CEO from a software company seems to be logical step from two point :
1. After a big Services acquisition, strengthening software which is a high margin business (compared to HW and Services) makes sense.
2. Oracle and SAP have been well known foe..very vocal in terms of cut throat competition… new HP CEO might know how to react with an aggressive competitor in Oracle. (known fellows Larry Ellison and Mark Hurd)
My sense is HP will focus more on solution selling than playing in silo (HW, SW, Services). Though this is not going to be significant success in short term; they will definitely aim for.
EDS integration has not been easy/”huge” success.. heard that few components of EDS (read “Emphasis”) are pitching internally for autonomy. HP’s software business (though many components are very nice products) has not been able to establish strongly in the market place. New CEO comes from a strong application software background (SAP). A good solution story for HP will require relatively higher focus on infrastructure and management software than applications. Adding more pieces to this will not help unless they have great leader to weave components into a compelling story. High expectation/big challenges for the new CEO. I don’t see great successes in near term.
I feel it is going to be a new inning for HP in changed competitive landscape (big acquisition making SW/HW/Services conglomerates). It will have to counter an aggressive inroads into its traditional hardware business from Oracle-Sun hardware business spearheaded by the very Mark Hurd, transform sales force create and deliver a good solution sales story, better integration of EDS. Post-recession growth phase of global economy might give HP some growth number to show to investors, real sustainable growth seems to be at least one year from now.
I think competition in infrastructure (include cloud/data center) hardware is going to be cut throat in coming months/quarters. Management software will follow the suit hence no surprise to see many appliance kind of offering flooding SMB and (why not?) enterprise market.
Solution story is going to be complex... more like a riddle for customers as market is on a new learning curve where canvas is rapidly changing to cloud. Good times for consulting services they might get many invites from customer but at the same time it will be far tougher to communicate values to customer.
Friday, October 8, 2010
Thursday, October 7, 2010
Q2 2010 IT Companies Earning Announcement
Dell reported a 22% year-over-year (YOY) increase in quarterly revenue to $15.5 billion. Net income was up 9% to $629 million. Highlights for the quarter include improved demand in all commercial businesses including enhanced demand for commercial clients which are being driven by an accelerating corporate Windows 7 refresh cycle. IT market, especially hardware part of it seems to be improving globally though growth rate has been uneven across geographies. On an overall most of the hardware vendors have reported good YOY growth.
Dell Desktop PC revenue continued to increase. Mobility and desktops revenues were up 21% and 17% respectively (YOY). HP’s Notebook and desktop revenues were up 10% and 27% respectively. HP lost unit share but managed to increase revenue from PC business. Apple grew desktop revenue by 15% and portables by 40%. Lenovo’s notebook PC increased by 58%(unit shipments) and desktop PC grew 36% (unit shipments) YOY.
Dell’s Server revenues increased 35% YOY to $1.9B on a 15% improvement in unit shipments. Blade server revenue increased 35% YOY and Data Center Solutions revenue growth exceeded 100% YOY. Previous two quarter also saw 39% increase YOY in revenue terms and 30% improvement YOY in unit shipments. HP’s Industry Standard Server revenues were up 31%. IBM's x86 server segment grew by 30% (17% growth in high-end x servers, and 16% growth in System x blade servers).
Dell’s Storage revenue grew 13% YOY to $624M with EqualLogic revenue up 63% YOY and PowerVault grew 14%. Dell transitions from being a straight reseller of EMC technology to an OEM storage model (including EMC technologies) coupled with Dell’s own storage IP. Dell had higher margins and profitability from Dell’s storage offerings. HP’s Storage revenue was up 10% year over year, IBM’s overall storage revenue grew 5% year to year. EMC’s storage revenue grew 21% and NetApp’s product (primarily storage and data management products revenue increased by 50% YOY.
Dell’s Enhanced Services grew 57% YOY to $1.9B. Dell’s recurring services revenue balance is $13.9B with approximately 70% of revenue coming from recurring sources. Perot System acquisition is going well and customers are receptive to Dell’s services offerings. HP’s services grew 1% and they still are lagging the market. IBM’s services revenue grew 1%, led by Global Business Services (GBS) growth of 3%; Global Technology Services (GTS) revenue was flat.
Revenue growth was driven across all regions in the quarter including an 52% YOY increase in BRIC revenue with BRIC plus 10 growing 48% YOY. In total 47% of Dell’s quarterly revenue was driven outside the US. APJ delivered 38% growth while the Americas and EMEA were up 17% and 24% respectively. Dell had another strong quarter in emerging countries with 52% growth in the BRIC countries. HP’s APJ grew 14%, EMEA grew 9%, and Americas grew 12%. (HP derives 63% revenue from outside US). IBM’s revenue from emerging markets grew 9% though IBM is focusing a lot on this market.
IT industry is witnessing hardware refresh cycle and most of hardware companies are benefited from this. IDC predicts that hardware growth for 2010 will outstrip the growth for services and software. Post-recession, there is increased focus on cloud computing and related services. Hardware that are being enhanced for better compatibility with these emerging technologies are gaining significant popularity. Data explosion and complex-heavy workloads are transforming the server and storage market.
