News and Analysis to 31st July 2003
News in summary
Hardware
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Poor results from Sun Microsystems
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Cisco and Intel team up
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Windows is better than Linux for embedded devices
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PC shipments on the ascendancy
Software
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Microsoft upping autonomic ante
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Gloom ahead
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Major movements in BI market
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PeopleSoft takes J D Edwards
Services
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CSC is going for growth
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Tata leads Indian IT exporters
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IBM has a good second quarter
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Accenture pursues outsourcing
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Yahoo! acquires Overture
Telecoms
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Nokia’s results are cause for concern
News in Detail
Sun’s future clouded by uncertainty
Chip to software development tools vendor Sun Microsystems
saw its stock fall by almost 20% as a result of disappointing fourth quarter
results. This is the ninth successive drop in sales, which suggests that unlike
competitors it is having trouble getting the ship onto an even keel. It would
be a shame to see Sun end its days as a subsidiary of IBM or HP, as it plays an
industry-balancing role in the promotion of things ‘not-Microsoft’. Possibly it
needs to streamline its offerings and make a better job of linking its
value-proposition to the needs of business.
Cistel threatened WiFi Alliance
Giants Intel and Cisco have teamed up to tackle the
short-range wireless marketplace, specifically the WiFi arena. Nobody markets
like Intel, and Cisco is regaining confidence by the minute. The only concern
is that their alliance in effect splits the WiFi community. It was hoped, at
least by the other vendors, that the WiFi Alliance would provide the forum to
promote this wireless technology.
Microsoft inside?
The world of embedded computing is one where bloatware
(software that is unnecessarily large) and untested software have no place. So
it is intriguing that a recent study by Embedded Market Forecasters is alleged
to have suggested that Windows applications can be built faster and cheaper
than Linux platform applications in respect of embedded devices, such as
handheld computers and consumer goods. Whether the software will scale down in
line with the needs of embedded architectures or indeed work in a reliable
manner is not known. A company called Microsoft sponsored the report.
Easy PC
The death of the PC appears to be wildly exaggerated.
According to IDC shipments have grown 7.6% quarter on quarter, making that four
quarters of growth in a row. Before we start abandoning plans for thin-client
architectures it should be noted that the growth was mainly in the consumer
arena. Dell took the ‘yellow jersey’, followed by HP, IBM, Fujitsu and Toshiba.
Microsoft sounds nervous
The new IT department ‘killer app’ is autonomic computing.
The thrust here is on computers that can take care of themselves and thereby
reduce the total cost of ownership, which in large can be attributed to the
carbon based life-forms traditionally required for their upkeep. The concept of
autonomic is based on our own autonomic nervous system (Click here for more
details – http://www.auridian.com/articles/HTML/Autonomic-computing.htm).
IBM has driven most of the marketing on this front, with the other hardware
vendors not ruling out their commitment to this. But Microsoft has leapt
forward to take this concept out of their hands by announcing that it will be
first to ‘deliver on vision’. Vision must be the new vapourware.
Nuclear winter extended to 2007
Thought the market was on the ascendancy? Don’t think so,
according to IDC. They believe that software spending will not recover until
2007, despite the industry murmurings that the upturn is actually just a couple
of quarters away. But despite this average trend there is still growth
predicted for security, business intelligence and content management in the
shorter term.
Quick decision made in BI marketplace
Business intelligence vendor Business Objects surprised
everyone by announcing its plans to acquire Crystal Decisions. Both are major
players in this market. They are also bitter rivals, so it is impressive that
they have suppressed their egos with a view to capitalise on the fast growing
BI marketplace.
JD Peoplewards – a reality
PeopleSoft recently announced that it has a majority holding
in JD Edwards, making it the world’s second largest enterprise applications
company. Oracle, which has been pushed to number three, is still keen to
acquire PeopleSoft. Whether the competition regulators or its cash flow allows
this is another matter.
Computer Science Corporation SchlumbergerSema
CSC looks set to acquire the outsourcing division of
SchlumbergerSema. Oil services specialist Schlumberger acquired software house
Sema Group during a moment of weakness (for both parties it seems) and now
appears keen to sell it off. The outsourcing division is only one part of
SchlumbergerSema, so expect to see the other divisions follow suit. This will
enable CSC to strengthen its fifth place in the outsourcing rankings ahead of
Accenture.
Tata tops IT export league
The latest Nasscom rankings of India’s Top 20 software and
services suppliers is headed by Tata, with revenues of almost $1bn. In the
number two slot is Infosys, followed by Wipro, Satyam and HCL.
IBM drives through tough times
Box to grid giant IBM has had a reasonable second quarter
with sales up 10% to $21.6bn quarter on quarter. However it incurred
significant costs as it restructured its chip business and extricated itself
from its disk drive business, leaving $56m net income.
Accenture gets dirty
Accenture, whose reputation is built on hiring the best and
the brightest young things, and charging them out at a premium, has of late had
problems winning ‘big ticket’ consultancy business. But rather than sit back in
denial, it has put its pride in cold storage, rolled up its sleeves and dived
headfirst into the grubby world of IT outsourcing. This tactical change in
direction is buoying up Accenture in these challenging times, with outsourcing
contributing 30% of its revenues. Expect cufflink prices to plummet as
Accenture consultants offload their ‘gravitas enhancers’ onto the market.
Search engines revving up
Who says the dotcom era is dead? Nobody has told Yahoo! as
it plans to buy search engine Overture for $1.63bn. This will have a tidal wave
impact on the search engine world. Yahoo! currently uses Google for its search
engine. Overture is a rival to Google. Rival MSN uses Overture. Expect further
musical chairs (shares?) as the market continues to consolidate. It may be
worth a punt on the smaller search engines as they are likely to get sucked
into this market vortex.
How strong is Nokia?
A strong brand does not seem to equate to premium pricing.
Leading player Nokia’s second quarter results showed a 28% decline in net
profit. It appears that consumers are opting for cheaper phones, competitors
are becoming more innovative and operators are exploiting their position to
drive down prices. Nokia cannot afford to take the number one slot for granted.
