Tom Taulli

Finance Corner

Pervasive: A Small-Cap Company Making a Move

Into the CloudMay. 3 2011 - 11:57 am

The cloud revolution has definitely made many shareholders happy. Just look at some of the top players. Salesforce.com (NYSE:CRM), which is a leader in salesforce automation and other applications, has seen its stock rise 62% over the past year. Then there’s NetSuite (NYSE:N),which is a top player in enterprise resource planning (ERP). Its stock price is up a hefty 146%.

But the cloud is also bolstering the fortunes of traditional software players – especially those that

have been remaking their solutions. One is Pervasive Software (NASDAQ:PVSW). Actually, itsstock price is up about 37% in the past year. But with a market cap of only $109 million – andwith $37.5 million in the bank – the valuation still looks cheap.

To learn more about the company, I recently had a chance to meet-up with the company’s CEO,John Farr. It was at its “Metamorphosis 11 Cloud Integration Summit.” The place was packed.

Pervasive essentially has two main businesses. First, there is the database segment, whichincludes the embeddable Pervasive PSQL system. While it is a mature business, it is a big cashflow generator.

It allows Pervasive to make key investments in its faster growing businesses, such as datamanagement and integration. Such things are crucial for cloud computing.

Take the Pervasive DataCloud platform. It has become an important technology to develop anddeploy data migrations. It involves relationships with companies like Salesforce.com and Intuit(Nasdaq:INTU).

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What’s more, there is also the Pervasive DataRush business. It addresses another big businessopportunity: Big Data. Simply put, it’s getting extremely difficult to deal with the surge in datagrowth.

So far, it looks like Pervasive has made the right tech bets. And by talking to its customers, it

appears that the solutions are high quality. In light of the big valuations in the cloud industry – and even Big Data – Pervasive looks like a gem. Then again, that’s probably why the companycontinues to buy back its shares at a healthy clip.

Ten Cloud Computing Leaders

Posted by Ben on May 26th, 2010

Cloud computing is as confusing as it is promising. For each so-called sure-fire proclamation (allemail will soon be in the cloud; a down economy will accelerate cloud computing), there aremany more questions.

What are the benefits of a private cloud versus public cloud? How do you manage identities inthe cloud? Should the collision of cloud computing and smartphones scare the pants off of our ITstaff?

The ten cloud computing leaders listed here hope to help the industry make sense of this trend.Of course, whoever comes out on top will reap massive rewards, influencing how the cloud takesshape in the coming years.

The companies below were chosen based on such relatively objective measures as customer traction and length of experience with the cloud model, as well as plenty of subjectiveconsideration, including ability to innovate, how well cloud computing ties in with the rest of thecompany’s product portfolio and ease of use.

Please note: this is a first in a series of articles. In the next installment we’ll cover cloudcomputing leaders such as IBM, AT&T, Elastra, Joyent, Cisco, OpSource, Enomaly and severalother early cloud innovators. Stay tuned.1. Amazon

Why they’re a leader today: Amazon spent years optimizing the back-end infrastructure of itsretail service, building it into what is widely recognized as one of the most reliable, scalable, andcost-efficient web infrastructures.

“[Amazon Web Services (AWS)] gives any software developer the keys to this infrastructure,which they can use to build and grow any business,” an Amazon spokesperson wrote me. “Thismakes it possible for any business to reach the scale of major internet players like Amazon.com, but without the expensive price tag they would have to pay to build and maintain such an . . .infrastructure.”



Examples of the services offered by AWS are Amazon Elastic Compute Cloud (EC2), AmazonSimple Storage Service (S3), Amazon SimpleDB, Amazon Simple Queue Service (SQS),Amazon Simple Notification Service (SNS), Amazon CloudFront and Amazon ElasticMapReduce.

Why they could be on top in years to come: Were I a betting man, I’d wager that Amazon will beleading the cloud space for years to come. Why is this such a safe bet? Four factors stand out:track record, cost, flexibility and pace of innovation.