Emerging markets have proved to be significant contributors of growth in economic slowdown and continues to be the battleground for most of MNC’s craving for growth. All vendors (IBM, HP and Dell) have done (have plans to) investments in these markets. Companies (Lenovo) deriving higher revenue from these markets have had high growth in previous few quarters. Dell has shown great performance in emerging market especially India and China recently where we have gained market leadership.
Economic slowdown caused many vendors to focus on operational efficiency – finding avenues for higher margin. IBM managed to get good margin despite low growth in overall revenue. Lenovo reported high growth for its smartphone business, HP recorded high growth (48% YOY) for its ProCurve networking products. Dell’s communication solution group is a well-timed strategy.
Dell Desktop PC revenue continued to increase. Mobility and desktops revenues were up 21% and 17% respectively (YOY). HP’s Notebook and desktop revenues were up 10% and 27% respectively. HP lost unit share but managed to increase revenue from PC business. Apple grew desktop revenue by 15% and portables by 40%. Lenovo’s notebook PC increased by 58%(unit shipments) and desktop PC grew 36% (unit shipments) YOY.
Dell’s Server revenues increased 35% YOY to $1.9B on a 15% improvement in unit shipments. Blade server revenue increased 35% YOY and Data Center Solutions revenue growth exceeded 100% YOY. Previous two quarter also saw 39% increase YOY in revenue terms and 30% improvement YOY in unit shipments. HP’s Industry Standard Server revenues were up 31%. IBM's x86 server segment grew by 30% (17% growth in high-end x servers, and 16% growth in System x blade servers).
Dell’s Storage revenue grew 13% YOY to $624M with EqualLogic revenue up 63% YOY and PowerVault grew 14%. Dell transitions from being a straight reseller of EMC technology to an OEM storage model (including EMC technologies) coupled with Dell’s own storage IP. Dell had higher margins and profitability from Dell’s storage offerings. HP’s Storage revenue was up 10% year over year, IBM’s overall storage revenue grew 5% year to year. EMC’s storage revenue grew 21% and NetApp’s product (primarily storage and data management products revenue increased by 50% YOY.
Dell’s Enhanced Services grew 57% YOY to $1.9B. Dell’s recurring services revenue balance is $13.9B with approximately 70% of revenue coming from recurring sources. Perot System acquisition is going well and customers are receptive to Dell’s services offerings. HP’s services grew 1% and they still are lagging the market. IBM’s services revenue grew 1%, led by Global Business Services (GBS) growth of 3%; Global Technology Services (GTS) revenue was flat.
Revenue growth was driven across all regions in the quarter including an 52% YOY increase in BRIC revenue with BRIC plus 10 growing 48% YOY. In total 47% of Dell’s quarterly revenue was driven outside the US. APJ delivered 38% growth while the Americas and EMEA were up 17% and 24% respectively. Dell had another strong quarter in emerging countries with 52% growth in the BRIC countries. HP’s APJ grew 14%, EMEA grew 9%, and Americas grew 12%. (HP derives 63% revenue from outside US). IBM’s revenue from emerging markets grew 9% though IBM is focusing a lot on this market.
IT industry is witnessing hardware refresh cycle and most of hardware companies are benefited from this. IDC predicts that hardware growth for 2010 will outstrip the growth for services and software. Post-recession, there is increased focus on cloud computing and related services. Hardware that are being enhanced for better compatibility with these emerging technologies are gaining significant popularity. Data explosion and complex-heavy workloads are transforming the server and storage market.
Emerging markets have proved to be significant contributors of growth in economic slowdown and continues to be the battleground for most of MNC’s craving for growth. All vendors (IBM, HP and Dell) have done (have plans to) investments in these markets. Companies (Lenovo) deriving higher revenue from these markets have had high growth in previous few quarters. Dell has shown great performance in emerging market especially India and China recently where we have gained market leadership.
Economic slowdown caused many vendors to focus on operational efficiency – finding avenues for higher margin. IBM managed to get good margin despite low growth in overall revenue. Lenovo reported high growth for its smartphone business, HP recorded high growth (48% YOY) for its ProCurve networking products. Dell’s communication solution group is a well-timed strategy.
Friday, June 25, 2010
Dell is Riding high on Market Recovery
Dell’s desktop PC revenue reversed a long period of decline and increased at 13% YOY to $ 3.6B (12% unit growth). HP’s desktop revenue was up 27% YOY in its most recent quarter. Lenovo and Acer recorded 47% and 54% increase in desktop PC revenue respectively. Dell’s Mobility revenues grew 18% YOY to $4.6B on a 27% improvement in unit shipments as the company feels the effect of an increasing mix of lower priced netbook sales. HP, Lenovo and Acer grew their notebook business by 17%, 76% and 48% respectively. Apple’s Macintosh® computers recorded a 33% unit increase YOY.
Dell’s Server revenues increased 39% YOY to $1.8B on a 30% improvement in unit shipments. Previous quarter also had a 26% revenue growth and 17% unit growth (both YOY). Dell continued to post stronger server revenue growth (61% YOY) in Large Enterprise segment. HP recorded high growth in server market (Industry Standard Server grew 54% and Blade up 45% YOY). IBM also posted a high growth (36% YOY) in its x86-based x-Series business.
