Cloud Computing Could Rain Profits for Companies - Barron's (AAPL, MSFT, ORCL, More...)

Cloud computing is going to be the next technological revolution, as big as the internet itself, a Barron's article reports today. Companies like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and Apple (NASDAQ: AAPL) could benefit, or easily lose, depending on how they enter the cloud computing segment.

Consolidation in enterprise technology has been going on amongst Cisco Systems (NASDAQ: CSCO), HP (NYSE: HPQ), IBM (NYSE: IBM), Dell (NASDAQ: DELL), and Oracle (NASDAQ: ORCL), largely in anticipation of the expansion of cloud computing. The gain in technology will allow these companies to be a "go-to" for small and large businesses as they push further into the realm of cloud computing.

The change will happen in stages, and begin with private clouds and progressing into public clouds. Private clouds are managed in-house and owned by the corporation. They take advantage of virtualization software, which allows one computer to run several operating systems at once by automatically allocating resources to where they are most needed.

The U.S. government is expected to spend around $43 billion in IT infrastructure and operations over the next several years, mainly focusing on private cloud computing. An analyst from the Gartner Group sees spending on cloud computing as a whole increasing from $70.8 billion in 2010 to $88.8 billion in 2011.

Some companies, such as Salesforce.com (NYSE: CRM), have already cashed-in on the cloud computing movement by offering customer-relationship-management services capability for a fee. This is very appealing for the small- to medium-business, where CRM software may be too expensive to buy and implement. Companies like Salesforce.com are also, right now, a small disturbance to enterprise-software providers like Oracle and SAP (NYSE: SAP). However, that unswatted annoyance may become a bigger problem if allowed to grow, hence the need for companies to complete a few M&A deals to gain the technology and expertise to enter these markets.

Salesforce.com has seen growth from $310 million five years ago, to $1.29 billion recently. The company is also expected to report profit of $80 million for FY09. However, analysts think that just because the companies were first to the market, it doesn't guarantee that they will be top dog for long. SAP, for instance, is planning on launching their own on-demand CRM service this year.

Another area that companies like AT&T (NYSE: T), Amazon.com (NASDAQ: AMZN), and Terremark World (NASDAQ: TMRK) is Infrastructure-as-a-Service (IaaS), compared to the Software-as-a-Service (SaaS) that Salesforce.com offers. With IaaS, companies would rent out resources like data-center space, networking equipment, or servers.

The future of cloud computing will allow the systems to be "very compatible yet very differentiated," accounrding to Steve Herrod, Cheif Technology Officer of VMware (NYSE: VMW). VMware is a server-virtualization-technology provider owned by EMC (NYSE: EMC).

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