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We are in a curious time of the year. Software companies in the US seem to delay product releases to miss the first few weeks of the year — perhaps because so many take time off at the holidays — so I have seen a number of product updates that are coming out soon, but which I have been asked not to talk about until they are released. So, the things that are top of mind will have to wait.
Recently, we’ve seen a lot of financial and market results that — once again — underscore the trend lines in the ‘computications’ device business (see How fast and far can Intel fall?):
- Intel announced numbers this past week that indicated demand is at best flat for personal computer chips, and this led to a fall in the company’s stock, and — in combination with other data — the S&P fell over 7%, and companies in related niches — VMware and Citrix — fell in tandem. Intel also announced plans to cut its workforce 5% a few days later.
- On the other side of the companion device/PC divide, Apple and Samsung are projecting huge numbers of tablets for 2014: 80-90 million units and 60-70 million units, respectively.
I don’t get why the market can be ‘surprised’ by the slumping fortunes of Intel or the dinosaurs that are trying to sell access to cloud computing that is premium priced relative to Amazon’s. This is one example of the way that financial analysts seem dumb. My bet is they think change is happening slower than it is, or as McLuhan said
We look at the present through a rear-view mirror. We march backwards into the future.
The analysts feel the future should be like the past, but nowadays that means whenever some news comes out, you’re surprised.
A second indicator of the trend toward the me-ization of work: Dropbox announced a $250 million round of investment — which might actually be as high as $400 million — at a valuation of $10 billion (see Dropbox, now valued at $10B, raises $250M). When I reported this, several folks responded on Twitter that it seemed a bit bubblicious. But the Wall Street Journal reported that the company expected sales to rise over $200 million in 2013, which is 50X valuation, but not based totally on signups: it’s serious bank.
Dropbox’s round might step up the competition with Box, which raised $100 million last month at a $2 billion valuation.
A second example of how the financial analysts are dumb about technology: they don’t get Dropbox and its competitors. Douglas MacMillan of the Wall Street characterized Dropbox as an ‘online storage provider’, which is like calling Instagram a photo storage company.
Dropbox is worth so much because it backfills a flaw in today’s operating systems. It provides a virtual distributed operating system that is lacking in OS X, iOS, Android, and Windows. One of the companies making those OSs would be well served to step up and buy Dropbox for a premium above that $10B — which would have to be $20B or more, I bet — to bring those capabilities back into the OS layer.
So when Google buys Dropbox for $25 billion, expect the financial analysts to be surprises that an ‘online storage provider’ could command such a price.