SourceCast: Episode 04: Bursting Bubbles
Supplier Report: 11/7/2015
IBM purchased another company named Gravitant this week. It helps customers select cloud services from a variety of providers (and is a cloud service itself). I know I keep saying this, but IBM is consistent with their purchases: Cloud, Analytics (Big Data), and IoT. Now I want to see all the pieces put together.
And when you have it all together, then you break it apart. HPE announced the departure of their CIO on the first official business day as Hewlett Packard Enterprises. The market seems to be down on HPE at the moment, while their sister company HP Inc gained on their opening day despite concerns about the health of the PC and printer markets.
The Dell/EMC acquisition continues to befuddle me. Rumor has it that Dell is looking to sell off $10B in assets (wise move) to pay down their massive debt. They are also looking to rush a startup that EMC and VMWare (and GE) created called Pivotal to IPO to help generate additional funds. So… Dell goes private and loves it, they are buying EMC and taking them private (presumably), but they are KEEPING VMWare public, and starting another company with the EMC asset and doing an IPO… that made my fingers hurt.
IBM
- IBM’s Shopping Spree Continues As It Buys Cloud Brokerage Firm Gravitant
With Gravitant, it gets cloud brokerage, which helps companies manage cloud purchases across multiple suppliers. IBM plans to fold the new bauble into its IBM Global Technology Services unit. In addition, IBM Cloud plans to add the capabilities to its growing SaaS catalogue.
That’s like a two for one sale because Gravitant gets sold as an old fashioned service offering, and also as a SaaS product, which plays well into IBM’s overall strategy.
- The Mainframe Is a Vampire
If you looked at the recent IBM numbers, which were pretty painful but in line with what generally happens when a company is adapting to a major industry change, you saw one bright light: their mainframe business was growing faster than the server segment in general is growing.
In fact, with the massive growth of web services, it has been hard for the server segment to get out of the low single digits. But once you adjusted for currency fluctuations, mainframes (IBM’s System Z) were up a whopping 20 percent. That’d be impressive server growth in a good year, for what has been a really soft year for servers, 20 percent growth is outstanding.
http://www.datamation.com/commentary/the-mainframe-is-a-vampire.html
- Why the IBM – Weather Company purchase is a big deal (shameless plug: I cover this topic on the SourceCast podcast episode #3, which will go live tomorrow… so visit again!)
http://www.bloomberg.com/news/videos/2015-11-05/ibm-to-buy-weather-company-why-that-s-a-big-deal - IBM Watson is going to change how you think about the weather (Here is a non-video article that says similar (internet of) things)
The focus at IBM is not so much in getting Watson involved in making better weather forecasts, but in putting the world’s most famous supercomputer to work in mining epic amounts of data in order to help businesses come up with actionable insights about the weather on both a real-time and long-term basis.
EMC/Dell
- Pivotal IPO Could Make Dell-EMC Deal Even More Complicated
As a reminder, EMC owns 80 percent of VMware, which is operated and traded as an independent company. When Dell agreed to buy EMC for $67 billion last month the deal included VMware, which Dell has said it wants to continue operating in the same fashion.
Pivotal is itself a joint venture of EMC and VMware along with GE (which owns around 10 percent). The plan could call for EMC to sell about 20 percent of its ownership stake as an IPO, which is similar to what it did when it took VMware public in 2007, according to the re/code article.
If this is true, it’s just another case of this deal getting ever more muddled with multiple layers of ownership, all pointing back to Dell, which if this closes is the ultimate decider here. Let’s not forget, however that EMC has a clause in its agreement that if it gets a better offer than the $67 billion that Dell offered it, it could take that deal.
http://techcrunch.com/2015/11/03/pivotal-ipo-could-make-dell-emc-deal-even-more-complicated/
- Dell planning to sell off $10 billion in assets (rumor)
It is too early to say I called it, but keep watching for news like this…Reuters reports the PC vendor is planning this to reduce the heavy debt load it will be taking on to buy data storage company EMC for around £44 billion. In 2007, EMC sold 19 percent of VMware shares in an IPO on the New York Stock Exchange. A successful Pivotal IPO could potentially raise billions in new capital
http://financialspots.com/2015/11/04/dell-planning-to-sell-off-10-billion-in-assets-rumour/
Here is more information on the sell off providing possible asset targets:
Unnamed sources told Reuters that Dell will take on about $49.5 billion after it completes the $67 billion acquisition of EMC and its federated companies sometime next year. Selling such assets as its Quest software business (for systems management), SonicWall (network security) and AppAssure (data backup) will help the company reduce the debt load, according to the sources.
