I recently spent a day with IBM’s x86 team, primarily to get back up to speed on their entire x86 product line, and partially to realign my views of them after spending almost five years as a direct competitor. All in all, time well spent, with some key takeaways:
IBM has fixed some major structural problems with the entire x86 program and it perception in the company – As recently as two years ago, it appeared to the outside world that IBM was not really serious about x86 servers. Between licensing its low-end server designs to Lenovo (although IBM continued to sell its own versions) and an apparent retreat to the upper-end of the segment, it appeared that IBM was not serious about x86 severs. New management, new alignment with sales, and a higher internal profile for x86 seems to have moved the division back into IBM’s mainstream.
Increased investment – It looks like IBM significantly ramped up investments in x86 products about three years ago. The result has been a relatively steady flow of new products into the marketplace, some of which, such as the HS22 blade, significantly reversed deficits versus equivalent HP products. Others followed in high-end servers, virtualization and systems management, and increased velocity of innovation in low-end systems.
Established leadership in new niches such as dense modular server deployments – IBM’s iDataplex, while representing a small footprint in terms of their total volume, gave them immediate visibility as an innovator in the rapidly growing niche for hyper scale dense deployments. Along the way, IBM has also apparently become the leader in GPU deployments as well, another low-volume but high-visibility niche.
Historically, the positioning of Dell versus its two major competitors for high-value enterprise business, particularly where it involved complex services and the ability to deliver deeply integrated infrastructure and management stacks, has been as sort of an also ran. Competitors looked at Dell as a price spoiler and a channel for standard storage and networking offerings from its partners, not as a potential threat to the high-ground of being able to deliver complex integrated infrastructure solutions.
This comforting image of Dell as being a glorified box pusher appears to be coming to an end. When my colleague Andrew Reichman recently wrote about Dell’s attempted acquisition of 3Par, it made me take another look at Dell’s recent pattern of investments and the series of announcements they have made around delivering integrated infrastructure with a message and solution offering that looks like it is aimed squarely at HP and IBM's Virtual Fabric.
International orders grew 34% for HP . . . not this year but actually back in 1964 when non-US orders accounted for 23 percent of HP’s revenues. While the growth of non-US tech revenues is in the news today, HP’s international orders first exceeded domestic orders not recently but as far back as 1975.
In my research on market entry and market opportunity assessment (MOA), I recently spoke to strategists at HP about how they evaluate markets. As I was leaving the building, I stopped in to the HP museum and spent some time with the HP archivist. The highlights of the visit include seeing the first HP device built in the now famous Palo Alto garage and a calculator that brought back memories of my father in his overstuffed chair “figuring out how to pay for college.” I was not only impressed by the history embodied in that room but also with the value that HP places on recording and memorializing its “life” as an organization. Not to sound too sappy but it really brings the company and the industry to life.
I’ve spent the last few weeks reading through some documents on the history of HP’s entry into international markets. There are valuable lessons to be gleaned from their experiences. I’ve written about many of those lessons in reports and blog posts but thought I'd draw out a few of them here.
Forrester’s survey of over 1,000 IT decision makers in North American and European enterprises, only 12% of firms officially support or manage Palm devices. In comparison, 70% of enterprises support BlackBerry smartphones, and 29% support Apple iPhones. Android devices, the newest entrants in the mobile OS wars, have strong momentum and are officially supported by 13% of firms.
Well, that got me wondering how Palm had fared in emerging markets. We know that device preferences are different globally. So, I thought, maybe there are some Palm fans outside of North America and Europe. I checked Forrester’s Global Technology Adoption data from last summer (new survey expected back from the field very soon) in which we surveyed 1,412 IT executives and technology decision-makers across 15 countries. Here is what I found out about PalmOS support across enterprises in a few of the countries:
HP's acquisition of Palm is all over the twitterverse at the moment. And everyone has an opinion on it, and what it means (which brings to mind one of my favorite movie quotes). There are precious few facts around at present - and only time will tell exactly how the acquisition will pan out. Either way, CIOs should know the following facts about HP and the acquisition of Palm:
I spent a couple of days with HP executives this week here in Boston. As I worked there myself for 20 years (up to 2001, so I have distance as well), I’d like to comment about how their enterprise business strategy now looks. Of course, I wasn’t alone there; there were 250 of us. Those who follow my peers in Twitter may already be overloaded with multiple 140-character cuts: my impression is that the tool tends to makes them behave more like adolescent journalists than analysts. Often, they were broadcasting tweets before even noticing that a particular statement was “under NDA”. Vendors will learn to be more cautious in the future; which is not good for us analysts. Anyway, here are my highlights of the HP briefings.
HP’s Converged Infrastructure story includes the pending acquisition of 3COM
Nice to see that HP now has (servers + storage + networking) PLUS power & cooling! Now, HP has Cisco squarely within their sights with this one, dropping statements like “they’re just a $30B vendor while we spend over $50B in our supply chain”; “as soon as we can, we will replace ALL our Cisco gear with 3COM and realize 45% savings”; and “of course, all 3COM products use the same operating environment, unlike them”.
My Take: Well, Cisco started this. They are, indeed, seriously threatened. If HP apply their financial muscle and play the pricing game, Cisco’s business and margins may well suffer. Remember, networking is the highest margin area in IT infrastructure: HP is adding it, Cisco is diluting it. But, I also think that Cisco will make other game changing moves in the next months. HP strategists should not be resting on their laurels, they should be doing scenario planning - and thinking way outside the IT infrastructure box.