News and Analysis to 18^th November 2004

Money doesn’t talk

Call it a charm offensive if you like, but Microsoft is systematically encouraging key witnesses in the European Commission’s antitrust case to zip their lips by giving them lots of money. Sun is over $2bn heavier for the experience. Lately Novell and the Computer and Communications Industry Association no longer feel the need to testify.  Now that the key witnesses are neutralised, we can expect to see the fins of Microsoft’s lawyers performing circular movements around the EU’s legal team. It will be messy, but at least it will be quick.

A sure fire approach to success

HP posted an impressive 27% leap on profits in its latest quarter. According to CEO Carly Fiorina, HP achieved record growth in all areas of its business in all regions. The secret to her success? After disappointing results in the previous quarter she fired three senior executives and concurrently declared that the poor performing divisions would be profitable the following quarter. This may well have influenced the performance of the current management team.

PeopleSoft harden

Now that the legal roadblocks are cleared, Oracle is primed to pounce on PeopleSoft. Despite jettisoning CEO Craig Conway, who was regarded as anti-Oracle, the latter’s board are not recommending the former’s offer. Oracle has thrown down the gauntlet. If a majority of PeopleSoft’s shares have not been tendered by midnight Friday then Oracle will drop the bid. The word on the street is that PeopleSoft would be wise to accept, and that Oracle is unwise to have offered.

Not so big in Japan

The world’s largest mobile operator Vodafone has for the first time announced a dip in sales. This has been attributed to its Japanese operation, where the absence of a 3G (broadband to the palm) offering has caused it to lose market share to local rivals. However that has been rectified with the launch of ‘Vodafone live!’ in 13 countries across the globe. A more modest launch would have allowed Vodafone to iron out technical glitches and learn how the users respond to 3G, and only then scale up. This 13-country launch smacks of marketing panic and could well cause brand damage, which in turn will make it even harder to get payback on the very expensive 3G licences it has procured.

Rum third quarter

After several rounds of hide and seek, EDS has released its third quarter figures. A net loss of $153m was reported compared to $16m last year. Its high profile contract with the US Navy was a major contributor to the assault on its cash flow. The delays in reporting were in part due to an internal audit investigation, which reported that there were no improper activities in relation to EDS’s accounting.

Solarux?

Sun Microsystems’ business strategy is something of a mystery. Firstly it had no time for Linux, then it was embraced, and now it is turning its own operating system Solaris into an open source offering. Solaris 10 is the culmination of 3,000 engineering years and $500m in R&D. This is a worrying trend for Sun, as migrating commercial products to open source is a move used by vendors to salvage dying or dead offerings.

Microsoft under attack

Whilst the software giant is focused on taming the European Commission, its rivals have taken the opportunity to launch broadsides. IBM is unleashing a slew of software and services around its Workplace platform, which exists to give the market an alternative to a Microsoft desktop. Novell is also planning to release its Linux Desktop 9,which will look at taking market share from Microsoft where users need a ‘reduced cost-reduced functionality’ desktop solution. Their timing may be doubly good as organisations are now revisiting their IT set-ups having ‘suspended them in amber’ during the ‘technology ice age’ of the last 3 years.