Storage revenue lagged servers growing 4% YOY to $554M with EqualLogic revenue up 74% YOY with particular strength in SMB and public sector. HP’s Storage revenue was up 16%, EMC's Information Storage product revenue (both HW & SW) increased by 28.3%. The increases experienced by EMC and IBM (Storage Systems revenues by 11% YOY) support the optimistic outlook for the storage industry in 2010. NetApp product (primarily storage and data management products) revenue increased by 17% YOY.
Enhanced Services grew 53% YOY to $1.9B as the deferred revenue backlog grew 8% to $6.1B. The integration of Perot is going well with predictable margins and Dell has identified 300 synergistic pipeline opportunities to date. HP’s services revenue was up 2% to $8.7B. ITO revenue was up 6% Y/Y while a technology service was flat and application services were down 2%YOY. BPO revenue was flat YOY. IBM’s Global Technology Services segment revenues increased 6% to $9.3 billion. Global Business Services segment revenues were flat at $4.4 billion. Application Management signings decreased 23%. EMC’s services revenues increased by 14% driven by an outperforming EMC Consulting team. Content Management and Archiving and Security products accounted for roughly 10.4%.
Emerging markets have demonstrated high growth for most of the companies. Dell’s revenue from BRIC countries (nearly 12% of total revenue) grew 60% to $1.8 B as revenue from outside the US increased to 48% of Dell’s quarterly total. India and Brazil recorded significant 91% and 81% YOY growth respectively. Similar high growth by reported by other key competitors as well. Lenovo witnessed 95% YOY growth in emerging market (12% of WW Lenovo’s WW sales). IBM’s revenue from growth markets grew 20% YOY (19% of IBM’s WW revenue). Lenovo continues to retain market share leadership in the big China market while Acer and HP have ambitious plan to expand in that market. Acer, which till now focused mainly at European and then US market has aggressive plans to expand in China market.
Growth Fueled by Hardware sales – High growth exhibited by most companies are primarily driven by core hardware sales indicating the much awaited hardware refresh cycle. Hardware sales of companies like IBM and HP have grown much faster than their services business. Companies have new products in their pipelines and are expanding into new areas – notably mobile phone segment in search of higher margin/value stream of business. HP has recently announced acquisition of Palm, Lenovo has reacquisition of Lenovo mobile and started shipping Smartphone in China, Acer has outlined plans to launch 4 Smartphone models for its coming Q2/Q3 FY 2010.
Recovery in commercial sector - Interestingly, growth rates in mature markets were buoyed this quarter by the continuing recovery in commercial products. Dell is currently at the beginning of a shifting demand pattern which will be characterized by continued improvements in the commercial sector, Dell’s strongest market segment.
Dell’s Server revenues increased 39% YOY to $1.8B on a 30% improvement in unit shipments. Previous quarter also had a 26% revenue growth and 17% unit growth (both YOY). Dell continued to post stronger server revenue growth (61% YOY) in Large Enterprise segment. HP recorded high growth in server market (Industry Standard Server grew 54% and Blade up 45% YOY). IBM also posted a high growth (36% YOY) in its x86-based x-Series business.
Storage revenue lagged servers growing 4% YOY to $554M with EqualLogic revenue up 74% YOY with particular strength in SMB and public sector. HP’s Storage revenue was up 16%, EMC's Information Storage product revenue (both HW & SW) increased by 28.3%. The increases experienced by EMC and IBM (Storage Systems revenues by 11% YOY) support the optimistic outlook for the storage industry in 2010. NetApp product (primarily storage and data management products) revenue increased by 17% YOY.
Enhanced Services grew 53% YOY to $1.9B as the deferred revenue backlog grew 8% to $6.1B. The integration of Perot is going well with predictable margins and Dell has identified 300 synergistic pipeline opportunities to date. HP’s services revenue was up 2% to $8.7B. ITO revenue was up 6% Y/Y while a technology service was flat and application services were down 2%YOY. BPO revenue was flat YOY. IBM’s Global Technology Services segment revenues increased 6% to $9.3 billion. Global Business Services segment revenues were flat at $4.4 billion. Application Management signings decreased 23%. EMC’s services revenues increased by 14% driven by an outperforming EMC Consulting team. Content Management and Archiving and Security products accounted for roughly 10.4%.
Emerging markets have demonstrated high growth for most of the companies. Dell’s revenue from BRIC countries (nearly 12% of total revenue) grew 60% to $1.8 B as revenue from outside the US increased to 48% of Dell’s quarterly total. India and Brazil recorded significant 91% and 81% YOY growth respectively. Similar high growth by reported by other key competitors as well. Lenovo witnessed 95% YOY growth in emerging market (12% of WW Lenovo’s WW sales). IBM’s revenue from growth markets grew 20% YOY (19% of IBM’s WW revenue). Lenovo continues to retain market share leadership in the big China market while Acer and HP have ambitious plan to expand in that market. Acer, which till now focused mainly at European and then US market has aggressive plans to expand in China market.
