Myrna,
The term "cloud" has unfortunately carried over form the early days as an investing buzz word, but it doesn't really describe anything. It's a broad umbrella to refer to anything (software, software hosting, computer space) that's not offered on end-user-company-located computers. It's so broad it's largely meaningless today. Forget "cloud". Distinct categories of competition commonly called "cloud" include:

- Software to manage customers (simply hosted on remote servers) - this is what CRM does
- Any software sold as subscription online - i.e. Office 2013, Steam
- Data backup/holding services like Dropbox, iCloud
- Server space and associated services to run websites
- Server space and associated services/platforms to run applications that the customer writes
- Large corporate server space which basically represents outsourcing of IT resources such that the hardware layer and possibility some of the software is managed by Microsoft or IBM or similar

All of these things are called cloud which makes it ****ing confusing. AMZN doesn't really compete with Salesforce.com. They're very separate things.

Salesforce are selling CRM software and related services, including managed hosting. CRM is just for managing sales, sales teams, leads, points of contact, marketing, etc. Salesforce is basically a software and online software services vendor for this stuff. They should be seen as such. They really have nothing as a purer "cloud" service separate from this stuff.

Salesforce.com produce perfectly good software and services in customer resource management. But they're far from unique and it's a crowded and fast moving space. There's really no way to make profit in this area without synergies (for example, being Microsoft or Oracle where you can sell all layers as a package). Salesforce just have a massive selling/marketing campaign which keeps growing the revenue, but should they stop that effort, sustainable large margins profit from their unique software and services and know how in the way that Microsoft (or any of the blue chip software cash cows) routinely sucks out of industry is really, really unlikely.

The "cloud" thing is just a bull**** buzz word to confuse investors and keep people "ooh aahing". They sell online-hosted software to organize sales and marketing, and a few online services around this. That's pretty much it. Meanwhile, their 10-K says:

We are a leading provider of enterprise cloud computing solutions, with a focus on customer relationship management, or CRM[

What it should really say is this:

We are a leading provider of customer relationship management software for enterprises, with related online services

Doesn't sound anywhere near as sexy, but that's what you're dealing with. I hope that helps.

As for how good Salesforce are at CRM, and what their prospect are, I haven't delved into it deeply. There's tons of comparisons like this if you want to understand how they relate to everyone else. But from what I can gather in my drive by analysis, there's lots of fast moving competition, they don't have any super obvious moats, and they have an unsustainable business model unlikely to ever generated their value in dividends, IMO, let alone a monster cash cow. They also have a lot of factors working against them due to synergies they lack that their competitors will increasingly have.

Anyone have a thought about how strong XLE is currently compared to the loss in oil intraday? Understand that stock buybacks go into blackout on Wednesday, maybe a play here in being short on the close Tuesday.

Grabbed a good chunk at 18.48 but got busy at work and didn't get a chance to buy more when it dropped further -- doh!

I love when HOS dips below 19 lol.

Added a tiny bit more in the high 18.50s, although I'm feeling the excitement as much with the current news.

TS , thanks for the info , reading over . I deducted that everything seems to be "cloud" , just trying to figure out who the winners and the losers will be.. They are all predicting big growth though.

I have stopped bothering with commodities because you are implicitly trading currency anyway. Why not just trade currency directly when it is going to be the overwhelming factor of the move anyway with the commodity.

The prior decade wasn't some huge supply/demand move on commodities, it was a dollar bear that is now over.

Sorry to noob this thread up again, but have a quick question about options can't find the answer to:

Two AAPL calls:

$124 @ $1.81
$125 @ $1.24

The way I read options, is that assuming you buy 1 of each option, for you to profit the stock price will need to go to:

$124 @ $1.81 = profit at $125.81
$125 @ $1.24 = profit at $126.24

Why would anyone ever buy the $125 calls? Especially if close to expiry, isn't the $124 call just a much better EV bet?

I've been tempted to invest a lot in AMZN because they're crushing it in terms of their cloud related business (AWS).

My problem is that I don't know how to evaluate the other (and still much bigger) areas of the company.

No, the guys on the other side of the trade have really thought this through. Higher probability of turning a profit but more risk. Closer to expiry the $124 call could be multiples of the 125 call.

Sorry I'm dense, not sure I understand what you mean

The $124 call is more expensive so you need to risk more to buy them. The $125 has a higher probability to expire worthless and is therefore cheaper.

What's your question though? I don't understand. We kind of covered this in the 2p2 chat. Those segments are all quite different so to ask who the cloud winners and losers will be a bit nonsensical. But to break down the segments:

- IBM, Oracle etc will win customized business services with good profit. Kind of like they're doing today in customized one-stop corporate IT services, just in the cloud.
- Microsoft will will win the generalized cloud platforms, from smaller customers to generic enterprise, as well as have a strong hardware business, with amazing profits on the software and good synergies with their other products. Just like they're doing today with software, only it will be in the cloud.
- AMZN will win the low cost business, with no profits, ever, just like they're doing today. Google might give them some competition if they ever care to compete properly, but they seem not to want to/lack the competence.
- CRM software (this bit is relevant to Salesforce.com/CRM stock) will continue to be a hodgepodge of hyper competitive, fast evolving, zero profit offerings from multiple vendors. Salesforce.com will likely go the way of the dogs as Office integration deepens and analytics/machine processing from ultra competent companies like IBM become more sophisticated. Salesforce.com are more a sales team and a nice interface and services with a generic backend.

I don't know if this is the right thread, but I'm pretty skeptical of this both from a technical point of view (they have a generally inferior product to AWS) and they have much less market share than AWS.

So I'm curious why you think this.

