Morningstar Advisor - December 2013/January 2014 - (Page 30)
Sector Rap
Cloud Is the New Engine of Growth
By Basili Alukos
Companies that keep people connected to their devices
will succeed.
The computing shift from the client/server
model to a device/cloud model has led to an
obvious disruption of the global PC industry,
which should lead to long-run declines
in unit sales. But the implications of this new
era are much broader. The physical location
of processing and applications has swung
from being distributed across servers and PCs
to central locations in the cloud. Morningstar's
equity analysts believe that technology
companies that provide scalable and flexible
solutions that are cross-platform and
support multiple Internet-connected devices
30 Morningstar Advisor December/January 2014
have the highest likelihood of success. And
ironically, "old-tech" companies such
as Oracle ORCL and Intel INTC have been able
to protect their moats by embracing this
new strategy.
To find out how investors can take advantage
of this paradigm shift in the tech business,
I sat down with a team of analysts who cover
the sector and contribute to Morningstar's
Technology Observer newsletter. Our discussion
took place Oct. 15.
Basili Alukos: What's the most important
aspect investors should be aware of in the
tech sector today?
Grady Burkett: It's important for investors
in the technology sector to delineate
between the consumer technology segment
and the enterprise or business technology
segment. On the consumer side, we have rapid
product cycles and changing consumer
behaviors. Consumers are less interested
in security and reliability and more interested
in features and having the latest, greatest
Table of Contents for the Digital Edition of Morningstar Advisor - December 2013/January 2014