Hewlett Packard (HPE & HPI)
Note: I suspect my coverage of HP Inc will dwindle with time, but for now, I will cover both companies.
- Hewlett Packard Enterprise Loses CIO As It Charts New Course
Ralph Loura, who had served as chief information officer of the enterprise business of HP for the past 15 months, has left the company. “I had an impact while there [and] I helped design the new op model for IT, and designed myself out of it because it was what the new company needed (move from a federated model with group CIOs, to a unified/centralized model with a single CIO),” he wrote to CRN.
- Why JPMorgan Is Cautious On HP Inc (HPQ)
The skeptical view taken by the firm comes on the back of PC data, which is hardly reassuring. Seagate and Western Digital both guided for a decline in HDD TAM for the fourth quarter. Intel reported a 19% YoY decline in its PC shipments for 3QFY15 worse than the 10% decline witnessed in 2QFY15. Desktops and Notebooks posted even worse numbers and there is scarcely anything notable that stirs confidence. While HDD companies see signs of stabilization, analysts at JPMorgan are far from convinced and expect more macro instability.
http://www.businessfinancenews.com/25953-why-jpmorgan-is-cautious-on-hp-inc-hpq/
However, On Monday, the stock market reacted like this (per USA Today):
HPQ, which sells PCs and printers, soared 13%, to $13.83; HPE, responsible for commercial computer systems, software and services, fell 1.6% $14.49. Both stocks are trading on the S&P 500.
Other
- Why Billionaire Trader Stan Druckenmiller Believes In Amazon And Not IBM
“We are in a bubble in what I would call short term behavior,” Druckenmiller said. To reinforce the point Druckenmiller gave a negative assessment of IBM, which he said has missed earnings only three times over the past nine years and is in the process of buying back billions in stock, and a bullish view on Amazon.com… the difference? While IBM is cutting R&D spending against a shrinking base of sales, Amazon has doubled that spending as a percentage of sales even as they’ve grown at double digit rates. “I love Amazon. They are investing on the future,” Druckenmiller said, before quipping, “Bezos is a serial monopolist.”
- Will NoSQL be the undoing of Oracle’s database reign?
What’s most interesting in all this is how database popularity, broadly measured, compares with Gartner’s newly released Operational Database Magic Quadrant. TechRepublic contributor Janakiram MSV has captured five big takeaways from Gartner’s report, but here’s a sixth:The database vendors that embrace NoSQL are destined to be the long-term winners.
http://www.techrepublic.com/article/will-nosql-be-the-undoing-of-oracles-database-reign/
- Why Did Microsoft Corporation Paint Its Cloud Red?
As part of the deal, Microsoft will feature Red Hat’s Linux as a “preferred” option for enterprise computing jobs on Azure. The deal comes in as a surprise for many as the companies have historically had differing stances on software patents and usage. Red Hat has always encouraged open-source softwares that can be distributed widely and can be modified. Microsoft, on the other hand, has been against it. Interesting to note is the fact that a separate technical team will be built from employees of both companies to solve the customer issues more efficiently.
http://www.businessfinancenews.com/25978-why-did-microsoft-corporation-paint-its-cloud-red/
- Teradata Plans to Sell Its $200 Million Marketing Application Business. Any Takers?