They're growing at record pace, making oodles of profit (they're growing faster than AMZN while making a profit), there are huge synergies with their other products, they have an enormous developer pool for whom Microsoft is their life, etc. Have a read of this.

This was discussed in 2p2 chat. It's the enterprise synergy and value added that creates the profit in this space. AWS are cheap and dirty. The money is in SaaS and PaaS, not IaaS, which is basically a commoditized product at this stage. Microsoft will own the software layer in this space, and especially the generic enterprise software layer where all the big profit is. Most importantly, they will own the developer layer as well.
Microsoft have this space wrapped up. No doubt AMZN will continue to do extremely well with zero-profit-margin and no-value-added commoditized layers that they do better than anyone else, and have plenty of business but zero profit and no real moat.

There is so much conflation of different services around the word "cloud" that it's better to be more specific. Although the cloud confusion stuff works well for CRM.

AAPL CMCSA NFLX could get weird tomorrow. I like the move on AAPL's part and I've been hoping they make this move for a while now. Likely will be a good catalyst

I'm not sure how Microsoft can have the space wrapped up when they're still 1/3 the size of AWS.

I agree with 'cloud' being a poor term. Amazon has built an IaaS infrastructure that is significantly deeper than Microsofts. Many of the companies building out on AWS can't switch to Microsoft without significant work since Microsoft doesn't offer nearly the same depth of features/components that Amazon does.

Last I heard (and I can't find actual numbers online to back this up) S3 was also storing significantly more data than Azure's blob storage. And a lot of the usage ties back to where your data lives (and moving this data is a significant undertaking for many companies).

Anyway, interesting stuff.

TS - chat link?

Cloud is a pretty poor term but AWS is undoubtedly the industry leader well ahead of traditional usual suspects like IBM and even EMC, both of of which have been aggressively trying to fight AWS off without much success.

Well of course they're the leader - they have the market share. But if you could own Google's share of Android with it's 70% and zero profit, or Apple's iOS with its 15% and all the high end profit, which would you rather own?
AMZN is like the Android of the cloud
MSFT is like iOS of the cloud
IBM, etc are like the Nokia of the cloud - a relic, but still in very early days of the switch, and useful for completely customized services.

Look, it's a case of market segments, what's profitable,and what each company can offer. Microsoft lays out its advantages very well here.

Large clients that want cheap raw servers with absolute best-in-class IaaS and don't mind paying substantial developer costs for deep custom configurability go with AWS. If your core business is massive served up data (like say NFLX or a data driven, complex SaaS you're selling), you go with AWS. Unix type coders go with AWS.
Client don't pay a premium for this (if the premium is too high, and they switch providers given that the hardware/managed hardware layer is largely commoditized). Google and AWS and host of other smaller providers compete in a race to the bottom for this space.

Clients that want smoothness, integration with the full range of existing business software, speed of development of their SaaS, easy reuse of existing enterprise code, easy integration across layers (desktop, enterprise, cloud, mobile), easy integrations with existing programs or business procedures, etc go with Microsoft.
Smaller clients that want "I just want to focus on typing my business code, and have it run reliably on the web" go with Microsoft (the bargain hunters go with AWS).
The army of .NET and Windows developers go with AWS
There is a lot of money and large sustainable profit margins in the above, as well as a huge level of lock in via synergies.

Large clients that want either in house or outsourced custom data and infrastructure services and solutions go with IBM, Oracle, Apache, etc.
There is some to lots of money in this, but it's less reliable due to the hazards of custom speccing.

The trouble is that all of the money is in the second and third types of services. All the cloud profit is going to run to Microsoft and value added providers. If you're going to make an investing bet on the cloud, you bet on the providers that are going to generate reliable profits with huge moats.

Also note that Microsoft is growing rapidly (much faster than AMZN) while offering an inferior IaaS service, coming late to market, and is turning a substantial growing profit from day one. That should tell you about the viability of their platform and the odds of continuing to make great money after their network gets more and more mature.

Agreed, but the business is still in its infancy. It's about end game profitability and what each can offer.

Quite possible. AWS is a highly customizable backend workhorse and Microsoft is a smoothed and integrated enterprise/end consumer experience. Big data is of course going to run their own services or go with AWS, especially at the prices and incentives AWS are offering.

Yeah hopefully someone who really knows their stuff can comment. I think Morishta does. I'm not that well across the cloud or how much stickiness there is.

can i have your guys opinion on LXRX Lexicon Pharmaceuticals, Inc. have 10,000 in shares.. got in at .90$ im just learning and kinda only took this position off a friends say lol.. any help is awesome. cheers. love the thread

Pharma stock recommendations from friends rarely pan out imo. Looks like the stocks been doing nothing for about a decade and is not making profit.

Doesn't look actively traded either, only 2mm vol. If I was you, I'd sell now. But I'm a noob and it's your money

Tooth, thanks for laying it out. I disagree with you on a bunch of the technical points you're making and how the market share is going to go. I'm quite familiar with AWS and Azure from the technical side in terms of the actual products being offered and what companies are using each for what purpose.

I'm definitely less knowledgeable about profitability and which option is the better investment.

Maybe a better way of putting it is that I'd very happily bet on Amazon beating Microsoft over the next 5-10 years in things like cloud market share metrics (including many of the areas you're saying AMZN will lose). I wouldn't bet on Amazon being the better investment though.

Chat doesn't work. I'm gonna kill myself

On the Amazon thing, my brother (recruited by every big dotcom basically) told me Amazon is losing the talent war big time and they are having issues figuring out what to do with the engineering talent they do get.

Take it with a grain of salt since I got no numbers to back it up but I am sure some of you heard similar things.

let it be known that im slightly long a third stock.. got convinced by some of you guys on HOS ,, in @ 19.45 giving myself a 1 point stop loss on it (18.40)