The Sky’s the Limit with Cloud Computing

Ash is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

There is no doubting that cloud computing is quickly becoming a part of our daily lives. I can save documents in my Google (NASDAQ: GOOG) Drive and share them around the world in an instant. There are plenty of other companies offering similar solutions too, all hoping that their system could eventually take off as the standard. Microsoft and Apple (NASDAQ: AAPL) both have systems that are similar to Google's that allow files to be shared across devices, and there are a lot of venture funded private businesses in the landscape. Let’s take a look at this cloud of cloud companies.

What is the Cloud?

The cloud, despite how it sounds, is actually quite grounded. The cloud refers to the use of computer resources, whether for storage or other uses, via the internet. At this stage pretty much any company that deals with the internet is, at least in some form, offering a cloud service. With there being so many different companies we’ll have to just take a look at the biggest in this article, the ones that are making this happen, and the companies that will lead the way.

Building the Cloud

Cisco Systems (NASDAQ: CSCO) creates a lot of the hardware that is required to get the cloud rolling. They’re not the only company that does, but they are certainly the largest and best positioned company for the cloud boom. Cisco makes the hardware that is required to get the data from one place to another; this includes routers, switches, servers and more. In my opinion, this company is well priced for entry. The stock currently yields 2.8% and they also have $45 billion in cash to further their investments in cloud-based hardware going into the future.

Another company that I feel is well positioned to help build the cloud is EMC Corp (NYSE: EMC). EMC is one of the world’s leading providers of network based storage. Over the next five years, with the growth of the cloud and through the help of virtualization arm, VMWare, I think that EMC will easily double their stock price. The storage market will continue to grow, perhaps even exponentially, over the next five to ten years, and EMC will be there to see gain from it.

Providing the Services

There are too many companies to name in the services arm of the cloud. Google, Apple, and Microsoft all offer storage solutions via their respective mobile devices. These services are targeted toward the consumer, but both Google and Microsoft are targeting their suite of cloud based services to companies. In the past, Microsoft Office was the juggernaut, but with Google now targeting business and consumers with Google Apps, this could all change.

The real money in the cloud will likely rest within the enterprise. If it does then there is one clear leader who will likely continue to expand, and that company is Amazon (NASDAQ: AMZN). Amazon offers many web-based solutions to enterprise and developers through Amazon Web Services. These services allow startups to create scalable apps and large multinational companies to securely store and transfer data around the world. Netflix, Pinterest, Reddit, and more all run on AWS.

EMC, as well as offering cloud building services, also offers many enterprise solutions, and I think that they will continue to succeed in that aspect for a long time to come. VMware, EMC’s virtualization software, may take a hit in the coming years as more companies try to take market share in the server space, but I think that the advantage the software holds over the market and the name recognition aspect will allow EMC to thrive in the years to come.

Where to go from here

If you want to get in on the cloud then I’d recommend Cisco, EMC, and Amazon as your ways to do it. All three are phenomenal companies, and I would say that all three of them are more than investible over the long term.

Cisco is your play if you like the hardware aspect of the cloud, EMC is the stock of choice if you think that data is the way forward, and Amazon is definitely a play on both of those aspects. 

Ash1402 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple,, EMC, and Google. Motley Fool newsletter services recommend Apple,, Cisco Systems, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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