Growth Fueled by Hardware sales – High growth exhibited by most companies are primarily driven by core hardware sales indicating the much awaited hardware refresh cycle. Hardware sales of companies like IBM and HP have grown much faster than their services business. Companies have new products in their pipelines and are expanding into new areas – notably mobile phone segment in search of higher margin/value stream of business. HP has recently announced acquisition of Palm, Lenovo has reacquisition of Lenovo mobile and started shipping Smartphone in China, Acer has outlined plans to launch 4 Smartphone models for its coming Q2/Q3 FY 2010.
Recovery in commercial sector - Interestingly, growth rates in mature markets were buoyed this quarter by the continuing recovery in commercial products. Dell is currently at the beginning of a shifting demand pattern which will be characterized by continued improvements in the commercial sector, Dell’s strongest market segment.
Friday, March 5, 2010
DELL Q4FY2010 Earning – Preparedness for a Market Rebound Ahead
Overall, Dell reported an 11% increase in quarterly revenue to $14.9 billion for the Q4FY10. Net income declined 5% YOY to $334 million. For FY 2010, Dell reported revenue of $52.9 billion which was down 13% when compared with FY 2009. However, Dell was able to beat market expectation.
From Business Unit perspective,
Large Enterprise and Public Sector experienced growth of 8% (to $4.3B) and 16% (to $3.8B) respectively (YOY) in revenues with operating income of $281M and $333M. Revenue in large enterprise segment and public sector segments was strengthened by favorable server market and, also partially by Perot System acquisition by Dell in Q4FY10.
In SMB, though revenues increased 10% YOY to $3.3B margin was low (op. inc. of $282M). Consumer revenues increased 11% YOY to $3.5B (29% year-over-year increase in shipments). In this segment operating income declined significantly from Q409 to $0M.
From a product segment perspective,
Desktop PC revenues declined 3% YOY to $3.4B on a 1% improvement in units. Mobility revenues increased 16% YOY to $4.7B on a 32% increase in unit. Server revenues grew 26% YOY to $1.8B with a 17% improvement in unit shipments. Storage business saw a revenue decline of 15% YOY to $599M. Services grew 5% YOY; however with Perot's business included, revenues were up 51% to $1.9B. Software and Peripherals revenue was flat YOY with revenues of $2.5B.
While demand is clearly returning to the market, competitive marketplace will be very exciting to watch for.
Server market seemed to be favorable for most of the hardware players. In most recent quarter (Q1FY10 ended on Jan 31, 2010), HP recorded high growth in server market (Industry Standard Servers up 27% and Blade up 24% YOY). IBM also posted a high growth (37% YOY) in its x86-based x-Series business in its Q4FY09 (ended Dec 31, 2010). Dell posted strong server revenue (up 47% YOY) in Large Enterprise segment.
Decline in PC (Desktop) revenue at Dell is in contrasts with some competitors (HP saw a 16% revenue increase) who are seeing much stronger desktop unit growth rates. Here we must notice the challenges posed by component pricing and Dell’s recent entry into retail market. Market is giving way to Mobility products. Dell is well positioned to benefit from expected PC refresh cycle.
Storage revenue from key players saw contraction with HP declining 3% and EMC declining 6.7% in their most recent quarter. Dell’s storage business declined 15% YOY but its EqualLogic revenue continued to grow at a healthy 44%. Dell's storage business did experience 18% QOQ growth as market demand returns.
Dell’s services revenue grew 51% (5% without Perot) YOY. HP’s services revenue was down (-1% YOY). While HP stated that its EDS integration goals are “ahead” of plan, these were not able to deliver growth for FYQ1. Acquisition of Perot System has given Dell opportunities to expand within existing customers and also reach new public, health care and large enterprise customers it has not sold to previously. Market will watch carefully how Dell leverages this acquisition to fuel growth.
Dell’s heavy reliance on PCs for revenue curbed its ability to maintain revenue growth during the recent PC market downturn and hurt its profitability during 4Q09. Dell has opportunity to leverage its Dell Services group to drive sales of hardware-software-services bundles to customers in its Large Enterprise, Public and, increasingly, SMB segments.
Geographically, Dell generates more than 50% revenue from Americas and addition of perot system will add to this concentration. Comparing this with HP and IBM who generate approx 44% and 42% respectively from Americas, Dell has potential to expand its market geographically. And it has been doing that successfully. Dell’s revenue from BRIC countries grew 72% YOY.
From Business Unit perspective,
Large Enterprise and Public Sector experienced growth of 8% (to $4.3B) and 16% (to $3.8B) respectively (YOY) in revenues with operating income of $281M and $333M. Revenue in large enterprise segment and public sector segments was strengthened by favorable server market and, also partially by Perot System acquisition by Dell in Q4FY10.
In SMB, though revenues increased 10% YOY to $3.3B margin was low (op. inc. of $282M). Consumer revenues increased 11% YOY to $3.5B (29% year-over-year increase in shipments). In this segment operating income declined significantly from Q409 to $0M.
From a product segment perspective,
Desktop PC revenues declined 3% YOY to $3.4B on a 1% improvement in units. Mobility revenues increased 16% YOY to $4.7B on a 32% increase in unit. Server revenues grew 26% YOY to $1.8B with a 17% improvement in unit shipments. Storage business saw a revenue decline of 15% YOY to $599M. Services grew 5% YOY; however with Perot's business included, revenues were up 51% to $1.9B. Software and Peripherals revenue was flat YOY with revenues of $2.5B.
