The business of data is growing bigger and bigger. An
astounding 2.5 quintillion bytes of data are created every day,
cluttering computer systems around the globe.
As more and more companies clamor to find space for the new,
archive the old, and analyze it all so it makes sense, a booming
$34 billion industry has emerged. While much of the growth in
data -- as much as 80% to 90% -- has come over the past two
years, we had better brace for more explosions.
Consider the data created by the 2.4 billion Internet users alone
who download 46 million applications. Consider that over the past
50 years, The New York Times published a total of 3 billion words
-- but Twitter users tweet 8 billion words every single day.
Facebook (Nasdaq: FB)
has 1 billion users, 1.13 trillion "likes" and 219 billion shared
Of course, behemoth Internet companies that live and die by data
simply build their own multi-billion-dollar facilities to store
their bytes. Facebook, estimated to own 1 million servers, just
built its fourth and newest facility just south of the Arctic
That's not so easy for IT departments constantly hearing from
CEOs to consolidate and spend less money, while at the same time
storing, processing and analyzing unprecedented amounts of data.
In the IT industry,
expects its revenue from analytics and associated Big Data
technologies to reach $20 billion by 2015. Overall market
revenues are projected to be $47.5 billion by 2017.
Many corporations turn to providers of data center space that
offer everything from IT infrastructure to cloud storage to
A great investment in this space is
Digital Realty Trust (
, a real estate investment trust and the world's largest provider
of data center space. It has 127 properties comprising nearly
23.7 million square feet in 32 markets throughout North America,
Europe, Asia and Australia.
Across the U.S. government, data storage needs are expected to
increase to an average of 2.63 petabytes (nearly 2,700 terabytes)
per agency in 2014 , an increase of 63%. In fact, IBM and
Amazon.com (Nasdaq: AMZN)
are vying for a $600 million contract with the CIA to provide a
private cloud, meaning its systems would reside in the agency's
secure data center. It would be the first of its kind for Amazon.
The U.S. government is one of the nation's largest advocates of
Big Data technology. Recently called a technology "essential to
modern warfare" by the Defense Information Systems Agency, the
federal government is expected to spend nearly $5 billion on Big
Data initiatives by year's end.
Video surveillance, compliance records, footage from military
unmanned vehicles, security events and medical scans are just a
few of the data types that agencies collect, store and share to
accomplish their goals. In fact, to line up contracts for
billions of taxpayer dollars in coming years, the Department of
Homeland Security has asked the industry's top Big Data vendors
to "show us what you have."
EMC Corp. (
will be right in the thick of that competition. In late 2012, EMC
formed a separate organization called Pivotal Initiative led by
Paul Maritz, a former CEO at
. Combining VMware's data center software and EMC's Big Data
technology, Pivotal Initiative is expected to bring in revenue of
about $300 million in 2013, a figure that is expected to rise to
more than $1 billion by 2017.
General Electric (
has invested $105 million in a 10% stake in Pivotal
Initiative. Best of all, EMC's products are compatible with
many different platforms, including offerings from IBM and
Interestingly, an unlikely giant has unexpectedly jumped into the
is buying San Francisco-based Climate Corp. for $930 million.
Climate Corp. makes a software platform that crunches
weather-related data to help farmers grow crops more effectively.
According to Monsanto, data science could be a $20 billion market
"beyond our core focus today."
Risks to Consider:
If the government shutdown drags on, Big Data companies with
federal contracts may stand to lose business.
Action to Take -->
Digital Realty, IBM, Oracle and EMC are all ways to directly
invest in the growing data trend. You might consider dividing a
portion of your portfolio among all four. IBM's space in Big Data
accounts for just 1% of its total revenue, however, and I'd wait
to invest in Monsanto purely for its move into Big Data.
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