May 20, 2012

When it comes to visualizing how effective cost savings can be in a cloud-based environment its time to learn a new acronym to better understand what is ‘efficient computing’.  Get to know MIPS, that is “Million of Instruction Per Second” or more specifically the cost of those MIPS.

In this case what’s good for business can also be great for investors says Fidelity’s Gavin Baker, manager of Fidelity’s OTC Portfolio (FOCPX)

When it comes to cloud computing its really about “going back to the future”

“The first wave of computing focused on the mainframe and minicomputer, which centralized processing power. A second stage was anchored by the PC and client-server architectures—which moved the computing power out to every desk and server closet,” Baker explains.

“Now, plentiful, high-speed bandwidth is ushering in a third era, which marks a return to centralized processing power—the cloud—with the crucial difference being that this centralized processing power is easily accessible to users on a variety of devices ranging from smartphones to PCs. A simple example is the switch from an e-mail program that you store on your computer to one you access over the Web. With cloud-based models, all the software, processing, and storage is handled remotely and the data is available anywhere in the world, at any time, and on any device with Web access.”

So where is the cost benefit and is there any drop in functionality?

“Cloud computing is a wildly different model that could take hold over the next 15 to 20 years because it offers users lower costs and more convenience.”

“Essentially, what we’re witnessing is a transformation of computing into a utility much like water or electricity. And the future is here now—you can open your laptop anywhere and access supercomputing power with just a credit card. Start-up companies aren’t buying servers, networking gear, databases, operating systems, or applications directly—they are buying these as services.”

In other words this paradigm shift is changing the playing field where you simply buy as much service as you use or need, and don’t get stuck footing the bill for services that aren’t consumed on a month-to-month basis.

With this in mind, Baker says he’s focusing in on three prime areas for future investing that show strong growth potential: cloud computing, mobility and personalized medicine.

While AnaTango currently has no plans to enter the personalized medical care industry, its good knowing we fit well within two of the three categories with our cloud computing optimized AMI Adaptive Management Infrastructure platform that allows AnaTango software to perform equally as efficiently from the desktop, laptop to smartphone and tablet devices.

What works for AnaTango is an exponentially strong business model specializing in a paradigm shift to subscription-based cloud computing, one that Fidelity’s Baker that investors should keep a keen eye on.

In the 1990s, Baker says there were two main trends a growth investor needed to get right: the replacement of mainframe architectures with client server architectures, and growth in personal computers (PCs). “Owning top companies related to the PC and client server trends was a big part of outperforming as a growth investor in the 1990s.”

He says that picking the winners might be hard, but the opportunity may be significant and could justify today’s valuations.

“I believe some of the companies in these businesses are going to be orders-of-magnitude bigger,” says Baker. “So valuations that appear elevated on a one- to two-year time horizon make more sense if you extend your time horizon and look at the bigger picture.”

Read more in Fidelity’s Investor Report here: “Three Tech Trends to Watch”

AnaTango’s Chief Marketing Officer Rob Mayeda brings nearly 17 years of broadcast news/media experience to AnaTango and is a multiple Emmy-winning meteorologist and multimedia producer.  Rob’s latest hobby is working in project scheduling software user interface operation and graphics design.  He also teaches geology courses at Cal State East Bay in Hayward should you be so inclined to want to sit in on a lecture one day.  Contact Rob @ rmayeda@anatango.com