SourceCast: Episode 40: Spin-Merge City
Supplier Report: 9/3/2016
Hewlett Packard Enterprise is said to be close to selling off their software assets… all of them. Thoma Bravo is rumored to be a front runner to purchase a portfolio valued between $8-10 billion dollars.
While HPE transitions back to a hardware-only company with their own designs on storage, datacenters, and AI; they face increasing and varied competition from IBM, Microsoft, Amazon, and Google.
Meanwhile a Chinese company known for mobile phones is about to get very serious about IT hardware and EMC is officially going to become Dell Technology next week.
IBM
- IBM swings axe through staff, humming contently about cloud and AI
Lee Conrad, an ex-IBMer who today runs the Watching IBM Facebook page, has been sharing messages from long-serving staffers laid off this week, some of whom claim their jobs are effectively being shifted overseas to India, China and Costa Rica.
Some axed workers say their last day will be at the end of November, allowing IBM to avoid paying into their 401K retirement savings pot for the year. Big Blue will only cough up the cash if you are an employee on December 15. This comes after the biz slashed its severance payouts to a maximum of one month of pay.
- IBM expands cloud footprint in Korea
Located outside Seoul in Pangyo, the new data center is designed to support growing cloud adoption and customer demand across the country.
According to IDC, an information technology research firm, the public cloud services market in Korea is expected to grow from USD445 million in 2015 to approximately $1B in 2019.
The new facility in Pangyo is IBM´s ninth cloud data center in the Asia-Pacific region, and part of the company´s growing global network of 47 cloud data centers.
http://www.financial-news.co.uk/36745/2016/08/ibm-expands-cloud-footprint-in-korea-20160826082900/
- Can IBM Win The Storage War Against Dell-EMC?
IBM said last year that it will invest $1 billion over the next five years to win the software-defined storage space. Although breaking EMC’s dominance isn’t an easy task from a technological point of view, I believe the potential disruption resulting from product portfolio integration of Dell and EMC could help IBM get closer to EMC due to certain advantages IBM enjoys in the enterprise software market.
http://seekingalpha.com/article/4002896-can-ibm-win-storage-war-dell-emc
- IBM and VMware extend public cloud tech deal
Further moves to strengthen the partnership see a VMware Cloud Foundation compatibility with IBM aiming to make it faster to deploy VMware’s products in an on-premise environment to IBM’s cloud.
The aim is to make it much easier for customers to be able to use VMware’s products in an IBM Cloud and for an IBM Cloud user to use VMware’s products.
Partnerships like this are becoming increasingly common as vendors look for a collaborative approach to the cloud market in order to differentiate themselves from the likes of Amazon Web Services, Microsoft Azure, and Google Cloud Platform that lead the market.
http://www.cbronline.com/news/cloud/public/ibm-and-vmware-extend-public-cloud-tech-deal-4992298
Comment: This is interesting, IBM is clearing going after EMC storage, yet making partnership deals with VMWare. - Hybrid Clouds Dominate — Enable Companies to Innovate, Exceed Expectations
The IBM study, “Tailoring hybrid cloud: Designing the right mix for innovation, efficiency and growth,” is based on in-person interviews and surveys of more than 1,000 C-suite executives from 18 industries. Conducted by the IBM Institute for Business Value (IBV), the study finds that the top reasons executives cite for adopting hybrid cloud solutions are: lowering total cost of ownership (54 percent), facilitating innovation (42 percent), enhancing operational efficiencies (42 percent) and enabling them to more readily meet customer expectations (40 percent).
Hewlett Packard Enterprise | HP INC
- HP: Gloomy Outlook Despite Increased PC Sales
Cathie Lesjak, the chief financial officer of HP, pointed out that one of the major reasons that the tech company is projecting downbeat earnings for the fourth quarter regardless of the stabilizing PC sales was that it has been pumping in a lot of money to boost its higher-end printers’ sales. The objective is to sell more of these in locations where individuals print more, which could result in more sales for printer supplies and other related services.