Amazon entered the cloud game early and has a ton of goodwill built up, while also having oneof the few established cloud brand names with AWS and Amazon EC2. As the AWS technology platform has become more tested and proven, Amazon has been able to squeeze increasingoperational efficiency out of the platform, allowing them to drive down prices.

“We’re very comfortable with running high volume, low margin businesses, which is verydifferent than traditional IT vendors,” Amazon’s spokesperson noted.

Flexibility, which is one of the cloud’s great selling points, is also a trait that Amazon believesdistinguishes it from other cloud providers. Developers are free to use whatever programlanguages and operating systems they please, while also having the flexibility to pick and chooseservices without getting lured into vendor-lock.

Finally, Amazon’s pace of innovation has been impressive. Their early forays into the cloud,while cutting-edge at the time, would seem outdated today. However, there’s nothing outdatedabout Amazon’s current lineup of cloud services, and Amazon has shown no signs of slowingdown.

This month, for instance, Amazon improved the streaming media capabilities of CloudFront byadding the ability to get detailed activity records on every stream. For businesses, information onwho is watching what and when, as well as when they get bored and abandon the stream, isincredibly valuable.

Key Executive: Andy Jassy, SVP, Amazon Web Services and Amazon Infrastructure, joinedAmazon in 1997. During his tenure at the company, Jassy authored the business plan for Amazon’s entry into the music business and served as both its Director of Product Managementand GM; started and built the CRM management team; and most recently, started and continuesto lead the Amazon Web Services business.

Customers: “We have hundreds of thousands of registered developers to date and this includes a broad spectrum of companies around the world, ranging from smaller companies like Playfish tolarger companies such as Eli Lily, Netflix, National Geographic, The New York TimesCompany, NASDAQ, ESPN and NASA,” Amazon’s spokesperson said.2. Salesforce.com



Why they’re a leader today: The evolution of SaaS to cloud computing is a natural one. After becoming a force in the CRM market, Salesforce.com rolled out the cloud-based Force.com platform in 2005.

The company claims that its Sales Cloud 2 currently owns 50 percent of the SFA market share.

Service Cloud 2 pushes Salesforce.com’s cloud reach into customer-service contact centers,giving customers the ability to merge various cloud computing platforms with traditionalcontact-center channels.

According to a company spokesperson, Salesforce.com became the first enterprise cloudcomputing company to achieve $1 billion in revenue in 2009.

Why they could be on top in years to come: Salesforce.com has been in the space a long time,long enough to have been called everything from an ASP to a SaaS company to, now, a cloud provider.

The company’s latest cloud innovation, Chatter, gives business apps many of the same featuresas social-networking applications. As the Salesforce credo explains: “We are in the era of Cloud2, where social networking use has surpassed e-mail; Facebook and YouTube use have outpacedsearch and new mobile devices like the iPad are creating entirely new ways to interact withinformation.”

Chatter leverages profiles, status updates and real-time feeds to enable deep collaboration. Userscan follow people, applications and data in a similar manner to how they would engage withfriends on Facebook or follow people on Twitter.

Key Executive: Chairman and CEO Marc Benioff is a fervent cloud advocate. His recent book,

Behind the Cloud, tells the story of how Salesforce.com went from an idea to a billion-dollar company.

Customers: Marquee customers include Dell, Kaiser Permanente, NBC Universal, Qualcomm,Siemens and Starbucks.3. Google

Why they’re a leader today: Gmail. That’s right, Gmail. There are plenty of other web-based (or I should probably now say, cloud-based) email services out there, but the functionality of Gmailand its integration with other cloud-based apps, such as Google Docs, Calendar, Wave, etc. makeit a force to be reckoned with.

In fact, I had a conversation the other day with a startup that uses Gmail and Google Docs simplyfor collaboration purposes. The company still relies on Office, but it’s easier to share, store andcollaborate with Google.

