News and analysis to 29th May 2003
CSC in risky
business
EDS learnt the hard way about ‘big ticket’ outsourcing;
WorldCom for one comes to mind. Rival CSC appears to have thrown caution to the
wind as it lowers itself into a $735m deal with UK telco equipment maker
Marconi. Marconi is famous for squandering its money mountain on dotcom fashion
accessories to the extent that major surgery was required. The new listing on
Nasdaq is something of a reinvention and thus Marconi Phoenix might have been a
more appropriate name. Ironically its ticker reference is MONI, perhaps a
reminder of something it used to have a lot of. In any case CSC appears to be
comfortable with the deal. I hope for their sake they get the money upfront.
Linux under attack
Disturbances on a geological scale are happening in the Unix
community. SCO Group, formerly known as Caldera, formerly known as Santa Cruz
Operation has just discovered that intellectual property gives real shareholder
value. Thus it has launched an attack on the Linux community stating that they
have infringed its copyright. SCO Group owns the rights to the Unix operating
system. Linux and Unix are synonymous, but whether the Linux community has
actually copied SCOG’s software is now in question. SCOG has also sent out 1,500
letters to the world’s top corporations warning them that they may be liable if
it transpires that Linux actually contains part of its intellectual property.
This has thrown the Linux world into turmoil and is certain to jitter users and
prospective users. It has also doubled SCOG’s market capitalisation. But apart
from SCOG who else might benefit from this? Step forward Microsoft, which
coincidently has just paid SCOG an undisclosed sum for a Unix license. The
motto to this tale is that my enemies’ enemies are my friends.
Cash that!
Microsoft CEO and cofounder Steve Ballmer has reaffirmed his
commitment to Microsoft by cashing almost $1bn worth of shares. One shouldn’t
read too much into this as he still has $10.5bn worth of equity still left in
the company.
End of the road for systems integration
Time is running out for system integrators according to
analyst ZapThink. It predicts that the emergence of web services will hit SI
revenues by as much as 70% by 2010. Web services will in theory offer ‘out of
the box’ self-integration. Thus we have circa 7 years to resolve outstanding
issues such as security, bandwidth and web services standardisation. Smart
integrators will hedge their bets by adding web services to their menu as just
another, albeit risky, integration solution.
Baltinomore?
Security conscious dotcom and erstwhile high-flyer Baltimore
is up for sale. More specifically what’s left of it is up for sale, since its
post Nasdaq delisting fire sale. Competitors such as Verisign and Entrust would
gain little value from purchasing it, as they would simply be buying more of
what they already have. Possibly a consortium of companies that have a shared
interest in secure e-business might be interested. Step forward banks and telco
service providers.
IBM SQueaLs with delight
And so it should. IBM gets to wear the ‘king of the RDBMSs
(Relational Database Management System)’ yellow jersey, according to Gartner.
It’s database related revenues dropped by under one percent. But Oracle that
picked up the number two slot was down over 20%. Notably down the list Microsoft’s SQL Server saw 17% growth.
Testing times for India
Microsoft has started to unveil the details behind its
planned $400m investment in India. A global professional products support
service will be set up in Bangalore. It will be interesting to see how easily
the cultural integration proceeds. How will Indian software developers respond
to a philosophy where testing prior to launch is seen as a relatively low
priority?
Talk up the Tech Sector
According to a senior investment advisor at Chase de Vere
Investments, the Technology Sector is well on the road to recovery. Key
indicators include: 60% of America’s top 500 companies are now back on track
regarding their business plans and consequently IT spend will pick up. There
will be 500 million Internet users and thus potential e-consumers by the end of
2003. 2,000 debt ridden IT companies have left the pitch, thus leaving greater
opportunity for the survivors. Over the last 3 months the Tech Sector has been
the strongest market performer. Investor warning: Unlike the last couple of
years, it is now possible for tech shares to go down as well as up.
PS2PS
Call it grid-computing or peer to peer (P2P), the fashion
for squeezing value out of one’s IT investment by utilising dormant capacity is
hotting up. Scientists at the US National Centre for Supercomputing
Applications have linked together 70 Sony PlayStation 2s to discover that such
a cluster could generate half a trillion operations per second, putting them on
a par with single box supercomputers. Pushy parents can encourage their
children to team up with their friends with a view to offering grid-computing
services to multinational corporations. Steve Ballmer may also find this
concept useful. Ordinary calculators overload when the numbers turn to
billions. Adopting this grid concept he can cluster a handful of calculators
together, which will make doing his domestic finances less of a chore.
