Cloud spending helps techs as PC sales stagger

Big U.S. Internet computing companies should outshine their plainer PC cousins when revenues season kicks off at once week, as corporations and fast-growing Web players dramatically accelerate their pace of hardware spending.

Downtrodden global economy

Corporations are increasingly turning to new research to make themselves more productive in a downtrodden global economy. In the meantime, a social networking and e-commerce boom is spurring massive outlays on the giant server factories that power Internet computing.

That's good news for Intel Corp, which is supplying more of its microchips direct to companies building their own servers, and firms like EMC Corp and VMware whose businesses are integral to the storage and transmission of remote data, known as "cloud computing".

Boon for traditional hardware makers just as Dell Inc

But it is less of a boon for traditional hardware makers just as Dell Inc and Hewlett Packard Co, which find themselves selling PCs at low margins and struggling to cope with an accelerating migration to smartphones and tablets.

Apple Inc, which reports on Tuesday, continues to defy the economy and astound Wall Street by luring ever more consumers to buy its newest gadgets.

Worldwide PC sales barely rose more than 3 percent last quarter over last year's numbers, according to the major innovation firms, as consumers stick with old machines or buy smartphones and tablets instead.

"I would not want to be in the hardware business right now," said Michael Yoshikami, CEO of fund manager YCMNET Advisors. "Cloud companies are going to continue to accelerate, however PC companies usually are going to continue to suffer."

The knock-on effect hurts Intel's traditional business of supplying chips for PCs, however it especially hits Microsoft Corp, which for all that relies on PC sales to keep its core Windows and Office products growing, in spite of making recent inroads into the cloud market with its server software and Azure developer platform.

VMware, the small nevertheless fast-growing leader in projecting or "virtualizing" operating systems onto computers via the Internet, as well reports revenues on Monday, with analysts' predicting a 30 percent jump in net profit.

The cloud will do better

"I think companies with higher exposure to the cloud will do better," said Cassidy at Stifel Nicolaus, citing small newcomers like Mellanox Technologies Ltd, which builds high-end networks connecting servers and storage devices.

"You build these new high-speed servers and you need to have highways or networks that keep them connected at higher speeds."

The globe on Friday

Apple's new iPhone went on sale in stores across the globe on Friday, prompting thousands to line uparound city blocks to snap up the final gadget unveiled while Steve Jobs' life.