I went through a similar thing myself. I’ve layered so many third-party apps onto my ownversion of Outlook that I’m reluctant to abandon it. Yet, when it came time to figure out how to



synch Outlook with my Android smartphone, what was the easiest option? You guessed it,Gmail.

According to Google, more than two million companies now run their businesses on GoogleApps.

Why they could be on top in years to come: Don’t be surprised if Google Apps continues toserve as a way to add functionality to other applications, such as Microsoft Office. With Office2010 just out, plenty of organizations are doing Google Apps versus Office 2010 comparisons.

While many companies simply have too much invested in Office or are too tethered to, say, theadvanced functionality of Excel, others may decide to skip a 2010 upgrade. Instead, they’ll keeptheir old versions of Office, while adding collaboration and cloud-storage features via Google.

Google already allows you to store any file, including Word documents, in the Google cloud.You can then share it in its original format. Moreover, Google says that it will enable real-time

collaboration directly into Office 2003 and 2007.

Clearly, Google sees “soft migrations” as a way to eat into Microsoft’s market share.

Key Executive: Dave Girouard, President, Enterprise, heads up Google’s enterprise-centric cloudefforts. Prior to joining Google, Girouard was SVP of marketing and business development atVirage, a provider of multimedia search and content management software.

Customers: Jaguar LandRover, Genentech, Seagate, Motorola, the City of Los Angeles.4. Microsoft

Why they’re a leader today: While the popular perception has it that Microsoft entered the cloudgame late when it rolled out Azure, Microsoft argues otherwise.

“Cloud computing is not new for Microsoft,” a spokesperson said. “From Hotmail to WindowsUpdate and Xbox Live, Microsoft has almost 15 years’ experience in cloud computing, hostingsome of the world’s largest cloud services.”

They have a point.

When touting its advantages over competitors, Microsoft focuses on its track record (15+ yearsof delivering massive services, such as Windows Update and Hotmail, at scale) and reach (the

company claims that twenty million businesses and over a billion people use Microsoft cloudservices).

Why they could be on top in years to come: While it’s tempting to predict that Microsoft won’t be on top in years to come – after all, the tech market is constantly in a state of upheaval – thecompany’s continued success is hard to argue against.



As competitors such as Google and Salesforce.com have set their sights on Microsoft customers,the behemoth has started pushing back. On a company blog, Andrew Kisslo, Sr. ProductManager, Microsoft Online, lists a number of companies abandoning Google Apps in favor of Microsoft.

I’ve also heard a few rumors about large enterprises getting ready to pull the trigger on a switch,only to be visited by Microsoft reps who work hard to find a way to retain the business. Theserumors stem from off-the-record conversations with industry insiders, so take them with a grainof salt. Still, even if this isn’t true, these rumors have the feel of truth about them, which is oftenmore powerful than the truth itself.

Despite struggling with government regulators in the past, Microsoft advocates new legislationto regulate the cloud. I’m not sure how to read this other than the fact that Microsoft is workingall the angles as it moves further into the cloud.

Key Executive: A diverse team, though Brad Smith, SVP and general counsel, gets a nod since

he was the executive who unveiled Microsoft’s cloud regulation push earlier this year.

Customers: 3M, Associated Press, Outback Steakhouse, Siemens and VeriSign.5. CA

Why they’re a leader today: If I had written this lineup a few months ago, before CA went on acloud shopping binge, grabbing startups 3tera, Cassatt, NetQoS and Oblicore, the companywouldn’t have even been considered for the top ten.CA is positioning itself as the go-to choice tomanage the “‘IT supply chains’ that are resulting as companies increasingly utilize externalservices to meet their business computing needs.” IT supply chain management includesmonitoring the technical performance of cloud services, automating deployment of applications

across cloud infrastructures and ensuring that the use of cloud resources at any given time isoptimally aligned with actual business requirements.

Once CA gets its new cloud new toys working well together, the company will arguably be theleading Infrastructure as a Service (IaaS) player.

