Gobbling Up the All-You-Can-Eat Data Buffet

December 22, 2012 at 6:59 pm Leave a comment

Buffet II

Gorging oneself at an all-you-can eat buffet has its advantages, but managing the associated extra pounds and bloatedness carries its own challenges. In a similar fashion, businesses and consumers are devouring data at an exponential rate, while simultaneously attempting to slice, dice, manage, and store all of this information. Data is quickly becoming as cheap as oxygen, and there are virtually no limitations on the amount consumed.

With the help of my handy smart phone, tablet, and digital camera, I can almost store and watch every moment of my life, very much like the movie The Truman Show. Social media and cloud services, coupled with inexpensive storage, have only made it simpler to digitally archive my life. Pretty soon, with the click of a mouse (or tap of the tablet) everyone will be able to instantaneously access every important moment of their life from cradle to grave.

Consuming Data Bytes at a Time

If you are in the mood for consuming free data, there are plenty of free multi-gigabyte services to choose from, including Dropbox, Mozy, and SkyDrive among other. For those chomping on more than 25 gigabytes of data, paid services like Amazon.com’s (AMZN) Simple Storage Service (a.k.a, “S3”) allow users to store a terabyte of data for about $0.01 – $0.05 per month.  However, if renting storage is not your gig (no pun intended), you can own your personal storage device for next to nothing. In fact, you can buy a 1 terabyte (equal to 1,000 gigabytes) external hard drive today for less than $70. If that’s too rich for your blood, then just wait 12 months or so and pay $50 bucks. To put a terabyte in context, this amount of storage can hold approximately 625,000 high quality photos or 412 DVD quality movies, according to a Financial Times article talking about “big data.”

A terabyte may sound like a lot, but if we’re going to be honest, this amount of storage is Tiddly Winks. Once we start talking about petabytes (1,000 terabytes), exabytes (1,000,000 terabytes), and zettabytes (1 billion terabytes), things begin to get a little more interesting (see chart below). If you consider that 2012 global data center traffic estimates amount to 2.6 zettabytes (or 2.6 billion terabytes), it doesn’t take long to appreciate the enormity of the data management challenge facing billions of people.

Source: The Financial Times

Source: The Financial Times

 The Financial Times also points out the following:

“From the beginning of recorded time until 2003, we created five exabytes of data. In 2011 the same amount was created every two days. By 2013 it’s expected that the time will shrink to 10 minutes.”


Digital World Driving Data Appetite

What’s driving the global gusher of data growth? There’s not just one answer, but one can start understanding the scope of the issue after contemplating the trillions of annual text messages; 1 billion Facebook (FB) users; 800 million monthly YouTube visitors watching 4 billion hours of videos; six billion cell phones worldwide; and a global 122 million tablet market (IDC).

I certainly wasn’t the first person to discover this megatrend, but I am not hesitating to invest both my client’s money and my money into benefiting from this massive growth trend. Businesses are prospering from the data tidal wave too, as evidenced in part by Oracle Corp’s (ORCL) stellar quarterly earnings results reported just a few days ago. The mass migration of services to the “cloud” (software delivered over the internet) combined with the  need to manage and store exploding industry data, resulted in Oracle reporting growth of +18% in its profitable Software License Sales and Cloud Subscriptions segment. With results like these, no wonder Oracle’s founder and CEO Larry Ellison owns a 141-mile square island, a multi-hundred million yacht, and is worth $41 billion according to Forbes (#3 on the Forbes 400 list).

Whether you realize it or not, we are all consuming heaps of all-you-can eat data at the digital buffet. Rather than rolling over into a data consumption coma, you will be much better off figuring out how to profit from the exploding data trends.


See also: The Age of Information Overload

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.


DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFs), GOOG, and AMZN, but at the time of publishing SCM had no direct positions in FB, ORCL, or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision. Please read disclosure language on IC Contact page.

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