The HP CFO said, “We think that is the right investment to make.“ Even though the boost in investments will put some pressure on the present quarter, Lesjak promised that it will “pay dividends in supply revenue in the future.”
http://www.themarketdigest.org/201608/hp-gloomy-outlook-despite-increased-pc-sales/3146061/
- HPE is betting big on AI to fuel your apps and analytics
Companies can use HPE Vertica 8 on data residing on premises, in private and public clouds, and in Hadoop data lakes. With its in-database machine learning capabilities, they can natively create and deploy R-based machine learning models directly within the software.
Improvements to data movement and orchestration let users load data as much as 700 percent faster than before, HPE said. Those gains are possible for hundreds of thousands of columns. Vertica 8 also makes it easier to load data from Amazon S3 and includes comprehensive visual monitoring of Apache Kafka data streams.
http://www.cio.com/article/3113986/hpe-is-betting-big-on-ai-to-fuel-your-apps-and-analytics.html
- HPE CIO tackles tough ‘spin merge’ with CSC
While Spradley is laser focused on the services separation, HPE has seemed anything but focused in recent years. There have been ill-conceived acquisitions (Compaq, EDS and Autonomy), scandals (pretexting and Mark Hurd) and architecture missteps (such as Itanium). And that’s independent of the secular trends, including the shifts to public cloud software offered by Amazon Web Services, Microsoft and Google, a tech evolution to which the company has struggled to adjust.
HPE’s micro and macro challenges might seem like drudgery to CIOs whose primary occupations include building digital products and services to drive business innovation. Such CIOs would rather experiment with blockchain, stitch together APIs and host hackathons than divest and spin off assets and staff.
- HP Enterprise (HPE) Stock Gains on Potential Software Division Sale
Shares of Hewlett Packard Enterprise (HPE) were up in mid-afternoon trading on Thursday as the Palo Alto, CA-based technology infrastructure company is in discussions to sell its software division to buyout firm Thoma Bravo in a deal that it hopes could bring in between $8 billion and $10 billion, sources told Reuters.
https://www.thestreet.com/story/13692527/1/hp-enterprise-hpe-stock-gains-on-potential-software-division-sale.html
Looks like we have a buyer…
Oracle
- Oracle’s Database 12c R2: Boom, bust, or meh upgrade cycle ahead?
In other words, this upgrade cycle for Oracle will be different from previous database rollouts. For starters, more of Oracle’s revenue will be subscription based. In addition, there are more competitors than ever for Oracle. It’s quite possible that SAP, which is using its HANA platform to prod customers to move off of Oracle databases, and Oracle are fighting yesterday’s war.
http://www.zdnet.com/article/oracles-database-12c-r2-boom-bust-or-meh-upgrade-cycle-ahead/
Storage
- NetApp a leader in Gartner Magic Quadrant SSA report
According to a recent report from the market research firm International Data Corporation (IDC), NetApp registered an impressive revenue growth of 238.2 per cent year over year, which was 2.7 times faster than the all flash array market as a whole.
http://www.canindia.com/netapp-a-leader-in-gartner-magic-quadrant-ssa-report/
- $67B EMC sale to Dell cleared; to close next week
Approval from China’s Ministry of Commerce (MOFCOM) was the last hurdle for the acquisition to clear after EMC shareholders voted in favor of the agreement in July. According to Michael Dell, chairman and CEO of Dell Technologies, the merger will be beneficial for both companies, using the power of 140,000 employees worldwide to achieve scales of economies as the company moves into new and growing technology markets.
Other
- Huawei Plots to Seize Another Tech Industry
Huawei is training its sights on selling computing gear for the world’s biggest data centers, which are the invisible locomotives of the digital world. These giant buildings packed with racks of computing equipment and miles of data-carrying cables enable every moment in the digital world, from the Facebook photo you shared this morning to the databases managing Walmart’s supply chain.
https://www.bloomberg.com/gadfly/articles/2016-08-31/huawei-of-china-plots-to-seize-market-for-data-center-gear
I totally predicted this situation in Episode 37 of SourceCast - Party Over At Salesforce.com With Terrible Q2 Earnings
Let’s look at what really matters: deferred revenues and billings. Deferred revenue missed at $3.82 billion versus $3.88 billion consensus, and billingsmissed at $1.86 billion versus $1.89 billion consensus. “This is a slight miss” you say, but billings have been beating estimates at an accelerating pace in recent quarters, which sent the stock soaring – one must view everything in context. Last quarter, the company beat billings by 12.9%, by 6.1% two quarters ago, and by 1.8% three quarters ago – so clearly, there is an acceleration that got the market really excited. To the best of my knowledge, billings never missed before (at least in recent years). When you go from that kind of bullish dynamic to a miss, trouble ensues – don’t blame me, that’s just how the market works.
