Despite the slow uptick of the economy over the past couple of years, many companies are still struggling to regain the profits they once enjoyed, and are having to find new avenues of service in order to keep afloat. Many businesses have turned to hosted services, such as VoIP and cloud computing, to cut down on in-house costs and increase efficiency. And considering the success of the cloud hosting market, as well as the very positive predictions for it over the next few years, it’s no surprise that some companies have chosen to incorporate the cloud into their business strategies—whether by providing cloud services or using them. But while some have chosen to look to the future to anticipate a changing technological climate, others seem to be stalling.
Best Buy (News - Alert) has announced that it will be selling MindShift Technologies, a cloud-computing business it acquired for $175 million in 2011, to Japanese firm Ricoh for an undisclosed amount. At the time of the acquisition, analysts believed this was a wise move for Best Buy. It was the company’s first significant step into the cloud computing market, and in the face of an economy turning increasingly to online shopping for computers and other electronic devices, gaining a cloud computing company would diversify Best Buy’s offerings.
But it wasn’t enough. Best Buy reported disappointing holiday sales this year, despite predictions that the company’s sales would increase just slightly. As a result, the company’s stock fell a steep 35 percent in the two days following the news. Now, in an attempt to make back a little money, Best Buy is selling its cloud computing company to Ricoh (News - Alert). Is this move wise? One could argue that instead of shedding the extra company, which was there in the first place to diversify its market offerings, Best Buy should have taken the route that so many other companies have and invested more heavily in cloud computing technology.
Hosted services are gaining attention and traction every day, and while many companies have jumped on the bandwagon, it looks like Best Buy is hopping off it only a few years after getting on board. Best Buy shares were up 1.1 percent in morning trading Jan. 21, but in the long run, did Ricoh get the better deal?
Edited by Rory J. Thompson