While demand is clearly returning to the market, competitive marketplace will be very exciting to watch for.
Server market seemed to be favorable for most of the hardware players. In most recent quarter (Q1FY10 ended on Jan 31, 2010), HP recorded high growth in server market (Industry Standard Servers up 27% and Blade up 24% YOY). IBM also posted a high growth (37% YOY) in its x86-based x-Series business in its Q4FY09 (ended Dec 31, 2010). Dell posted strong server revenue (up 47% YOY) in Large Enterprise segment.
Decline in PC (Desktop) revenue at Dell is in contrasts with some competitors (HP saw a 16% revenue increase) who are seeing much stronger desktop unit growth rates. Here we must notice the challenges posed by component pricing and Dell’s recent entry into retail market. Market is giving way to Mobility products. Dell is well positioned to benefit from expected PC refresh cycle.
Storage revenue from key players saw contraction with HP declining 3% and EMC declining 6.7% in their most recent quarter. Dell’s storage business declined 15% YOY but its EqualLogic revenue continued to grow at a healthy 44%. Dell's storage business did experience 18% QOQ growth as market demand returns.
Dell’s services revenue grew 51% (5% without Perot) YOY. HP’s services revenue was down (-1% YOY). While HP stated that its EDS integration goals are “ahead” of plan, these were not able to deliver growth for FYQ1. Acquisition of Perot System has given Dell opportunities to expand within existing customers and also reach new public, health care and large enterprise customers it has not sold to previously. Market will watch carefully how Dell leverages this acquisition to fuel growth.
Dell’s heavy reliance on PCs for revenue curbed its ability to maintain revenue growth during the recent PC market downturn and hurt its profitability during 4Q09. Dell has opportunity to leverage its Dell Services group to drive sales of hardware-software-services bundles to customers in its Large Enterprise, Public and, increasingly, SMB segments.
Geographically, Dell generates more than 50% revenue from Americas and addition of perot system will add to this concentration. Comparing this with HP and IBM who generate approx 44% and 42% respectively from Americas, Dell has potential to expand its market geographically. And it has been doing that successfully. Dell’s revenue from BRIC countries grew 72% YOY.
Saturday, February 20, 2010
HP-Microsoft Partnership – IT Management
On 13 January 2010, Microsoft and HP announced they are partnering and jointly investing $250 million over a three-year period to provide management for the "IT stack" from infrastructure to application. They plan to create and sell solutions based on Microsoft applications, preinstalled and pre-configured on HP's Blade System Matrix, which offers a unified data center fabric (UDCF) and Microsoft HyperV. The companies agree to provide bidirectional integration of management software to aid simplification of the combined HP/Microsoft offerings.
The Microsoft/HP partnership may be seen as an alternative to the EMC, VMware and Cisco partnership to deliver the Virtual Computing Environment (VCE). In comparison to VCE, Microsoft’s and HP’s announcement is less disruptive to existing infrastructure investments and embraces the management of Microsoft applications. To sum it up, this agreement represents very comprehensive end-to-end integrated technology stack across hardware and software -- from infrastructure to application.
It could help strengthen H-P in its competition with chief rival IBM. H-P has been clashing more frequently with the tech giant since it acquired technology-services firm Electronic Data Systems in 2008. That deal bulked up H-P portfolio of corporate tech-services contracts. But IBM has a wider array of software for corporate buyers than H-P does. By solidifying its relationship with Microsoft, H-P may be able to broaden the data-center software it now sells.
EMC is the majority owner of VMWare Inc., which makes software used to make data centers operate more efficiently. With the new Microsoft deal, H-P says it now will use Microsoft's competing software.
Similarly, H-P will package Microsoft's database with its hardware as it once did with Oracle's software. That agreement ended after Oracle moved to acquire Sun. Under its deal with Microsoft, H-P will make a similar machine running Microsoft's database software.
The Microsoft/HP partnership may be seen as an alternative to the EMC, VMware and Cisco partnership to deliver the Virtual Computing Environment (VCE). In comparison to VCE, Microsoft’s and HP’s announcement is less disruptive to existing infrastructure investments and embraces the management of Microsoft applications. To sum it up, this agreement represents very comprehensive end-to-end integrated technology stack across hardware and software -- from infrastructure to application.
It could help strengthen H-P in its competition with chief rival IBM. H-P has been clashing more frequently with the tech giant since it acquired technology-services firm Electronic Data Systems in 2008. That deal bulked up H-P portfolio of corporate tech-services contracts. But IBM has a wider array of software for corporate buyers than H-P does. By solidifying its relationship with Microsoft, H-P may be able to broaden the data-center software it now sells.
EMC is the majority owner of VMWare Inc., which makes software used to make data centers operate more efficiently. With the new Microsoft deal, H-P says it now will use Microsoft's competing software.
Similarly, H-P will package Microsoft's database with its hardware as it once did with Oracle's software. That agreement ended after Oracle moved to acquire Sun. Under its deal with Microsoft, H-P will make a similar machine running Microsoft's database software.