http://seekingalpha.com/article/4003466-party-salesforce-com-terrible-q2-earnings
- Salesforce To Launch AI Product, Einstein
The company is hoping Einstein, the Artificial Intelligence product it is working on introducing to the world, will propel her to fresher growth.
Salesforce’s Dreamforce conference hold in San Francisco and the event typically draws around 170,000 attendees. The company believes this will be the perfect time and place to formally make the big announcement.
It could be recalled that Salesforce acquired a handful of artificial intelligence companies in the last two years and Forbes believes this coming announcement explains those decisions. Other companies to have towed the same path in the past include Google and Microsoft.
http://stocknewsusa.com/2016/08/26/salesforce-launch-ai-product-einstein-stocks-rise-announcement/
- Salesforce CEO Marc Benioff indicates his rivalry with Microsoft is back on
Their purchase of Quip is a direct threat against Microsoft…“We have to have productivity built in. All of our applications need to have core productivity applications, whether it is email, like with Salesforce Inbox or spreadsheets or word processors like Quip, live documents. All of that has to be an integrated part of what we are doing. We believe that strongly. We have obviously done a lot of great work with Microsoft as well, with their products. We have now our own product in this category. And this is going to be really important for us going forward and it’s the reason that we bought Quip.”
http://www.businessinsider.com/salesforces-marc-benioff-ups-rivalry-with-microsoft-2016-9?r=UK&IR=T
- Why the container community is wrong to whine about Docker
Predictably, everyone wants in on this Docker action, though few are as honest about that interest as Red Hat’s Riek. Though he stresses he doesn’t speak for Red Hat, it’s not hard to believe that his concerns would be widespread within the open source giant, not to mention other vendors. Declaring “containers as the future of the Linux OS and application-centric IT,” Riek questions “the aggressive way that Docker Inc is trying to control the Docker open source project.”
http://www.techrepublic.com/article/why-the-container-community-is-wrong-to-whine-about-docker/
Photo: Blake Richard Verdoorn
SourceCast: Episode 37: Down and Dirty
SourceCast: Episode 36: Who Watches the Watchmen?
Supplier Report: 8/13/2016
IBM has managed to agitate an entire continent this week by being at the center of IT problems occurring with Australia’s online census. The Prime Minister has gone on record saying “heads will roll”…
Acquisitions are still going strong: HPE bought SGI, Randstad bought Monster.com, Apple purchased Turi, and IBM might buy Imperva.
Oracle and Microsoft are both dealing with potential information breaches while EMC is facing an existential crisis… can they compete with AWS?
IBM
- IBM’s Watson won Jeopardy, but can it win business from banks?
IBM’s pitch to banks is that Watson can do everything from answering customers’ questions in retail branches to detecting credit card fraud to helping wealth managers make better investment recommendations for their clients.
Bank technology executives said the minimum cost of using software like Watson, including due diligence and training, could reach a few million dollars. It is not uncommon for a full-scale implementation to cost in the tens of millions of dollars, said the executives, who were not authorized to talk to the media.
An IBM spokeswoman noted companies can develop their own applications using Watson’s underlying code if they do not want to pay for a full-scale implementation. The company declined to give details of the software’s costs.
- Will IBM buy Imperva?
IBM is the top potential suitor for Imperva (NYSE:IMPV), but big blue may have to outbid both Cisco (NASDAQ:CSCO) and Juniper (NYSE:JNPR). Imperva is working with Qatalyst on a sale after succumbing to pressure from Paul Singer’s Elliott Management.
http://seekingalpha.com/article/3997245-ibm-bidding-war-brewing
What is Imperva?Imperva is a leading provider of data and application security solutions that protect business-critical information in the cloud and on-premises. Founded in 2002, we have enjoyed a steady history of growth and success, generating $234 million in 2015, with over 4,500 customers and 300 partners in more than 90 countries worldwide.
