The following is a post I put together based on a talk I gave at TechRepublic's community powwow last week in Louisville. The mission: Handicap the business technology winners and losers so far in 2011.
As I thought through the winners and losers---I'm a financial nerd more than a tech one so I incorporated a lot of earnings conference calls---it became apparent that 2011 was really a year of massive shifts. Like the stock market, the tech vendor landscape has been volatile. As an IT buyer, that volatility can be downright alarming. Why? You could buy gear from a vendor headed for the dustbin, or what IBM CEO Sam Palmisano called the boneyard of tech.
With that said, here's a look at how I went about selecting key winners and losers so far this year. We'll start by sector working from inside the data center and going out from there.
Data center guts (servers, storage, networking, integrators): Winners: IBM, EMC, NetApp, Intel
- IBM is riding a mainframe cycle, new Power systems and managed to get a lot of PR out of its Watson Jeopardy showdown. Now baby Watsons are going to be used in call centers, hospitals and other areas. Those headlines manage to pull a lot of software, hardware and services along with it.
- As for EMC and NetApp, recent months have featured a run on storage acquisitions. HP and Dell have both pulled the trigger on storage acquisitions, but pure plays still rule the roost. EMC and NetApp continue to thrive. After all virtualization needs a lot of storage.
- Intel's Xeon franchise is surging in servers. Even though Intel faces questions about the tablet and smartphone market, the data center market is locked down.
Losers: HP, Cisco, Oracle
The loser category may both feature turnaround stories in the not too distant future. HP has been a mess for three quarters and enterprise buyers have to be wary. The PC business is being spun off, HP is overpaying for Autonomy and the TouchPad is dead. It's a soap opera not an IT giant.
- Cisco took its body blows early due to slowing sales and a bad turn in the consumer business. However, it got focused quickly, fixed costs and now is looking to punch HP in the mouth after months of networking pain. My guess is Cisco won't be in the loser category too much longer.
- Sun customers at TechRepublic Live were not big fans of the Oracle acquisition. Customers panned the lack of support for Sun gear. Oracle has been focusing its hardware efforts on the high end and neglecting those who bought Sun commodity gear. Although Exadata may be a big hit for Oracle, former Sun customers appear to be stuck.
Work in progress: Dell
As for Dell, I like what the company is building with its SaaS acquisitions. Sure, Dell is building a stack of stuff and would love to sell you servers, storage and networking like everyone else, but its open architecture message makes sense. And it is leaving its SaaS acquisitions alone to grow.
Enterprise software: Winners: VMware, Oracle, SAP, Microsoft, Red Hat
- VMware continues to dominate the virtualization model and is moving up the software stack. In many respects, VMware reminds me of the company it derides---Microsoft. VMware wants to be the cloud OS and has other lines with it---Zimbra, SpringSource etc. I can find customers worried about lock-in, but they don't seem to be running for the exits.
- Oracle is well, just Oracle. The company's margins are stellar, it has promising hardware with Exadata and could theoretically punch IBM in the mouth someday. Customers may be wary of Oracle and the licensing model, but they stay.
- SAP is the application king and after a few years of turmoil with Leo Apotheker, the company is singing a nice mobile tune. I'm surprised how well Sybase has worked out for SAP.
- Microsoft is driven by its business software unit, notably Office and SharePoint. All you have to do is look at the earnings report and you realize that enterprises are fueling Microsoft right now. Azure also looks promising.
- Red Hat is on track to be the first $1 billion open source software company. JBoss looks strong, Red Hat enterprise Linux thrives and there's not much you can complain about.
Losers: CA, Sage
In the loser bin, the biggest odd duck I had was CA. The problem for CA is the same one it has had for years: It's cobbled together and management can't outline a vision. CA may have a vision, but it certainly can't communicate it. The results are plodding.
The audience at TechRepublic Live 2011 also added Sage to the loser category. A few folks said Sage was just as cobbled together and being tossed.
Cloud: Winners: Amazon Web Services, Salesforce.com, NetSuite, Workday, SuccessFactors
- Amazon Web Services will be Amazon's largest business and if it can ever figure out how to do enterprise agreements and play the account management game it will be very dangerous. AWS is good enough for government work and probably your shop too.
- Salesforce.com continues to gain traction and I think it's on to something with this social enterprise argument. Chatter could become a standard.
