June 18th, 2009
Original Web Article: Why Dell should buy Palm
Review Summary:
Dell needs to move quickly if it is to keep its numbers up as PCs continue to commoditize. Dell needs a new consumer play and there isn’t time to sit around architecting one. Dell needs Palm.
Review/Analysis:
Dell is a great company. Smart people. Good products. Global infrastructure. Commoditizing markets. Thin margins.
Three choices: 1) Hunt for another EDS, or piece-meal acquisitions, and try to compete in the services space with HP and IBM. 2) Attack the small to medium business (SMB) market. 3) Expand their considerable presence in the consumer space.
So, let’s look at the three choices:
Enterprise: If they want to spend a lot of money they could try for an Accenture(NYSE:ACN) or Computer Sciences Corp. or even CapGemini. For less money they could get a Keane. Where would that leave them?
Small/Medium: The SMB market had been hard for all of the big boys to crack. ATT(NYSE:T), Verizon(NYSE:VZ), HP, IBM…no one does it well. Can Dell?
Consumer: Dell has nailed the consumer market before. There are many options, but Dell has to get away from dependence on PC sales.
Almost everyone assumes Dell is going to do the first one and attack the enterprise space along with HP and IBM. Why do they assume this? Because the money is in services, solutions and recurring contracts. But, the risks to Dell are staggering. Dell is not an enterprise service company. It will have a hard time changing that perception and its management are, well, the wrong folks for entering the enterprise market.
Dell has already showed its interest in the SMB market. With the announcement of the expansion of their ProManage managed services and an agreement with ATT, Dell just might be able to pull this one off where others have failed.
What is Dell really good at? Packaging. Consumer products.
Will Dell abandon its roots and enter a highly competitive IT enterprise services market with everyone fighting tooth and nail? Will Dell risk its future on the small/medium business market where almost everyone has already failed?
Dell is a great product company. They need to use that greatness to their advantage. Leading consumer electronics companies are having hard times right now. Look at Motorola. Probably too expensive, but a possible merger? Look at Palm. Having some problems, but really good foundational technologies.
Palm could give Dell the fast entry it needs. With Dell’s international network of assemblers Dell could slash production costs and help work the kinks out of Palm. Palm would give Dell the technologies it needs to come to market first with many new consumer offerings.
HP’s iPaq is a non-competitor. Motorola(NYSE:MOT) is missing the boat. RIM hasn’t figured out what cool device looks like. The Sony(NYSE:SNE) Satio and other devices are still two quarters away.
A match made in heaven. But, Dell better move fast.
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 18th, 2009
Original Web Article: H-P Recruits Alcatel for Cisco War
Review Summary:
Cisco(NASDAQ:CSCO) jumped into the enterprise server space with the introduction of its Unified Computing System (UCS(JNB:UCS)). Now it is competing against its former partners IBM(NASDAQ:MSFT) and HP. Did Cisco(NASDAQ:CSCO) under estimate the fallout?
Review/Analysis:
In March, 2009, when Cicso announced its entrance into the enterprise server market, Cisco(NASDAQ:CSCO) broke through the traditional barriers that existed between the network vendors and the server vendors. Many speculated that Cisco(NASDAQ:CSCO) might have gone too far (’Cisco Steps on Server Giants’ Toes’). The biggest projected impact would be on major Cisco sales partners IBM(NASDAQ:MSFT) and HP.
Cisco’s(NASDAQ:CSCO) move was not unexpected. In fact, the push-me/pull-you between Cisco and HP had been yanking back and forth for years. HP wanted to enter the home networking market and Cisco(NASDAQ:CSCO) balked. HP avoided emphasizing some of its products to avoid irritating Cisco which purchased well over $500M in equipment from HP.
HP is not all innocent in this game. HP had been prepping for a long time to move into many territories that could have been construed as Cisco(NASDAQ:CSCO)’s. The expansion of the ProCurve line with the acquisition of Colubris started to show HP’s cards and Cisco(NASDAQ:CSCO) undoubtedly started to twitch.
Undoubtedly, the acquisition of EDS by HP brought home to Cisco the need to quickly get into the IT infrastructure and enterprise server markets. Otherwise, Cisco would be partially stuck in the same tar pit that is crushing Nortel(TSE:NT) and has had a strangle hold on many other telecom equipment providers. Cisco(NASDAQ:CSCO) had to move and move fast or be left behind as an also ran in the enterprise solutions space.
The Alcatel-Lucent(EPA:ALU)(ALu)/HP ten year agreement is a great deal for HP. Even without many details, it is obvious that the HP/EDS group will be doing a major overhaul of the Alcatel-Lucent data centers and EDS will be absorbing ALu staff. HP will also benefit from the expanded offerings of ALu’s(EPA:ALU) products and exposure to major ALu customers.
