The shift toward cloud computing, smartphones, and tables caught many industry experts by surprise. What are the market leaders in yesterday’s tech world doing to adapt? Below, I review my take on Red Hat Inc (NYSE:RHT) and Microsoft Corporation (NASDAQ:MSFT) with a focus on analyzing how they are adapting to secular changes.
Moving to the cloud
Red Hat Inc (NYSE:RHT) is better known as an operating system company that provides open-source software. Recently, however, the company has shifted attention to the more broader cloud computing space. This is a good move because the company is responding to changes in the market. However, other tech companies have established dominant positions in cloud computing a long time ago, and they are formidable forces that Red Hat Inc (NYSE:RHT) has to contend with.
At the same time, Red Hat investors are in a vulnerable position right now. Large companies have not fully embraced cloud computing and are, rather, choosing to stick to the security of conventional servers despite the push. Some are arguing, however, that enterprises are buying into the “open-source” world.
As a result, cloud computing is slowly creeping in and replacing expensive servers. Red Hat Inc (NYSE:RHT) has particularly been keen at becoming the preferred option when it comes to the provision of “private cloud” and “hybrid cloud” services. The acquisition of ManageIQ was part of this strategy of providing superior cloud-computing experience.
The company is also implementing some channel changes that will facilitate expansion in 2013. Red Hat Inc (NYSE:RHT) closed the year with total revenue and operating cash of $988 million and $100.2 million, respectively.
A future in mobile?
Being the biggest software company in the world, Microsoft Corporation (NASDAQ:MSFT) has been hit hard by the market shift from PC to mobile computing. But with many years of business experience, Microsoft Corporation (NASDAQ:MSFT) has appropriately focused on the smartphone and tablet market.
It has also been keen on making mobile versions of Windows operating systems so as to adapt. A new tablet, known as the Surface Pro, was unveiled in January 2013. The tablet runs Windows 8 as the main operating system. The device debuted in Canada and in the United States on Feb. 9 at an $899 price tag.
The other version, Surface RT tablet, was launched in October 2012 and runs on an Intel processor known as the Ivy Bridge. The initial Surface RT is expected to compete with Apple’s iPad, which generally falls within the same price range of $399-$499. However, it has been met with a very poor reception.