- NetSuite continues to land ERP accounts. Most likely outcome for NetSuite is that it continues to grow and then Larry Ellison, who already owns half the company buys the rest and makes it an Oracle unit.
- Workday is the company that scares SAP and others. For services companies, ERP may mean Workday. Workday is primarily all about HR today, but watch its foray into financials very closely. There's a 2012 IPO on deck.
- SuccessFactors is another HR play that is installed everywhere. The business execution vision is interesting and has promise.
Losers: The market is doing too well for now, but a shakeout looms.
Work in progress: Google Apps
As for the work in progress, Google Apps appears to be focused on the midmarket these days. Google Apps is now commonplace, but I want to see what's next.
PCs Winners: Lenovo, Apple, Dell
- Lenovo's gains of late have been nothing short of stunning as it rides the enterprise upgrade cycle. I like the ThinkPad tablet for uniqueness---I have no idea how it'll sell though.
- Apple: Macs are increasingly in the enterprise and I suspect that there will be more of them. Tim Cook, Apple's new CEO, seems much more enterprise friendly than Steve Jobs, who allowed the company to sell into corporate accounts, but basically was all about the consumer play.
- Dell: Dell is selling into the corporate PC upgrade cycle too and generally doing well. Profitability leaves something to be desired for the PC business. Dell could---arguably should---drop the consumer fascination.
Acer was about netbooks only is halfway interested in tablets and it's questionable where this brand heads.
Work in progress: HP
HP is the second most profitable PC maker behind Apple so you can't call it a loser. However, the PC spin-off communication was botched and uncertainty rules. Until HP clarifies its plans, HP's PC unit may struggle.
Mobile Winners: Samsung, Google, Apple, HTC, Verizon, AT&T
I lumped hardware, software and carriers together here.
Clearly Android is a key winner. Android is dominant and carries Google services and a few hardware makers along for the ride. Samsung and HTC are the top dogs in the Android world. It's quite an Android army. One nit: Android feels to geeky to me. In fact, it reminds me of a mobile Windows 3.1.
Apple as a winner is a no brainer. The iPhone and iPad dominate. In fact, no other tablet maker has come close to denting the iPad. Frankly, it's sad that Apple caught the industry so flat-footed that rivals haven't been able to close the gap for years.
At the beginning of 2011, it looked like Verizon and AT&T were going to kill each other once Verizon got the iPhone. Nothing happened. The two companies own U.S. wireless service.
Losers: RIM, Nokia, Microsoft
As for the losers, RIM strikes me as a mess. The PlayBook is troubled. RIM overpromises and underdelivers. I need to see a few quarters of sustained BlackBerry 7 device sales before I even consider thinking differently about RIM.
Nokia and Microsoft are losers until proven otherwise. Nokia is a mess and is betting on Windows Phone 7, which hasn't really gained much traction. Windows Phone 7 is a sweet OS and arguably second only to Apple's iOS. The problem is no one is buying Windows Phone 7 devices in volume. That's where Nokia comes in. Both companies have to prove they can compete as a unit. And don't get me started on Microsoft's continued no-show in the tablet market.
Works in progress: Sprint
And finally, Sprint is an interesting work in progress. Customer service has improved and the budget pricing is easy to understand. However, Sprint has a garbled network vision with WiMax and LTE and a balance sheet time bomb via its Clearwire partnership. On the bright side, Sprint is getting the iPhone. If the network holds up, Sprint may be up for renewal.
Companies worth watching:
Here are a few companies I find interesting to watch:
- Citrix: An interesting mobile story and desktop virtualization play. One thing to watch regarding Citrix is the costs involved on the back end if you use it for desktop virtualization. Ditto for VMware. Moka Five has good story to tell about local/cloud and inexpensive implementations relative to the bigger dogs.
- Riverbed: WAN optimization could go mainstream. The company is chugging along nicely.
- Zoho: This SaaS vendor has a wide selection of apps and is one of the few companies that hasn't shunned the SMB market. Many vendors start SMB and then move up the food chain. Zoho is worth a close look and is a bit of an odd duck: The company has been bootstrapped from the beginning and has no interest in selling out. Operates out of India and Austin, Texas with an office for looks in the Valley.
- Fusion-io: I like its SSD approach to the data center, but need to see more traction.
- Sea Micro: Here's a company that builds kick-ass servers with Atom chips. It also builds and engineers its systems in the U.S. What's not to love?