Cloud Sectors Itemized

We discuss and follow a number of “Cloud” based companies on this message board. As a “non-techie”, I for one have had a difficult time understanding exactly what “the Cloud” represents in terms of an industry. I have often used and heard others use “Cloud” and “SaaS” interchangeably. I recently listened to a marketing webinar introduction for a paid subscription service. Therefore the Cloud industry segments I list below to help other non-techies such as myself understand the breath of the Cloud universe is information shared from this webinar/infommercial and not a paid service. In this discussion, the Cloud was broken down into the following 6 segments:

  1. Components
  2. Data Centers
  3. Infrastructure As a Service (IaaS)
  4. Platform As a Service (PaaS)
  5. Software As a Service (SaaS)
  6. Service and Support

This may seem rather sophomoric to many of the contributors to this board, but perhaps there a few others out there like me that may find this useful.

Please note that I refrained from using the company examples for each of the Cloud segments so as not to appear as if I am making recommendations or oversharing from the webinar.



Harley, you are certainly right that these terms are often thrown around in sloppy ways. I suppose in some cases the sloppiness doesn’t matter a lot if the actual product is clear, but I think being clear about the vocabulary and classification adds sharpness and clarity to the discussion.

One example of this is AYX and the periodic complaints that they have no SaaS or cloud offering.

The first problem, of course, is that strictly speaking, SaaS is a licensing model that has nothing to do with the hardware used to deliver that model. SaaS is substituting a subscription for what was historically a large upfront payment of a right to license followed by perhaps additional license and some kind of support and maintenance. With SaaS all of that is bundled as a service and the customer pays in an on-going way, eventually paying more than they would with the old model, but doing so over a number of years so there is less up front income. This, of course, presents a challenge for companies transitioning from up front to subscription in terms of revenue comparisons.

Use of the cloud to deliver SaaS licensing is very common because it gives the seller a single unified resource to manage and one which is easily expanded to handle an increasing customer base. Management, support, modifications, etc. are all handled centrally and economically.

So, back to AYX, they have two sides to the business - the development tool and the server for repeated running of reports. I don’t know how these are sold, but they could both be sold on subscription. The development tool most naturally lives on the analysts machine to provide the most control and responsiveness. The data it is working on can come from any source, which could be cloud sources, but the development tool needs to be agnostic about data sources. The report server can likewise live where ever it is convenient, possibly near to where the greatest volume of data is, whether that be in the cloud or local. I.e., they have the problem covered and there really is no missing implementation. A cloud specific offering might be something like a cloud-based location with a report server and local data for the most critical and voluminous data, but that is nothing more than an AWS partition; there is no new product that needs to be developed.


Hi Harley,
I am mostly a lurker on this board, but I would like to respond to your post because I also watched the webinar you referred to. This board is about finding and evaluating growth stocks based on objective metrics (high growth rate, low churn, reasonable customer acquisition cost, reasonable margin, etc). The reason there are a lot of cloud/SaaS stocks on this board (rather than cloud related stocks from the other sectors you listed in your post)is not because of a particular ideology or bias that SaaS is the hot sector, but rather because the SaaS companies are the ones putting the touchdowns on the scoreboard.



I was simply providing a list of the 6 segments of the Cloud sector. My post was not making a judgement on any one of those segments, and I certainly was not passing judgement on the Cloud segment classification of the companies discussed on this message board. Given the universe of board posts here, I thought it would be useful to the audience.