I think Alcatel-Lucent(EPA:ALU) got the short end of the stick in the agreement. The volume of sales from the HP alliance will likely be small, and there are lots of very good competitors in the product areas that Alcatel-Lucent(EPA:ALU) is bringing to the agreement. But, it’s better than emulating Nortel.
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 18th, 2009
Original Web Article: Them’s Fightin’ Words: Cisco Says HP-Microsoft Alliance Cuts Out PartnersReview Summary:
The recently announced alliances between HP & Alcatel(EPA:ALU) and HP & Microsoft(NASDAQ:MSFT) takes another swing at Cisco. Cisco(NASDAQ:CSCO) better stop ducking and start swinging.
Review/Analysis:
When Microsoft(NASDAQ:MSFT) and HP announced their expanded alliance and the investment of $180M on unified communications and collaboration, Cisco(NASDAQ:CSCO) said it “lacks the power of Cisco’s network”. I knew HP had their own global network for their Halo product suite, but I concurred in principal with Cisco. Not anymore.
When Alcatel-Lucent(EPA:ALU) (ALu) and HP announced their alliance today and that Alcatel-Lucent(EPA:ALU) would provide software components and HP would do ALu’s data centers, they forgot to mention the network capabilities that Alcatel-Lucent(EPA:ALU) brings to the collaboration table. I suspect that these are not a direct part of the ALu/HP alliance, but are Alcatel-Lucent’s(EPA:ALU) cards to play.
Undoubtedly, we are looking at a three way alliance forming between Alcatel-Lucent(EPA:ALU), HP and Microsoft. The possibilities boggle the mind.
Cisco(NASDAQ:CSCO) is good. Cisco is very good. But, I am betting on the new threesome to win in the collaboration market.
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 17th, 2009
Original Web Article: Dell Looks To Ramp Up Acquisitions For Growth
Review Summary:
Michael Dell is no slouch and is leading his company into new arenas. Dell recently moved on the SMB space with ATT. Now Dell is gearing up for acquisitions. Data Centers? Hand Helds? New Arenas?
Review/Analysis:
The commoditization of the PC and pursuit of recurring enterprise contracts has caused major shifts in market players HP (acquisitions of LeftHand, EDS), Oracle(NASDAQ:ORCL) (acquisition of Sun(NASDAQ:JAVA)), Cisco(NASDAQ:CSCO) (acquisitions of Richards-Zeta and Pure Digital) and IBM(NASDAQ:MSFT) (acquisitions of Transitive and Exeros). Dell has no choice but to follow suit. Or does it? Many are speculating that Dell will attack the same enterprise data center space.
Michael Dell has a history of innovation. He can think way outside the box. The current box: data center consolidation, outsourcing, virtualization and storage changes (deduplication, RAID-on-a-chip, SSD).
So, the question is will Dell act conservatively and jump into the same box with IBM(NASDAQ:MSFT), HP, Oracle(NASDAQ:ORCL) and Cisco. Or, will they attack the consumer arena (that has been so good to them) in new ways. Apple(NASDAQ:AAPL) did it and won big. Dell is very capable of doing the same thing.
Since Dell has already announced new positions within the SMB space, I would look for them to do two things over the next six months:
1) Strengthen their position in enterprise.
2) Evolve their position in the consumer space.
Possible acquisitions in the enterprise space: NetApp(NASDAQ:NTAP), Brocade(NASDAQ:BRCD), Emulex(NYSE:ELX), QLogic, BMC, 3Com(NASDAQ:COMS)
Possible acquisitions in the consumer space: Motorola(NYSE:MOT), Palm, IRiver, High Tech Computer.
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 17th, 2009
Original Web Article: PMC - Sierra Up 71% Since SmarTrend’s Buy Recommendation
Review Summary:
PMC-Sierra’s(NASDAQ:PMCS) new 6Gb/s SAS chipset is only part of the reason that PMC-Sierra(NASDAQ:PMCS) is on the upswing. The real reasons start with the ‘blink’ factor and Cisco(NASDAQ:CSCO), HP, IBM, Oracle(NASDAQ:ORCL), Sun(NASDAQ:JAVA), Brocade(NASDAQ:BRCD), ATT(NYSE:T) and many others. Who would blink first and shift between the competitor vs vendor categories.
Review/Analysis:
The astounding rise in PMC-Sierra’s(NASDAQ:PMCS) stock price is driven by much more than the release of a faster RAID chipset.