Saturday, January 30, 2010
Productization of IT Services
The IT market has started a period of accelerated change and innovation in how IT is applied and delivered to businesses and consumers. New technologies, such as virtualization; new delivery approaches, such as SaaS; and billions of dollars of investments in online services and cloud infrastructure from IT and Internet powerhouses point to IT progressively being delivered as a service, possibly as a utility and eventually "out of the cloud.“
Chasing the long tail comprising of SMBs has never been an easy task for large IT vendors and SPs. However, Mid Market (Medium Small, Medium Large & Large) alone, if targeted properly, can generate significant revenue - $280B in 2010 (48% of the WW IT Services spend)
A major challenge of the mid market for technology providers is that it is diversified and fragmented. It requires a certain amount of standardization to go to market and keep the cost of sales low.
Industry analysts (Gartner/ IDC) believe Industrialized IT Services will be able to penetrate the SMB Market. Modular solutions with a low-cost entry point make it easy for customers to buy, integrate and manage.
Although SMBs are comfortable buying hardware direct from the manufacturer or online, this has not translated into similar purchasing behavior for IT services. The diverse nature of SMB customers requires multiple routes to market will typically be appropriate.
Accelerating Services Productization is a strategic priority for HP Services. IBM’s IP led approach focuses on standardized services modules.
IBM & HP continue their effort to improve penetration into the midmarket businesses (100 to 999 employees) with specific products and programs.
Chasing the long tail comprising of SMBs has never been an easy task for large IT vendors and SPs. However, Mid Market (Medium Small, Medium Large & Large) alone, if targeted properly, can generate significant revenue - $280B in 2010 (48% of the WW IT Services spend)
A major challenge of the mid market for technology providers is that it is diversified and fragmented. It requires a certain amount of standardization to go to market and keep the cost of sales low.
Industry analysts (Gartner/ IDC) believe Industrialized IT Services will be able to penetrate the SMB Market. Modular solutions with a low-cost entry point make it easy for customers to buy, integrate and manage.
Although SMBs are comfortable buying hardware direct from the manufacturer or online, this has not translated into similar purchasing behavior for IT services. The diverse nature of SMB customers requires multiple routes to market will typically be appropriate.
Accelerating Services Productization is a strategic priority for HP Services. IBM’s IP led approach focuses on standardized services modules.
IBM & HP continue their effort to improve penetration into the midmarket businesses (100 to 999 employees) with specific products and programs.
Mobile Device Market – Trends …Gartner
Gartner expects the following five key trends to impact the mobile device market during the next 18 months:
• As established vendors consolidate, new entrants will join the fray. New device
vendors such as Apple and Garmin are looking to differentiate themselves, while big name vendors like Motorola face pressure as market shares decline and design
innovation becomes more challenging.
• Device vendors will build out ecosystems. Pressure from operators to lower the price of devices will drive some established players such as Nokia and Sony Ericsson to seek out new sources of revenue from content and services sold to end users.
• More devices will focus on removing complexity for the user. Increasing device
functionality and a need for differentiation will drive demand to simplify the user interface
and service experience.
• Mobile devices will increasingly become lifestyle statements. Style will play more of a role across the range of devices, driven not only by fashion trends but also by
consumers' desire to reinforce their lifestyle choices.
• More high-end mobile devices will feature "field-refreshable" platforms. As cellular technologies become part of increasingly expensive consumer devices, vendors must manage ongoing support, upgrades and enhancement of devices.
• As established vendors consolidate, new entrants will join the fray. New device
vendors such as Apple and Garmin are looking to differentiate themselves, while big name vendors like Motorola face pressure as market shares decline and design
innovation becomes more challenging.
• Device vendors will build out ecosystems. Pressure from operators to lower the price of devices will drive some established players such as Nokia and Sony Ericsson to seek out new sources of revenue from content and services sold to end users.
• More devices will focus on removing complexity for the user. Increasing device
functionality and a need for differentiation will drive demand to simplify the user interface
and service experience.
• Mobile devices will increasingly become lifestyle statements. Style will play more of a role across the range of devices, driven not only by fashion trends but also by
consumers' desire to reinforce their lifestyle choices.
• More high-end mobile devices will feature "field-refreshable" platforms. As cellular technologies become part of increasingly expensive consumer devices, vendors must manage ongoing support, upgrades and enhancement of devices.
Worldwide Consumer Electronics Market Size and Trends – Towards Greater Mobility
According to CEA (Consumer Electronics Association), said worldwide consumer electronics sales are expected to hit 724 billion dollars in 2009. (Up 4.3 percent from the 694 billion dollars in 2008 but a steep drop from the 13.7 percent growth posted last year and the double-digit growth rates of previous years.)
Mobile phones accounted for 26.7 percent of total revenue last year but sales are expected to slow in 2009, the CEA forecast, growing by just 2.1 percent this year over last year to 1.2 billion units.
Mobile phone sales grew by 13 percent in 2008 and by 15.4 percent in 2007.
Television sales are expected to grow by 2.6 percent in 2009 to 232 million units, down from the 10.5 percent and 9.1 percent growth rates of the previous two years.
