Connecting the Dots

I'm surprised it took so long for the mainstream media to connect the dots on recent acquisition activity here in Silicon Valley. For those of us steeped in both cloud computing and mobile telecommunications, the pattern has been clear for a long time. Nonetheless, I found it encouraging that the Valley's newspaper of record, the San Jose Mercury News, finally reported on the trend in a front page story today.

If you haven't been following the M&A action here in tech's heartland, let me do a quick recap.

• HP just today acquired 3Par for $2.4B after a fierce bidding war with Dell. 3Par's products combine virtualization software and hardware to increase storage capacity and lower operating costs, making them ideal for cloud computing applications. Also this year, HP acquired 3Com, Palm and Fortify Software.
• Intel acquired McAfee on August 19 and then 10 days later acquired Infineon. McAfee makes security software which is a critical element for both cloud computing and mobile telecom. Infineon makes wireless chip sets for three primary markets, security, communications and energy efficiency.
• Google has made a number of smaller acquisitions this year including Aardvark, a social media search engine for $50M, AdMob, a mobile advertising platform that's particularly popular with iPhone app developers, ITA Software, a flight information software company, and just last month, Slide, a social application company.
• In addition, Cisco Systems acquired Tandberg for $3.3B and Oracle acquired Sun Microsystems for $7.4B

The recent Silicon Valley acquisition frenzy, which has already seen five billion-dollar plus acquisitions this year, illustrates two irreversable trends in technology -- cloud computing and mobile telecommunications.

According to the IEEE, by 2014 smartphones and other mobile devices, such as Apple's iPad, will send and receive more data each month than they did in all of 2009. More than 75% of that information will come from Internet traffic and nearly all of the balance will come from audio and video streaming.

A big part of the increase in mobile data will come from cloud computing applications. Utility software (such as maps) will lead the way, followed closely by productivity tools (especially for sales, data sharing and collaboration), then social networking and search.

A senior analyst at ABI Research, a telecom analyst firm in Oyster Bay, NY, predicts that the number of people subscribing to mobile cloud computing applications will rise from 71 million today to more than a billion by 2014.

Asia will lead the way with the largest number of mobile cloud computing app subscribers, but North America will bring in nearly as much revenue because high-paying enterprises will have a larger slice of the pie here.

So it's no wonder that Silicon Valley tech companies are scrambling to acquire companies and technology that will give them an edge in either cloud computing or mobile telecommunications, or both. And if the month of August was any indication, there will likely be several more billion-dollar acquisitions before the end of 2010.

The Four Horsemen of Cloud Computing

The first four of the seven seals, as described in the last book of the New Testament, represented pestilence, war, famine and death.  These four seals were depicted as beasts riding on white, red, black and pale-green horses.  These Four Horsemen of the Apocalypse, as they became to be known, were said to have been unleashed to warn of upcoming events -- including the Day of Judgment.

That is heavy stuff.

Ok, now fast-forward some 2,000 years, and we had the "lite" version of the Four Horsemen:  Cisco, EMC, Oracle and Sun Microsystems.

Much less intimidating than famine or death, and certainly not as serious, but still imposing in their own right.

These were the four companies who prior to the rupture of the Internet bubble, were firing on all cylinders.

EMC had reinvented and reinvigorated the data storage solutions industry.

Oracle was king of the database software world.

Cisco networked the universe and at one point became the world's most valuable company.

And Sun "the network is the computer" Microsystems was happy, for a time, to sell the world as many high-end servers as it could manufacturer.

As a result, Wall Street had christened these companies the Four Horsemen of the Internet.

Today, three of the four continue to dominate their market segments while one has been subsumed by the other and lives on in technology only, no longer in name.

Although three of the four companies that comprised the Four Horsemen live on, The Four Horsemen of the Internet is done.  It's time has come and gone. Their 15 minutes of fame behind them.

Make way for the The Four Horsemen of Cloud Computing.

In alphabetical order, here they are, the Four Horsemen of Cloud Computing.

Akamai:  "At Akamai we've been optimizing the cloud for over ten years, building a global computing platform for over ten years, building a global computing platform that helps make cloud computing a reality."

Google: "the elephant in the cloud."

VMware:  "Advancing the Foundation for Cloud Computing."

But wait a minute. That's only three horsemen.

Well, I guess we could go with The Three Horsemen of Cloud Computing.  But to me, it lacks the panache of "The Four Horsemen of Cloud Computing."

Do you agree that we need a fourth?

If you do, please weigh in.

The cloud computing company that gets the most mentions will become the fourth horseman of cloud computing.   And you'll get the satisfaction knowing you helped make it happen.