In the past, it was easy to place a major company in a particular category or market like telecom, data center, system integrators, etc.:
- Network Vendors - Cisco(NASDAQ:CSCO), Alcatel-Lucent(EPA:ALU), Nortel…
- Server Vendors - HP, IBM(NASDAQ:MSFT), Dell…
- Storage Vendors - EMC, NetApp…
- Telecom Providers - ATT(NYSE:T), Verizon…
- System Integrators - IBM(NASDAQ:MSFT), Accenture(NYSE:ACN), CapGemini…
The world has changed in the last six months. I have been waiting for the last five years for someone to ‘blink’ and start competing against their vendors and customers. Oracle(NASDAQ:ORCL) blinked and bought Sun. Cisco(NASDAQ:CSCO) blinked and entered the enterprise server market. And now the shifts are occuring at lighting speed as companies realign with new partners, make new acquisitions and enter new markets.
The key market of the hour is the data center. This includes outsourcing, cloud computing, consolidation, virtualization, deduplication and many other buzz words du jour.
And now there is a perfect storm in the storage arena. In-line deduplication combined with raid-on-a-chip combined with solid state drives allow data to move almost as fast outside the processor as inside. Virtualization allows maximum usage and sharing of processor and storage resources. Cloud computing allows sales to new customers that could afford the old data center models. Software as a Service allows utilization of best of breed (or good enough) platforms by customers who previously couldn’t afford to utilize packages like ERP.
The changes that are coming:
- Acquisitions by major system integrators of companies in the deduplication, virtualization, storage management arenas.
- Rise of software companies that are not best of breed in the large enterprise space, but are ‘good enough’ in the SMB space.
- Attacks on markets that were traditionally hard to attack. SMB’s, remote globals.
- More major shifts by companies like HP, IBM(NASDAQ:MSFT), Cisco(NASDAQ:CSCO), Dell.
- Explosion of Software as a Service.
David Croslin
President, Innovate the Future, Inc.
david@innovatethefuture.com
www.innovatethefuture.com
www.davidcroslin.com
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 16th, 2009
Original Web Article: Verizon Business battles ‘network’ perception
Review Summary:
Verizon purchased MCI, a little over three years ago, to gain access to an enterprise customer base, a global IP network and the Federal government’s Networx contract. MCI, as the article points out, was not really a vertical market player. Renaming MCI to Verizon Business did not miraculously create the solution offerings needed to become a viable competitor in the data center, service integration, and business process markets. With little investment in new solution product offerings, staff and distinguishing intellectual property, Verizon Business is left trying to play the ‘global IP network’ card with little success.
Review/Analysis:
Everyone wants to get into the ’solutions’, ‘management’, ‘data center’, ‘virtualization’ markets. The goal is to find a customer base that has deeper pockets, is less subject to churn, can provide stable recurring revenue and can be counted on for expanded purchases.
The easily defined categories of the past ‘telco’, ‘vendor’ and ’service provider’ have all been muddied since the bubble popped in 2001. HP bought EDS. IBM has Global Services. Cisco(NASDAQ:CSCO) is shifting into servers and data centers. ATT and Verizon are doing cloud computing.
Reviewing Verizon Business’ “data center” offerings shows them to be mostly co-location opportunities backed by a ‘global IP network’. “Virtualization” is a consulting offering to evaluate your servers using VMWare tools to try to bring in VMWare and new servers.
Making an alliance with Accenture will probably not help a great deal. Accenture is a large enterprise player. Large enterprises will listen to Accenture and then buy their data center/management services from a large, flexible service integrator with a proven track record and a large pool of available consultants.
Perhaps VzB should consider the SMB markets? They could:
- Partner with companies like Epicor, Brocade and other companies with great product sets. Forget about SAP, VMWare, etc. Those are too expensive for the SMBs.
- Partner with vertical SIs in large markets to handle the actual lifting and hauling.
- Spend $20M to buy server/storage infrastructures for their data centers.
- Use their existing 200+ data centers for more than co-lo. Use them as the foundations for true data center offerings.
With relatively minor investments (for a company the size of Verizon) and in a short time-frame VzB could become a major player in the SMB market. This would create the trust factor that large enterprises need to have. Then VzB can move up the ladder and benefit from an Accenture alliance.
Otherwise, IBM, HP/EDS, Cisco, Oracle/Sun and many others will deliver a quick, killing blow to Verizon Business.
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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June 4th, 2009
Original Web Article: 3Com Goads Cisco with H3C Push
Review Summary:
3Com’s(NASDAQ:COMS) H3C enterprise networking unit has picked the perfect time to attack global markets. The market competitors are experiencing disruptions in traditional vendor/OEM alliances, shifts between multiple sales channels, product consolidations and increasing head to head competition. All of these disruptions create a window of opportunity for a H3C to become a dominant global seller.