- IBM under fire as census blame game starts
Information has begun to emerge about the confluence of events that led the ABS and IBM to take the site down on census night, which show IBM and ABS staff misinterpreted data and were spooked by fears of a damaging data breach following a fairly standard security threat known as a distributed denial of service (DDoS) attack.
The website problems were initially blamed on the DDoS attack, which would have made the site inaccessible to users by bombarding it with thousands of logins at once.
However, it was later confirmed that the ABS and IBM decided to take the site down due to security concerns
http://www.afr.com/technology/ibm-under-fire-as-census-blame-game-starts-20160811-gqqkdu
- What IBM Doesn’t Want You To Know
My takeaway from this interview is merely more solidarity in my original thought on IBM: Great company, awful management. Are these concepts mutually exclusive? No, but they are correlated.
For investors who have unanswered questions on IBM’s cloud competitiveness, perhaps this interview was unsatisfying. I also was expecting more information, as I would like to add to my analysis on my comparison of worthy cloud investments. But for now, we must wait until IBM’s next earnings report.
For now, investors must decide whether to support the shell or the ghost inside. I think that a good enough machine can run decently even with a poor operator. Even if you were to attempt to bring IBM down from the inside, you would have quite a task on your hands.
- IBM finally renews with Vodaphone
Vodafone has renewed its system intergration deal with IBM. The system integration deal is valued at around USD 900 million. The system integration is likely to be outsourced further with small vendors also taking a small part in the deal.
Microsoft
- Microsoft accidentally leaks golden keys that unlock every Windows device
The leak was uncovered by two security researchers MY123 and Slipstream, who revealed in a (Star Wars-style) blog that the security flaw allowed malicious entities with admin rights or physical access to a device can bypass Secure Boot to not only run other operating systems (OS) like Linux or Android on the device but also install and execute rootkits and bootkits, at the most deeply penetrated level of the device.
http://www.ibtimes.co.uk/microsoft-accidentally-leaks-golden-keys-that-unlock-every-windows-device-1575542
Microsoft leaks Secure Boot credentials, shows why backdoor ‘golden keys’ can’t workThis particular flaw is only going to be of interest to people that want to run different operating systems on an ARM-based tablet or who want to put Linux on an x86 device that shipped with Secure Boot enabled. Microsoft has already patched the problem and as security flaws go, it’s not huge in and of itself. What it does show, however, is the folly of relying on the idea that backdoors can be locked down and perfectly controlled.
Storage
- This former EMC exec says Amazon ate his old business and it will never recover
That traditional storage market, where companies buy specialized hardware called storage arrays to hold and manage corporate data, is never coming back, says Mark Lewis, a longtime storage exec, who was once EMC’s CTO and chief strategy officer.
There are two reasons for the death spiral, he says:
1. Storage technology continually gets faster and cheaper.
2. Amazon changed the game.http://www.businessinsider.com/amazon-ate-emc-says-former-emc-exec-2016-8
- Dell squashes rumors that EMC’s Ambulos is leaving
It said in a statement to CRN: “It is categorically false that Gregg Ambulos will leave Dell after the completion of the merger. Gregg will be key player in the future organisation, a proven industry leader with deep and trusted relationships with channel partners, and will be an important executive as we build the channel business for Dell EMC.”
http://www.channelweb.co.uk/crn-uk/news/2467703/dell-squashes-rumours-that-emcs-ambulos-is-leaving
Oracle
- Russian hackers appear to have infiltrated up to 330,000 computer cash registers sold by Oracle
“Oracle Security has detected and addressed malicious code in certain legacy MICROS systems. Oracle’s Corporate network and Oracle’s other cloud and service offerings were not impacted by this code. Payment card data is encrypted both at rest and in transit in the MICROS hosted environment.
“To prevent a recurrence, Oracle implemented additional security measures for the legacy MICROS systems. Consistent with standard security remediation protocols, Oracle is requiring MICROS customers to change the passwords for all MICROS accounts.