The CEA's 2009 outlook for computer sales is somewhat better, with growth forecast at 8.2 percent over 2008 but still a significant drop from the 17.8 percent growth of last year.
One bright spot is laptops. - The ratio of laptop PC sales to desktop PC sales is expected to continue to widen this year with 63 percent of the computers sold in 2009 expected to be laptops, the CEA said.
The CEA said MP3/digital media players were expected to generate "strong sales" in 2009 along with portable navigation GPS units.
It said the game console market is expected to grow by 5.4 percent in units and 1.1 percent in revenue in 2009.
Mobile phones accounted for 26.7 percent of total revenue last year but sales are expected to slow in 2009, the CEA forecast, growing by just 2.1 percent this year over last year to 1.2 billion units.
Mobile phone sales grew by 13 percent in 2008 and by 15.4 percent in 2007.
Television sales are expected to grow by 2.6 percent in 2009 to 232 million units, down from the 10.5 percent and 9.1 percent growth rates of the previous two years.
The CEA's 2009 outlook for computer sales is somewhat better, with growth forecast at 8.2 percent over 2008 but still a significant drop from the 17.8 percent growth of last year.
One bright spot is laptops. - The ratio of laptop PC sales to desktop PC sales is expected to continue to widen this year with 63 percent of the computers sold in 2009 expected to be laptops, the CEA said.
The CEA said MP3/digital media players were expected to generate "strong sales" in 2009 along with portable navigation GPS units.
It said the game console market is expected to grow by 5.4 percent in units and 1.1 percent in revenue in 2009.
Domestic IT services market in India to have substantial growth
Domestic IT services market in India to have substantial growth:
The domestic IT services market in India is estimated to grow to $12.8 billion in 2013 from $5.7 billion in 2008-09, representing a compounded annual growth rate (CAGR) of 18.6% from 2008 to 2013, according to a report from Springboard Research, a IT Market Research firm. The report predicts the Indian IT Services market will be dominated by IT infrastructure management services, which are expected to reach $7.2B in 2013 reflecting a steady 53% market share, and a CAGR of 18.1% from 2008 to 2013. However, applications services with a growth rate of 19.6% are expected to remain the fastest growing market segment. IT Consulting Services will remain the smallest segment, with an expected market share of 5% and a growth rate of 16.4%. Banking, financial services & insurance (BFSI) lead the IT services market with a 21.5% market share, followed by the public sector and telecom. However energy & utilities, followed by healthcare remain the fastest growing vertical industries. The report however, reveals that infrastructure hosting services showed the highest growth over the period among the infrastructure services category with a CAGR of 23.4%, closely followed by enterprise IT outsourcing, network integration and network management.
Key Insights : India has been one of the least affected country across the globe when it comes to domestic IT services consumption. Interestingly, domestic IT services average gross margin is quite comparable to international levels (according to report). It is no surprise that key IT services vendors have increased focus on India for its domestic IT services market. Dell’s recent launch of cloud services in India fits well in this opportunity.
The domestic IT services market in India is estimated to grow to $12.8 billion in 2013 from $5.7 billion in 2008-09, representing a compounded annual growth rate (CAGR) of 18.6% from 2008 to 2013, according to a report from Springboard Research, a IT Market Research firm. The report predicts the Indian IT Services market will be dominated by IT infrastructure management services, which are expected to reach $7.2B in 2013 reflecting a steady 53% market share, and a CAGR of 18.1% from 2008 to 2013. However, applications services with a growth rate of 19.6% are expected to remain the fastest growing market segment. IT Consulting Services will remain the smallest segment, with an expected market share of 5% and a growth rate of 16.4%. Banking, financial services & insurance (BFSI) lead the IT services market with a 21.5% market share, followed by the public sector and telecom. However energy & utilities, followed by healthcare remain the fastest growing vertical industries. The report however, reveals that infrastructure hosting services showed the highest growth over the period among the infrastructure services category with a CAGR of 23.4%, closely followed by enterprise IT outsourcing, network integration and network management.
Key Insights : India has been one of the least affected country across the globe when it comes to domestic IT services consumption. Interestingly, domestic IT services average gross margin is quite comparable to international levels (according to report). It is no surprise that key IT services vendors have increased focus on India for its domestic IT services market. Dell’s recent launch of cloud services in India fits well in this opportunity.
Cloud Computing and India
Dell India Offers SaaS Applications on the Cloud:
Dell India (6th January 2010) launched its portfolio of Software-as-a-Service (SaaS) applications for large enterprises, small and medium businesses across the country. The new SaaS applications provide customers with cloud-based IT services that help simplify and automate IT management and reduce overall IT costs. Dell’s cloud-based application is currently doing pilot projects for 10 customers in India and the company hopes to bag its first customer this January. Sameer Garde, managing director & GM-large enterprises, said with Dell’s new IT services, enterprises can leverage SaaS to solve key issues around distributed device management, remote infrastructure monitoring and business continuity and compliance. The platform offers configurable, flexible options with minimal upfront costs for customers and channel partners to quickly deploy just the applications and managed services they need to achieve superior IT business impact. Dell is offering a broad portfolio of new SaaS applications across three key IT infrastructure management areas: Client device management; Remote Infrastructure monitoring and Continuity and Compliance management.
