While the mobile industry is becoming increasingly central to all computing, it is Apple that is clearly dominating the market place and more enviable its its very high profitability. A great majority of the revenue comes from mobile devices that are launched not far ago. Looking at this companies are running like crazy - few giving up in the race and others running at high speed to get pie of this surging market.
HP, with leading market share in PC business has surprised industry by announcing that it will stop selling laptops, tablets and smartphones. It will stop making hardware for devices purchased as part of the acquisition of Palm Computing, and will license the webOS platform software to other companies.
And Google, which has avoided selling handsets save for one brief failed attempt, is buying Motorola Mobility for a hefty $12.5B. Google becomes both partner and competitor to current Android-based handset makers as Motorola will continue making Android-based phones and tablets. Contrary to this, Apple don’t license their software but use it only for their own hardware.
Legal battles is also not short of any catfight - Microsoft is suing Barnes & Noble, Foxonn. Oracle is suing Google. Sony is suing LG. Samsung, Motorola, Nokia, HTC and Kodak are all suing Apple, and Apple is suing them all barring Kodak.
Tuesday, September 20, 2011
Thursday, September 15, 2011
HP spins off PC business
HP spins off PC business
I believe that (perhaps) HP is reading market incorrectly, and even if they turn this their way; company will need at least a 4-5 year makeover period. And who knows, market might surprise them even at that time.
Interestingly, two exactly opposite strategies being tested in the market: Company like Oracle increasing its baggage, Google trying hardware and at the same time traditional HW company like HP shedding its core (DNA?).
Consumerization of IT is going to bridge the gap between what we call two distinct segments LE and Consumer (SMB is already becoming “not that” meaningful segment). At this point of time putting oneself in either of the (wrongly proclaimed “mutually exclusive”) segments does not look like a far sighted wisdom.
The way IT is penetrating individual household (start from Smartphone, Smart TV, Smart Camera Still/Video…….. to increasing personal/household digital content, pervasive computer/laptop/IPAD,….. and do not forget emergence of video/interactive gaming…so children are part of this revolution) and pressing need to seamless communication within these devices as well as among various online/cloud based services accesses is going to transform individual household consuming IT like what a SMB is today. And add to this increasing trend of work from home/entrepreneurship.
If we don’t read correctly, at some point of time in future, some consumer company will start eating up what we call enterprise segment today.
I believe that (perhaps) HP is reading market incorrectly, and even if they turn this their way; company will need at least a 4-5 year makeover period. And who knows, market might surprise them even at that time.
Interestingly, two exactly opposite strategies being tested in the market: Company like Oracle increasing its baggage, Google trying hardware and at the same time traditional HW company like HP shedding its core (DNA?).
Consumerization of IT is going to bridge the gap between what we call two distinct segments LE and Consumer (SMB is already becoming “not that” meaningful segment). At this point of time putting oneself in either of the (wrongly proclaimed “mutually exclusive”) segments does not look like a far sighted wisdom.
The way IT is penetrating individual household (start from Smartphone, Smart TV, Smart Camera Still/Video…….. to increasing personal/household digital content, pervasive computer/laptop/IPAD,….. and do not forget emergence of video/interactive gaming…so children are part of this revolution) and pressing need to seamless communication within these devices as well as among various online/cloud based services accesses is going to transform individual household consuming IT like what a SMB is today. And add to this increasing trend of work from home/entrepreneurship.
If we don’t read correctly, at some point of time in future, some consumer company will start eating up what we call enterprise segment today.
Friday, October 8, 2010
HP's new CEO - Challenges Ahead
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.
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.
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.
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