Stormclouds & Social Stock

Recent events have challenged our thinking on everything from social media to the cloud. Here are two headlines that have made us think, or think twice, about the most top of mind technology trends.

Sony Issues Call the Cloud into Question

The cloud is fast becoming the preferred method of storing information. But how secure is it?

Last week, a Sony subsidiary internet service provider called So-Net was infiltrated by hackers who then stole more than $1,000 worth of customers’ redeemable gift points. This might have been just a footnote in the news if it weren’t for the company’s ongoing security problems, epitomized last month when the credit card and personal information of more than 80 million Sony customers was hijacked by hackers infiltrating the company’s databases. This amounted to one of the biggest data breaches in history, prompting Sony to shut down the Playstation Network and other online properties for four weeks.

Sony has come under fire for lax security and for waiting so long to respond – however, this scandal has not only harmed the company’s reputation as a trustworthy brand, but has also cast doubt on the safety of cloud computing more broadly – particularly when it was revealed that the hackers were using Amazon’s Elastic Compute Cloud (EC2) to siphon computing power. Sony’s handling of this wave of crises might be a glimpse into the security threats of our future in a cloud-based world.

Entertainment and technology companies like Sony have to face the reality of very real security threats that have the potential to do much more damage (both technical and reputational), and on a broader scale than ever before. If they are to successfully manage massive decentralized databases containing private information, and thus succeed in the brave new world of cloud computing, they are going to have to assure customers that their data is secure. At this delicate period of the new cloud paradigm, technology companies have to take extra precautions to protect their reputations against a growing perceptions that they do not have a firm enough grip on user data.

A Social Media Giant Goes Public

Whether from our smartphones, tablets or PCs, we are constantly managing our human relationships via social media outlets – there is no question that social media has become part of our everyday conversations.  However, the market value (real or hypothetical) of the major social media players has proven difficult to pin down.

On May 19, popular professional networking site LinkedIn went public. Initially, the stock value rocketed to nearly triple its initial IPO valuation. LinkedIn’s strong reputation and visibility earned it a first-round victory on the financial front. Despite not being a profitable company, LinkedIn has shown that public confidence in a strong brand can provide that extra boost in valuation that could be the difference between success and failure.

Over the past few days, LinkedIn’s shares have slipped, with some financial analysts saying the company isn’t worth nearly as much as it first appeared. This raises the question: can social media giants justify their existence on the market? Major social media players like LinkedIn face the challenge of translating their strong online reputations into strong market performance. With Facebook’s and Twitter’s inevitable IPOs in the near future, will we see a new tech bubble? Or will the social media bubble burst before it gets off the ground?

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