According to financial statements within the Teradata announcement, Marketing Applications revenue was down about 9% this year, which is surprising in a generally strong martech market but in line with the rest of Teradata’s business. Teradata told me separately that their marketing cloud business grew 22% year-on-year this quarter, suggesting that the decline came in the older, on-premise products and/or related services. As you may know, Teradata’s marketing applications business was a mashup of the original Teradata marketing products, developed over the past 20 years and largely on-premise, and the Aprimo cloud-based systems acquired for $525 million in 2010. The Aprimo group was dominant in the years immediately following the acquisition but control shifted back to the older Teradata team more recently. One bit of evidence: the Aprimo brand was dropped in 2013.
Photo: Josh Byers
SourceCast: Episode 01: What the Dell!?!
Supplier Report: 7/25/2015
Mergers and acquisitions was a major news theme (again) this week. IBM announced they were acquiring DB startup company Compose. The HP/EMC rumors started up again, while Mr. Tucci expressed his desire to keep his company whole (not splitting off VMWare). Speaking of HP – they sold off a part of their troubled Autonomy business.
IBM
- IBM Acquires Database-As-A-Service Startup Compose
While Compose started out as a MongoDB database specialist, the company now offers services around MongoDB, Elasticsearch, RethinkDB, Redis and PostgreSQL. The overall idea behind Compose is to allow mobile and web developers to create their apps without having to worry about their database backends.
http://techcrunch.com/2015/07/23/ibm-acquires-database-as-a-service-startup-compose/?ncid=rss
- Employees: More layoffs announced at IBM
This comes after a months long investigation into the job numbers at the Columbia facility and where the jobs are going. The company already lost some tax incentives from the state of Missouri back in May for not meeting the 800 jobs promised to the state.
http://www.abc17news.com/news/employees-more-layoffs-announced-at-ibm/34327968
- Why IBM Actually Had A Great Second Quarter
As IBM has continually been focusing on bulking up its product offerings (combining “add-on” solutions stemming from investments in “strategic imperatives” with its “older” offerings), customer stickiness is likely to continue increasing. This is due to the fact that when a company utilizes IBM’s solutions for a larger proportion of its IT needs, switching to a competitor’s solution would not only be an increasing inconvenience, but the level of operational disruption is likely to be greater as well. As a result, IBM should be able to continue to increase prices while still retaining its clientele. Ergo, overall profit margins are likely to continue expanding in the future.
http://seekingalpha.com/article/3350435-why-ibm-actually-had-a-great-second-quarter
- IBM’s Cloud, Analytics Moves Haven’t Paid Off, Yet
“Long term, the company (IBM) is putting itself in a position to grow again,” Kreher told InformationWeek. “Near term, they are expanding profit margins as they shed lower-margin businesses … They are going to have lumpy results for the next few quarters.”
http://www.informationweek.com/cloud/ibms-cloud-analytics-moves-havent-paid-off-yet/d/d-id/1321409
- IBM’s supercomputer Watson now knows you and tells you the news
(Hmmm… I wonder how this could be useful)“With Watson we can cognitively filter the news according to the topics and entities that we are looking for,” reads the promo video.
- Apple and IBM release 10 new apps, incorporating analytics and iBeacons
The apps use technology like predictive analytics and are for business travelers and mortgage officers, among other professionals.
- IBM: Partnerships Are Necessary For Success In Big Data
http://www.crn.com/news/channel-programs/video/300077552/ibm-partnerships-are-necessary-for-success-in-big-data.htm
EMC
- Why EMC has no plans to split itself up
“Splitting this federation or spinning off VMware is not a good idea,” said EMC Joe Tucci during an earnings call with analysts Wednesday. “I firmly believe that we are better together. A lot better together.”