Why they could be on top in years to come: With the cloud computing space relatively new anduntested, cloud management is even less of a mainstream offering. Clearly, cloud managementwill be critical, and CA entered the space at the perfect time.

Key Executive: Chris O’Malley, EVP, Cloud Products & Solutions Business Line, previously

served as EVP and GM of CA’s Mainframe Business Unit. Before that, he served as SVP of Sales Strategy and Execution.

Customers: Rackspace, 1&1, SoftLayer, Cadence Design, Logicalis, Jewelry.com, LayeredTechnologies, Scale Up Technologies, Radix Technologies.6. Rackspace



Why they’re a leader today: Rackspace started out in 1998 offering data center services, such asdedicated server hosting and storage. As with many other hosting providers, Rackspace is nowcalling itself a “cloud provider” more often than not. Unlike the herd rushing into this space,though, Rackspace was an early mover. The Rackspace Cloud suite offers access to virtualservers, an application and website building service and a storage service. To broaden its appeal

to the developer community, the company released an open source “Cloud Servers API,” whichallows users to create, configure and control Rackspace Cloud Servers from within their ownapplications.Why they could be on top in years to come: Rackspace is already considered one of the main rivals to Amazon, and its Cloud Tools quickly grew into a top cloud ecosystem.Moreover, Rackspace has been aggressively rolling out new features, such as Database-as-a-Service (DaaS) tools; and it has been doing the hard work to support popular third-party platforms, such as Oracle.

Key Executive: Emil Sayegh, GM of the Rackspace Cloud, was formerly Director of ServicesMarketing at Dell.

Customers: Radio Flyer, Razorfish, TV Guide Magazine, Carlsberg, Wendy’s, Boston Celtics.7. Eucalyptus SystemsWhy they’re a leader today: A roundup like this, focusing on an emerging trend, shouldn’t gettoo top-heavy with established vendors. Startups are the lifeblood of innovation in the techsector, and Eucalyptus fits the bill well. What started as a research project at U.C. Santa Barbarahas evolved into one of the cloud’s early success stories. Eucalyptus’s open source softwaregives users a way to turn existing data-center resources into a cloud that can be controlled andcustomized by local IT. Eucalyptus software delivers such capabilities as end-user customization, self-service provisioning and legacy application support. Included APIs allowusers to then extend internal apps to public clouds, such as Amazon EC2.

The company is backed by $5.5 million in Series A VC funding from Benchmark Capital andBV Capital.

Why they could be on top in years to come: Cloud adoption will move slowly if too muchemphasis is placed on public clouds. Many large organizations simply have too much invested intheir in-house applications and infrastructures to abandon those investments. Eucalyptus’s positioning as a private- and hybrid-cloud software provider should serve the company well.

Moreover, any new proprietary computing technology eventually attracts open sourcecompetitors. Eucalyptus is an early advocate and provider of open-source cloud tools. When NASA built its Nebula Cloud Computing Platform, arguably one of the most advanced cloud platforms, the space agency relied on various open-source technologies, including Eucalyptus,Django, Xen, and the Lustre file system.

Eucalyptus is also pushing for cloud standards, presumably hoping, of course, that its owntechnology will be one of those standards.

Key Executive: In March, Eucalyptus appointed former MySQL CEO Marten Mickos as thecompany’s new CEO. Former CEO and co-founder Woody Rollins now serves as CFO.



Customers: NASA and Eli Lilly.8. Terremark

Why they’re a leader today? Terremark is another hosting/colocation company embracing thecloud. With a market cap of $504 million (as of February 2010), the company has the resources

to compete with the likes of Microsoft, Amazon and Google.According to its February 2010earnings report, Terremark’s total revenue for Q3 fiscal year 2010 totaled $74.3 million, up 13 percent over the prior year. Not bad coming out of a deep recession.

Before you think this is a reflection of how bad the recession actually was, Terremark reportedthat it had “a record bookings quarter with $37.6 million of new annual contract value booked inthe quarter ended December 31, 2009.”

