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Top financial magazine highlights CLOUD COMPUTING: 'trouble for major tech suppliers.'

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  • Deosaran Bisnath
     Barron s Cover | SATURDAY, OCTOBER 23, 2010A Private PartyBy MARK VEVERKA | MORE ARTICLES BY AUTHORBig companies are quickly adopting new computer
    Message 1 of 1 , Oct 23, 2010
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       Barron's Cover | SATURDAY, OCTOBER 23, 2010A Private PartyBy MARK VEVERKA | MORE ARTICLES BY AUTHORBig companies are quickly adopting new computer networks known as "private clouds." That may mean trouble for major tech suppliers.ArticleComments+ TEXT SIZE − PRINT EMAILSHAREtwitterDiggfacebookLinkedInStumbleUponYahoo! BuzzMySpacedel.icio.usNewsVineMixx SINGLE PAGE REPRINTS GET RSSIT TURNS OUT THIS CLOUD has a dark side for technology vendors–and their shareholders.Corporate adoption of efficiency-enhancing, virtualized computer networks, known as "private" clouds, is going so well that big companies may be ready for the next phase of cloud computing years sooner than either Wall Street or Silicon Valley expected. That's not a welcome development for the technology suppliers that sell Corporate America hardware and software because the next step is the outsourcing of many data-processing services. In other words, corporate customers
      gradually will be cutting back on big-ticket items and redirecting smaller amounts of money to computer-services providers."It's possible that we could see another nuclear winter in tech spending," says Walter Price Jr., who has been managing technology funds for more than 25 years.The consensus has been that big, global companies, already sitting on record mounds of cash and reporting improved revenues and profits, would steadily increase their spending over the next few years as the recovery gradually gained steam. Information-technology stocks would enjoy the ride.But that's not really happening. Even without the effects of cloud computing, Goldman Sachs now sees 2009's declining global information-technology sales followed by about 5% growth this year and 3% in 2011 as a subpar recovery takes hold (see chart nearby). Price contends that it could get worse than that. "What's coming is a secular decline in tech spending," he says. "We are headed to an
      environment where it will be difficult for [tech vendors] to keep revenues growing."http://online.barrons.com/article/SB50001424053111904502004575562243330821352.html?mod=BOLFeed#articleTabs_panel_article%3D1




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