Is Cloud Computing a Bubble About to Burst?

The current hype about cloud computing, now going on three years, is "just another bubble," says Gartner analyst Jack Santos. In Gartner-speak, it is reaching the peak of inflated expectations. But the higher the peak, the greater the crash to the trough of disillusionment), and this peak has reached amazing heights, Santos argues.

That might be so, but all consequential new technologies have a "hype cycle" and therefore always feature an investment bubble. The issue is not the over-investment, but the degree to which the sector has profound and destabilizing implications for the broader economy.

But there is another side to bubbles. "Even in a bubble, there is a germ of truth and reality," Santos notes. Google was a dot com, but was different. It proved to be the provider of a consequential new technology, unlike most of the other inconsequential endeavors.

The real trick in any bubble is not trying to talk yourself out of the hype, but picking the winners that come out of that bubble, Santos says. In other words, cloud computing is going to produce a couple of big winners. The unknown today is who those winners will be, and why they prove to be winners.

Cloud Bubble

Reed Hastings: Master of Business Transitions

Netflix was supposed to be toast, roadkill on the digital content highway, remember? Most firms might have met that fate when a huge transition had to be made. But that is partly, perhaps largely, what defines business winners from losers: there are some people and companies that actually can manage a transition from one business era to the next, replacing a successfu--but dying--business model with a new one.

Reed Hastings has for those and other reasons been named "number one" on Fortune magazine's "Businessperson of the Year" list. Apple CEO Steve Jobs might also have been a very-strong candidate for inventing yet another consumer product category (the tablet). But Steve Jobs is something more like "Businessperson of the Decade," one might argue.

In January 2005, Wedbush Securities stock analyst Michael Pachter called Netflix a "worthless piece of crap." He put a price target of $3 on the stock, at the time trading around $11. The doubters thought Blockbuster, Wal-Mart or Amazon, with their economies of scale and established customer bases, would simply destroy Netflix. Ironic, eh?

Reed Hastings: Leader of the pack - Fortune Tech

Take Risks Outside Your Area of Core Competency

If you are going to take business risk, take it outside the area of your core competency and revenue stream, if at all possible, one might argue.

Amazon: It's Tough Being "Number One"

The appearance of arrogance is a constant danger for any firm that leads its business category.

New Cox Wireless Campaign Targets "Unfair" Mobile Practices

Cox Wireless is launching its branded wireless service in Hampton Roads, Va., Omaha, Neb.., and Orange County, Calif. with an unusual pricing plan and a clear attack on a perceived weakness on the part of the dominant service providers.

"Our research found that value and transparency are very important to consumers when choosing a wireless service plan, but they are not finding these qualities in the wireless plans offered today," said Cox Wirless VP Stephen Bye.. "Total loss of unused minutes as well as unforeseen overage charges on bills are just two examples of what our customers have told us is just unfair."

To address those issues, Cox Wireless has created the "MoneyBack Minutes" program, where customers receive a five-cent credit for unused minutes, up to $20 a  month. 

86% of Firefox Revenue Might be at Risk

Financial analysts get squeamish when too much of any company's revenue comes from a single, dominant customer. If so, Mozilla should make virtually all analysts blanch. Fully 86 percent of Mozilla's revenue in 2009 came from a single customer, Google.

There are a couple of dangers here any analyst would note. First, Google now has launched Chrome, its own browser. To be sure, Chrome has perhaps nine percent share of the browser market while Firefox, Mozilla's offering, has about 23 percent. That likely means Google still will want to pay Mozilla for access to premiere placement in the search pane.

So would Google renew its contract with Mozilla after November 2011? That depends on how many search queries, and how much revenue, Google gets from the deal today. If the money outweighs Google's long-term strategic plans for Chrome, then Firefox is safe.

But as Chrome encroaches on Firefox's market share, there will come a tipping point where the search deal no longer makes sense for Google.

Is November 2011 Armageddon For Firefox?

Is an iPad More Like a PC or an iPod?

Lots of people will argue about what a "tablet" device actually is. Some might argue an iPad, for example, is an iPod "Touch" with a much-bigger screen. Others will argue it is more like a PC without a keyboard and mouse. To make the argument even more complex, there now are different form factors for tablets. There's the iPad with a 10-inch screen and the Samsung Galaxy with a seven-inch display.

Size matters in mobile devices, and smaller is usually better. The iPad is 50 percent heavier than the Tab, about a half a pound more, and that makes a big difference if you're holding it for long periods, some would argue.

The form factor might ultimately lead to differentiation in the tablet space. Most tablet users will wind up using them as an e-book reader and video player. So the issue is how much value a user places on larger screen size versus portability. It isn't so clear yet how much content creation actually will be done on such devices. They are built for consumption (reading, watching, hearing) more than creation of such media.

For some of us, that really does make the iPad an iPod "Touch" with a bigger screen, Apple's protests notwithstanding. To that extent, the question is whether an iPod Touch style device with a seven-inch screen, or a 10-inch screen, is useful. Don't get me wrong, one would have to conclude that the tablet really is a brand-new product category, not simply a new form factor for a notebook PC.

But like many other devices that are "multi-function" appliances, there are trade-offs. Smartphones have to work well as phones, even though they also are mobile Web devices. PCs have to work well for content creation and work, even though they can be used to read e-books, listen to music and watch videos. E-book readers have to support the reading experience. A tablet arguably has to work well as a mobile Web appliance.

But that's where the product category issues lie. Smartphones and Internet-connected PCs, notebooks and netbooks also support the mobile Web. The tablet lies between the smartphone and the notebook. Tablets support content consumption "better" than a smartphone, but do not support "content creation" as well as a notebook.

But that still leaves lots of room for positioning devices. You might say an e-book reader now is a tablet optimized for reading, an iPod is pocket-sized device for listening to music, while other multi-function devices are optimized for watching video or navigating the touchscreen Web. In some ways, you might argue the tablet has separated the "work" and "content creation" roles of the PC from the web browsing role.

Let the tablet wars begin