In terms of the cloud, the company “increased the annualized cloud computing run rate to $17.2million during the third quarter, a 30 percent increase from the previous quarter.”

Terremark’s Enterprise Cloud is a managed cloud platform for deploying mission-criticalapplications. Enterprise Cloud’s Infinicenter web portal allows users to configure and provisionvirtual servers and server groups. It also has features for organizing servers according to role anddynamically extending them according to utilization.

Why they could be on top in years to come: Already considered a leading provider of collocationand VMware-based infrastructure services, Terremark has carved out a sizable cloud niche bylanding a number of government customers.

Terremark is investing heavily in its “Network Access Point (NAP) of the Capital Region,” adata center complex located outside of Washington, D.C. in Culpepper, VA. Obviously, NAP of

the Capital region is intended to serve the federal government. Getting an early foothold with theFed should pay off both near- and long-term.

Key Executive: Randy Rowland joined the company in 2007 and served as VP of ProductDevelopment and GM of Managed Hosting before attaining his current position as SVP of Product Development.

Customers: Agora Games, USA.gov, Library of Congress, SUBWAY Restaurants.9. GoGrid

Why they’re a leader today: GoGrid (formerly ServePath) provides a “multi-tier, cloud

computing platform that allows you to manage your cloud hosting infrastructure completely ondemand through an intuitive, web interface.” The platform integrates storage, load balancing,hourly billing and a number of other features.GoGrid is directly positioned against Amazon EC2.It differentiates itself through broader support of various Windows and Linux operating systems,lower pricing and a 100% uptime SLA.

I’m not sure how much of a competitive advantage that extra .01% of uptime is, but as you can probably guess, GoGrid cites its customer service quality and reliability as key differentiators.



Why they could be on top in years to come: Like other hosting companies on this list, GoGridoffers a range of other services – collocation, managed hosting, CDN services – to keep thelights on as its cloud computing services ramp up. The company is pursuing a hybrid cloudstrategy, which makes perfect sense in the early days of cloud adoption.

Even more promising, GoGrid has focused on interoperability as a competitive differentiator.With others trying to throw walls around their platforms and sneak vendor-lock in through thecloud, GoGrid’s efforts to integrate with a range of operating systems and its acceptance of toolsfrom vendors that, at first glance, could be considered competitors (RightScale, Tap in Systems)means that when GoGrid mentions “interoperability,” it’s not an empty promise.

Key Executive: John Keagy, CEO and co-founder, previously founded and sold several ISPs.

Customers: GoGrid claims nearly 10,000 customers, including Novell, Macy’s and SAP.10. RightScale

Why they’re a leader today? Many organizations will adopt cloud apps and services in a hodge- podge fashion. The finance department will commit to one application on a certain cloud, whiledevelopers will be off in a different, more arcane cloud.RightScale promises to deliver controland portability back to IT as cloud sprawl threatens to become just as bad as data-center sprawl.The RightScale Cloud Management platform allows organizations to deploy and manageapplications across multiple clouds. A SaaS product, the platform sets up server clones, load balances them, monitors for and reports errors, performs automated backups, etc.

The company is backed by $17.5 million in VC funding from Index Ventures and Benchmark Capital.

Why they could be on top in years to come: There’s no guarantee they will be. As with other startups on this list, they have their work cut out for them to maintain success. That said,RightScale is focused on a specific IT pain point and is early to the cloud-management game.The company has already scored a couple of major customer wins with ESPN, Eli Lilly andSony Music.

Key Executive: Thorsten von Eicken, CTO and founder, previously founded and served as Chief Architect of Expertcity (which was acquired by Citrix Online), where he directed the architectureof GoToMeeting.Customers: ESPN, PBS, Eli Lilly, Sony Music, Harvard University, Zynga, Sling Media,CrowdStar, StarCut, Animoto.

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Jeff VanceSourced/Pulled from:http://itmanagement.earthweb.com/features/article.php/12297_3884311_1/Ten-Cloud-Computing-Leaders.htm

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