Insights : This is a well timed move by Dell to increase presence in Indian domestic IT Services market. Major IT services vendors IBM, as well as domestic low cost IT services companies like Infosys, Wipro and TCS are increasing their footprint in this country with a sizable SME market.
Dell India (6th January 2010) launched its portfolio of Software-as-a-Service (SaaS) applications for large enterprises, small and medium businesses across the country. The new SaaS applications provide customers with cloud-based IT services that help simplify and automate IT management and reduce overall IT costs. Dell’s cloud-based application is currently doing pilot projects for 10 customers in India and the company hopes to bag its first customer this January. Sameer Garde, managing director & GM-large enterprises, said with Dell’s new IT services, enterprises can leverage SaaS to solve key issues around distributed device management, remote infrastructure monitoring and business continuity and compliance. The platform offers configurable, flexible options with minimal upfront costs for customers and channel partners to quickly deploy just the applications and managed services they need to achieve superior IT business impact. Dell is offering a broad portfolio of new SaaS applications across three key IT infrastructure management areas: Client device management; Remote Infrastructure monitoring and Continuity and Compliance management.
Insights : This is a well timed move by Dell to increase presence in Indian domestic IT Services market. Major IT services vendors IBM, as well as domestic low cost IT services companies like Infosys, Wipro and TCS are increasing their footprint in this country with a sizable SME market.
IT Trends 2010
Besides widely acknowledged trends (2010) like increasing adoption of SaaS, managed services, virtualization and mobile applications; AMI Partner’s team of go-to-market analysts have identified few trends that the industry hasn’t fully explored.
Summary
With economic upturn, SMBs will tentatively transition out of survival mode and focus on opportunities for business expansion. SMBs are now looking to enhance existing customer relationships, improve business efficiencies, grow revenue etc. Technology wise this equates to - collaborative tools, improved networking and disaster recovery plans. Due to economic downturn, business decision-makers (BDMs) are much more involved in the purchase process of ICT. Phrases such as “save time” and “save money” will need to be heavily supported with hard numbers and proof of outcome. Though cloud computing in increasingly being ubiquitous in IT marketplace, small businesses in particular will require extra handholding in 2010 to fully understand the specifics of how their businesses can benefit from flexible payment terms, scalable solutions, and other inherent benefits, amplifying the need for channel partners to clearly communicate their value proposition and continue efforts to educate SMB customers. Consolidation in the IT industry, convergence between hardware, software and services, and economic pressures are forcing channel partners to find new revenue streams, leading to the growth of “Total” IT solution providers in the SMB market. Over the past 3 - 4 years, the first wave of MSPs have undergone significant trial and error in the technical, operations and sales/ marketing of their managed services business. As a result, influential MSPs are refining their business model and approach to better serve SMBs’ needs. In addition, SMBs have a preference for a single end-to-end provider, instead of out-tasking parts of their IT needs to different providers.
In order to tap SMB IT services market opportunities Dell needs to
- Increase focus for services it can provide around – collaboration tools, networking, disaster recovery
- Have more clear/direct value proposition time/cost saving – more proof points required to sell services to SMBs – selling more to business (than IT) customer/departments
- Remote Managed IT Services (RMITS) market picked up considerably in 2009 – note that customer need more of an end-to-end solution.
- Cloud is gaining momentum – but it’s time to take lead on educating customer on how it can benefit their business.
Summary
With economic upturn, SMBs will tentatively transition out of survival mode and focus on opportunities for business expansion. SMBs are now looking to enhance existing customer relationships, improve business efficiencies, grow revenue etc. Technology wise this equates to - collaborative tools, improved networking and disaster recovery plans. Due to economic downturn, business decision-makers (BDMs) are much more involved in the purchase process of ICT. Phrases such as “save time” and “save money” will need to be heavily supported with hard numbers and proof of outcome. Though cloud computing in increasingly being ubiquitous in IT marketplace, small businesses in particular will require extra handholding in 2010 to fully understand the specifics of how their businesses can benefit from flexible payment terms, scalable solutions, and other inherent benefits, amplifying the need for channel partners to clearly communicate their value proposition and continue efforts to educate SMB customers. Consolidation in the IT industry, convergence between hardware, software and services, and economic pressures are forcing channel partners to find new revenue streams, leading to the growth of “Total” IT solution providers in the SMB market. Over the past 3 - 4 years, the first wave of MSPs have undergone significant trial and error in the technical, operations and sales/ marketing of their managed services business. As a result, influential MSPs are refining their business model and approach to better serve SMBs’ needs. In addition, SMBs have a preference for a single end-to-end provider, instead of out-tasking parts of their IT needs to different providers.
In order to tap SMB IT services market opportunities Dell needs to
- Increase focus for services it can provide around – collaboration tools, networking, disaster recovery
- Have more clear/direct value proposition time/cost saving – more proof points required to sell services to SMBs – selling more to business (than IT) customer/departments
- Remote Managed IT Services (RMITS) market picked up considerably in 2009 – note that customer need more of an end-to-end solution.
- Cloud is gaining momentum – but it’s time to take lead on educating customer on how it can benefit their business.
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