10 Server Companies That Make You Think 'Buy,' 'Sell' or 'Hold' Page 2
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5. EMC (Hold)
A year ago, EMC would have been a "Buy" but today, it's a Hold. Why the change for a company that owns one of the world's most successful companies (VMware)? One reason is a collaborative effort called The Open Virtualization Alliance. IBM, HP, Intel, and Red Hat have connected into an alliance to promote KVM virtualization, now owned by Red Hat (NYSE: RHT).
Why should this matter, you ask? If your company and several others created an alliance to promote Chevrolet, do you think you'd still continue to sell Fords? Maybe not.
IBM and HP also have their own storage solutions so EMC's SANs could be kicked to the curb in front of their data centers instead of occupying a nice cool rack inside them. It also seems that EMC's innovation has slowed to a trickle lately. Some large companies, like Oracle and EMC (NYSE: EMC) lose innovation through acquisitions. They acquire, scuttle, and move on.
EMC has tremendous market share and great products but the face of the competition is changing. Hold on this one to see what happens next.
6. Microsoft (Hold)
Microsoft is on innovation hiatus and has been for some time. Can you name the last truly innovative product from Microsoft? Me neither. Unless you turn back the clock to 1995 and say Windows 95. It seems that the new Windows look was the last innovative spark from Redmond. Microsoft (NASDAQ: MSFT) just hasn't kept up the pace on innovation like it did back in the Gates days. Maybe there's a connection.
Don't expect much from Microsoft in the next couple of years. It will get it together in 2014 or 2015 with something new, when we emerge on the other side of this recession, and Microsoft reworks its structure a bit.
Industry observers say Microsoft has lost its lucky charm or its heart, and it no longer holds the world for ransom. Linux and Apple have made significant dents in Microsoft's near monopoly on desktop operating systems. Now, with focus turning toward cloud-based services, Microsoft is losing its planetwide stranglehold on the soon-to-be-extinct fat desktop.
7. Citrix (Hold)
It's hard for me to say "hold" on Citrix because of the deep and historic love I have for that company. At one time, it would have been a strong buy but now it's in a holding pattern. It has changed the names of its products and acquired Xen, but no significant innovations in years have come from these guys. It's very disappointing.
That said, Xen powers Amazon.com's cloud offerings, and its software powers virtualized applications globally. There are companies like 2X out there that are hot on its tail with equivalent technology at a fraction of the price. Citrix XenApp isn't easy to install or maintain. XenServer is easy, but it doesn't have the third-party support of VMware. It's hard to put a finger on where Citrix is heading.
Many analysts have postulated that Citrix (NASDAQ: CTXS) and Microsoft should negotiate a Citrix buyout, although Oracle might be more of a contender for a Citrix purchase.
Citrix is a strong hold. Something good should come from the company in the next year or so. Stay vigilant and hopeful.
8. BMC (Hold)
The coolest new thing about BMC is its involvement in the OVA. BMC (NASDAQ: BMC) makes some cool software: Remedy, Patrol and BladeLogic, but I'm just not feeling the innovation of yesteryear. Ten years ago, these guys put the "it" in IT. The company still does some cool stuff, but I've felt a little slighted by its somewhat late arrival onto the SaaS scene. The company now offers Remedy as a service (awesome product), but it would have been great to have it five years ago. Eight years ago would have been even better.
Remedy is a great product and an online version is the best thing ever. But, sorry, BMC, you're still on hold. Let's get that early decade gray matter pumping again.
9. Oracle (Sell)
Oracle, like Microsoft, used to have the corner on its market, but that's rapidly changing. Its purchase of Sun Microsystems, which included MySQL, was an attempt to halt the diminishing relevance of its too-expensive-but-very-capable database system. But, not even MySQL can save Oracle now.
Oracle (NASDAQ: ORCL) has isolated itself from other tech companies, too. Not a wise business practice in these days of fierce competition and rising stars. Oracle may find itself pandering to the old school while its competitors are working the audience with innovation and pay-as-you-go pricing.It's OK though, Oracle has a few kicks left in it before it fossilizes completely. Larry Ellison is no fool. He'll purchase any innovation that he needs from another buyout. Sun is another good example of his buy, shell, eat, and toss the empty husks aside mentality. After he's done with Sun, it will be hard to figure out what he actually got out of his multi-billion dollar purchase.
Oracle is a "sell" company, although you should keep an eye on it. It's difficult to predict Larry's next move with any accuracy.
10. Computer Associates (Sell)
Computer Associates (CA) has never particularly struck the innovation nerve but its products are very popular. The product lines are easy to use but don't offer much in the way of innovation or clever design. It produced a line of cloud products that look promising. Something referred to as Cloud Solutions.
Cloud Solutions includes Turn-key Cloud, Cloud Security, Service Assurance, and others. Software as a Service (SaaS) and Platform as a Service (PaaS) tools are also available.
CA (NASDAQ: CA) is one to watch for future innovations on the cloud frontier. Its security tools have proven themselves in the data center and it will be interesting to watch its evolution in the cloud space.
Ken Hess is a freelance writer who writes on a variety of open source topics including Linux, databases, and virtualization. He is also the coauthor of Practical Virtualization Solutions, which was published in October 2009. You may reach him through his web site at http://www.kenhess.com.
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