- EMC’s turbulent trifecta temporarily ties Tucci to top table
The person who wrote this headline must be so proud of themselves (oh… British publication, of course)“The companies that will be successful are the ones that are able to truly transform themselves. The board and management, we’re focussed on assuring and we are deeply engaged in making sure we have a very successful transformation. We have a number of options, really good options, and we have important next-generation winning technologies, great assets, and we have great people,” he continued. [The post also mentions the fabled HP/EMC merger]
http://www.theregister.co.uk/2015/07/23/tuccis_turbulent_trifecta/
- EMC to cut jobs in Q4 2015 to reduce costs by $850M
EMC will cut $50 million through tighter spending and job cuts in the fourth quarter of this year. The company will increase the size of cost savings in each quarter until it reaches an annual rate of $850 million starting in 2017 by reducing other expenses, as well, in part by canceling underperforming products and closing facilities.
http://www.infotechlead.com/networking/emc-to-cut-jobs-in-q4-2015-to-reduce-costs-by-850-mn-32532
- Big Changes in Store for Storage
According to a recent outlook from Wikibon, we are on the cusp of a digital extinction event as today’s complex network storage architectures give way to more nimble server-side solutions. The firm predicts that within 10 years, 90 percent of storage revenues will flow toward server SAN or hyperscale server SAN solutions, marking a 150 percent annual growth rate from today’s current market estimate of about $1 billion. At best, traditional SAN and NAS may eke out meager existences within long-term data retention infrastructure in which the frequency of data access is low but metadata retrieval is fairly steady.
http://www.itbusinessedge.com/blogs/infrastructure/big-changes-in-store-for-storage.html
- EMC Corp Sticking To Its Guns
Right or wrong, EMC is committed to its path of evolving into a leading provider of “IT-as-a-service”. Likewise, the company remains committed to an operating structure that is going to continue to frustrate some investors, as it believes (correctly, in my view) that VMware (NYSE:VMW), Pivotal, and other components are vital to its future strategy.
http://www.insidermonkey.com/blog/emc-corporation-emc-sticking-to-its-guns-363253/
Hewlett Packard
- HP study finds smartwatches could do more to keep user data safe
The smartwatches fell short when it came to encrypting data that’s sent to the cloud. While the wearables used SSL and TLS security protocols to encrypt information, some relied on SSL 2.0, an older version of the protocol that’s known to have security flaws. Additionally, 40 percent of the watches were vulnerable to POODLE attacks.
- Autonomy Unit iManage Exits HP With Buyout
The iManage business that has now fully exited HP provides a work management solution that targets legal, accounting, and financial services firms around the world. It claims to have 3,000 customers and says that it continued to grow in its last full fiscal year under HP ownership.
http://www.techweekeurope.co.uk/software/collaboration-suites/hp-autonomy-imanage-buyout-173052
Other
- Dell is closely studying the EMC playbook
“I think what [EMC CEO Joe] Tucci has done with VMWare is a good example of that, where you can take something that people don’t fully understand, buried in the portfolio, and unlock it while still having a partnership with the mothership,” said Durban, who sits on the Dell board of directors.
http://fortune.com/2015/07/17/dell-is-closely-studying-the-emc-playbook/
- Salesforce Positioned as a Leader in the 2015 Magic Quadrant for Sales Force Automation
Salesforce [NYSE: CRM], the Customer Success Platform and world’s #1 CRM company, today announced that Gartner, Inc. has positioned Salesforce as a Leader in its July 2015 Magic Quadrant for Sales Force Automation (SFA). This is the ninth consecutive year that Salesforce has appeared in the Leaders quadrant.
- Splunk Named a Leader in 2015 Gartner Magic Quadrant for SIEM
“Splunk is the only security provider to improve on completeness of vision in the Gartner 2015 SIEM Magic Quadrant which we believe serves as the latest evidence that Splunk remains at the forefront of solving advanced and emerging SIEM use cases,” said Haiyan Song, senior vice president of security markets, Splunk. “Splunk is growing well beyond the SIEM market rate, as an increasing number of companies recognize the value of taking an analytics-driven approach to security with Splunk as the nerve center. And with our recent acquisition of Caspida, Splunk is adding machine learning-based user behavioral analytics and extending our analytics-enabled SIEM to better detect advanced and insider threats.”
https://uk.finance.yahoo.com/news/splunk-named-leader-2015-gartner-120000738.html
Photo: Kristina Alexanderson, Flickr