In my opinion, investors should mostly ignore the hype around “cloud” computing.
There are different definitions of so-called “cloud” computing. In a literal sense, cloud computing refers to computers attached to a network. Such technology has been around since the 1960s. The current interest in cloud computing largely has to do with the pervasiveness of fast Internet connections. “Cloud” software can be thought of as “software that requires a fast Internet connection”. The widespread adoption of broadband Internet allows certain forms of cloud technology to become more viable. For example, backing up large amounts of data over an Internet connection now makes sense.
However, all software companies are largely on the same footing when it comes to cloud computing. If cloud computing makes sense for a particular market segment, anybody can (re-)design their applications to take advantage of fast Internet connections. Software has always been an arms race between competitors improving their product with new features. Cloud computing is simply part of that arms race. Personally, I don’t see cloud computing as being a paradigm shift like the Internet was.
