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From the you're stupid club we get this:

Brokerage firm Piper Jaffray asked 112 CIOs to name their preferred public cloud provider. Amazon Web Services came out on top with 35%, up from 33% in a similar survey a year earlier, writes the WSJ’s Alistair Barr. Microsoft Corp.’s Azure service (which favors a hybrid approach) locked in 21% of votes (up from 20%), and Rackspace came in third with 16% (up from 15%). Google’s popularity actually fell, to 7% from 12%. “We attribute the Google losses to AWS winning the initial branding war over Google Cloud,” Piper Jaffray analyst Gene Munster said.

Riiiight.  The next sentence tells the real tale; public cloud is losing to private, as it should.

The reality of "cloud computing" is that it is more expensive than running your own for the simple reason that the more fingers in a pie the more money it costs, end-to-end.  This is basic economics; nobody works for free.

If your needs are highly dynamic and variable then cloud computing (for that CPU resource) can make some sense because when you run your own you need to buy for peak loads.  If your use case has a spike type of utilization profile then paying only for what you use, when you use it, can make economic sense.  This also assumes that your I/O needs are reasonably modest, as heavy I/O has never been cost-effective to provide over a cloud infrastructure simply due to what's required to get good performance out of a disk drive that's not attached to the machine where it is being used.  The cost of that makes "cloud-attached storage" prohibitive for I/O heavy applications.

But there's another problem as well, and that's security.  Who's responsible when your cloud provider gets hacked and your data gets stolen?  You are!  As we've recently seen high-profile, high-impact hacks are increasing in frequency and effectiveness, and if that doesn't scare you off from trusting someone else with that responsibility you're not very bright.

My view?  Cloud computing has a much more-limited future than the proponents are admitting to -- no matter which company is involved.  Further, there's enough competition now in the space and the sunk costs are high enough that price wars are becoming the order of the day, and it's not revenue that matters when you're in business -- it's profit, which is going to be increasingly difficult to generate.

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So what do I think?

First, allegedly Samsung just wants the patents.  I think not.

Samsung has a problem; they're losing their growth rate.  KNOX has gone basically nowhere and they need a MDM platform of some sort.  Their high end phones are no longer the only Belle of The Ball and having Google's millstone around their neck is hurting them.  Their alternative, Tizen, has failed to launch (but is now going into their TVs.)  The low end is being destroyed by low-cost Chinese device producers.

Does a deal make sense?  You bet it does.

Can Samsung do the deal?  With their free cash.

What does Samsung get?  

For openers:

  • QNX.  A working OS that can go into Samsung devices now, giving them a working alternative to Android without losing compatibility for most Android apps.  This is something Tizen doesn't do.

  • Enterprise/security/MDM.  Samsung has part of this already, but this sort of combination "closes the loop" and slams the door on others, specifically Apple, who Samsung wants to slam the door on.

  • The patent portfolio. That's probably the smallest part of the bargain.

There's more that I can come up with but those are the immediate "big ones."

There are some real impediments to getting it done but this makes a lot more sense than does Lenovo going after these guys. Among other things there is no Chinese impediment with the Canadian government.

Earlier today the chart looked like a potential breakdown below recent support on the earnings release; the market itself had been soft and high-beta (e.g. BlackBerry) names were getting pantsed.  That's the sort of environment that technical traders like to short into but if you did it today you got cornholed to the tune of about 30% in minutes.

~67 million shares traded today with 53 million of them in the last 30 minutes.

Mr. Short, the margin clerk is on line 1 and says you need to wire in $50 million within the next half-hour.  Oh, you don't have it?  That's most unfortunate.

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