Review/Analysis:
Penetration into the enterprise/government spaces is normally extremely difficult. Especially if it requires creating new channel relationships and solution partners. Fortunately for H3C, the entire enterprise, government and SMB markets for networking, storage and data center products are on the edge of massive tectonic shifts.
Traditional alliances are collapsing as evidenced by the strong rhetoric from Cisco(NASDAQ:CSCO) towards HP (Cisco Ready to Throw Punches Against HP - The Channel Wire). Recent acquisitions by key players (Oracle’s(NASDAQ:ORCL) Sun(NASDAQ:JAVA) Deal - A Closer Look - BusinessWeek) are further redifining what product blends will be solution offerings. Major shifts in channel sales (Hewlett-Packard() are dissolving existing sales teams and customer relationships. And entrance of key competitors throughout the networking, storage and data center markets (Dell Unveils Nationwide Managed Services Solution Designed for Small and Medium Businesses - Reuters(Chi-X:RTR.L)) are greatly expanding the number of potential partners.
All of these activities and many others are destablizing the traditional competitive landscape in H3C’s markets and are creating a host of new opportunities for H3C to develop new partners, new channels and new markets.
David Croslin
President, Innovate the Future, Inc.
david@innovatethefuture.com
www.innovatethefuture.com
www.davidcroslin.com
SPEAK WITH THE AUTHOR:
David Croslin consults on this and many other topics through Gerson Lehrman Group. To contact David directly or request a consultation please click here.
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April 6th, 2009
Part of the problem with innovation today is the broad definitions that are being applied to the words involved. In reality, most people mean an ‘invention process’ followed by marketing that creates an innovation.
In this case, ‘radical innovation’ means innovating a new product or a new market, whereas incremental innovation would be adding innovations to an existing product/market. Radical innovation is often referred to as ‘disruptive’ innovation because the innovation disrupts existing products and markets.
All companies follow a similar lifecycle that eventually leads to:
1) Commoditized products
2) Destructive incremental innovations
3) Internal instead of external innovations (costs versus revenues)
ALL companies must do disruptive (’radical’) innovation if they want to continue to succeed. Utilizing targeted innovation techniques it is possible to deliver disruptive innovations in far less time than the standard 3 to 7 years. This standard, multi-year time frame is a reflection of the normal randomness of most innovation processes. Targeted innovation, the process patented by Innovate the Future, Inc., eliminates the randomness and allows a clear analysis of market potential, revenue potential and minimization of risk. Delivery of innovations to market can occur in weeks instead of years.
David Croslin
President, Innovate the Future, Inc.
david@innovatethefuture.com
www.innovatethefuture.com
www.davidcroslin.com
Posted in Company Lifecycle, Innovation, Innovation Lifecycle, Market Lifecycle | No Comments »
April 6th, 2009
Most successful executives are inherently not risk averse. They understand the need to invest in order to reap a return.
The key is that proponents of a new invention and potential innovation do not approach the executives with a sufficient business plan that reflects the value of the innovation to the customer, the impact on new and existing markets, the internal and external costs and the impacts on future revenue streams.
Unfortunately, answering these questions about a future innovation is extremely difficult unless the invention has been founded in a innovation process that starts with market recognition and then moves into invention, productization, marketing and innovation. The process today is all too often completely backwards and is driven by existing customer feedback.
The key is to follow a clearly defined invention/innovation process that starts with recognizing a target market and attaching resources based on potential and not based on random results from existing management processes.
David Croslin
President, Innovate the Future, Inc.
david@innovatethefuture.com
www.innovatethefuture.com
www.davidcroslin.com
Posted in Company Lifecycle, Innovation, Market Lifecycle | No Comments »
April 6th, 2009
Innovation should be more targetable than it is today.
All of the ‘innovation processes’ proposed today by innovation consultants, except those used by Innovate the Future, seek to:
1) Increase the frequency of random creativity by ‘empowering employees’
2) Increase the odds of ‘catching’ a random innovation by changing management style
3) Telling executives to take more risk with potential innovations
All of these merely wrap the current randomness of discovery and innovation. They don’t actually drive targeted innovation.
The book The Innovation Equation by Jacqueline Byrd proposes the equation:
Innovation = Creativity * Risk Taking
This is a perfect reflection of the pure randomness of innovation today. Increase the number of people randomly creating and increase taking risks and you will eventually find a viable innovation from random events.
Innovate the Future’s patented Targeted Innovation process does not require more people, a change in management or an increase in risk taking. It is driven by targeting your market, creating targeted inventions and deploying targeted innovations. Deployment can occur in weeks or months, not years.
David Croslin
President, Innovate the Future, Inc.
david@innovatethefuture.com
www.innovatethefuture.com
www.davidcroslin.com
Posted in Innovation | No Comments »