“Information for customers on how to change your passwords has been published on My Oracle Support (Doc ID 2165744.1). We also recommend that you change the password for any account that was used by a MICROS representative to access your on-premises systems.”
http://www.businessinsider.com/russian-hackers-attack-oracles-cash-registers-2016-8
Oracle CSO Mary Ann Davidson on Security: Oracle, still clueless about securityIn 2012, for example, Davidson lambasted the Payment Card Industry Security (PCI) Standards Council for requiring “vendors to disclose (dare we say ‘tell all?’) to PCI any known security vulnerabilities and associated security breaches.” Or, as she put it more succinctly, “tell your customers that you have to rat them out to PCI.”
She added, just to make it perfectly clear where she’s coming from, that information on security vulnerabilities at Oracle is on a “need to know” basis.
http://www.computerworld.com/article/2975780/security/oracle-still-clueless-about-security.html
- Oracle’s Data Breach May Explain Spate of Retail Hacks
The MICROS system compromise could explain why so many shops, hotels, and retail outlets have been suffered breaches at their point of sale systems in the past months, said Avivah Litan, an analyst in Gartner IT -0.03% . Asked whether she believed that this breach has something to do with a recent spate of stolen payment card data in retail andhotel hacks, Litan told Fortune, “I think it’s very likely.”
http://fortune.com/2016/08/08/oracle-data-breach-retail-hacks/
- Oracle says it didn’t ask employee to cook cloud accounts
The software and cloud computing giant appears to be fleshing out its original stand that the employee had been terminated for poor performance and not as a whistleblower, which would give her a number of protections under securities laws.
In a filing in June in the U.S. District Court for the Northern District of California, Svetlana Blackburn, a senior finance manager for North America SaaS/Cloud Revenue, alleged that her superiors had instructed her to “to add millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers,” an act that she had warned was improper and suspect accounting.
http://www.cio.com/article/3105985/oracle-says-it-didn-t-ask-employee-to-cook-cloud-accounts.html
Other
- Apple acquires Turi, a machine learning company
Apple declined to comment on the financial terms of the deal, but Geekwiresuggests that it was upwards of $200 million.
This isn’t the first acquisition Apple has made in the AI/machine-learning space. It acquired Perceptio, a company that specialized in machine learning and image recognition, back in September 2015.
https://techcrunch.com/2016/08/05/apple-acquires-turi-a-machine-learning-company/?ncid=rss
- Salesforce CEO Sees News Of Oracle’s NetSuite Deal As Mere Drop In Pond
“We would not expect the combination of these companies to create any meaningful technology/product synergies,” he said.
- Will Meg Whitman pick head or heart?
Whitman is continuing to shrink the house that Hewlett and Packard built and that her predecessors Carly Fiorina and Mark Hurd greatly expanded. That would make it easier to swallow up. In May, the company announced plans to merge its services arm into rival CSC in a deal worth $8.5 billion. (Hewlett-Packard had bought EDS, the heart of the division that’s now being sold off, for $13.9 billion in 2008.)
Richard Kugele, an analyst with Needham & Co., estimates that a buyer would need to pay nearly $50 billion for the company, a 40 percent premium over its current market value.
http://www.sfchronicle.com/business/article/Will-Meg-Whitman-pick-head-or-heart-9135032.php
- Hewlett Packard Enterprise acquires high-performance computer company SGI in $275 million deal
Hewlett Packard Enterprise (HPE) is to acquire SGI, the company formerly known as Silicon Graphics, for $275 million in cash and debt, equal to around $7.75 per share. HPE says the move will help its push into the big data analytics and high-performance computing (HPC) markets.
SGI has approximately 1100 employees worldwide and brought in $533 million in revenue in its 2016 fiscal year, according to the statement – a drop from the $767 million it made in 2013. Its HPC and big data analytics products are used in the scientific, technical, business and government communities.
- Randstad To Acquire Monster For $429 Million
My colleague John Zappe, who has covered the company for years, said in 2011 Monster was a “takeover target” and noted that there’d been 20 or so rumors of a sale. Then, he said the company’s market cap was about a billion dollars, after decreasing by billions. Randstad, which has about 30,000 employees in 39 countries, will pay $429 million for Monster now.
http://www.eremedia.com/sourcecon/randstad-to-acquire-monster-for-429-million/
Photo: Kale Nimz