IT industry analysis—2009 Week 29—on one page

Catch up on the past week's analysis

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GREEN

• According to Forrester, customers are increasingly putting green criteria for supplier selection at the top of their agenda. These criteria include the energy efficiency of products, the use of sustainable materials and manufacturing techniques as well as whether products are recyclable. It also includes vendors’ commitment to sustainable operations such as policies on carbon emission reporting and employee commuting practices. Forrester said most vendors have at least one-quarter of their existing customers planning green IT engagements. Over 40% of the client base of Accenture, TCS and KPMG plan to hire a service provider for a green IT project in 2009. Forrester expects that the global market for such green IT services will grow by 60% a year, peaking at $4.8bn in 2013. [1]
  
• Forrester also says that the enterprise uptake of environmentally friendly IT products has slowed down for the first time since 2007. 11% of companies surveyed plan to slow down implementation of green IT initiatives, due to the recession. On the other hand, 12% of firms plan to accelerate their green IT initiatives. The study found that cost-cutting is the principal factor for companies adopting green IT programmes, followed by the need to conserve space and avoid building new datacentres. [2]
  
• BT has launched a 'Sustainable Workforce Assessment' service. This consulting-led service aims to help customers understand how flexible working arrangements for their staff, such as remote or home working, teleconferencing and hot-desking, can help reduce costs. By encouraging people to work from home and travel less, organisations should reduce energy consumption, CO₂ emissions and costs.
  

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CHANNELS

• Computacenter reported revenues down 8% in constant currency for 1H09. IT hardware sales are suffering as customers put new projects and system refreshes on hold. This has a knock-on effect on professional and support services: the fewer new systems sold, the less demand there is for the implementation and support services that go with them. Computacenter recognised this earlier in the decade and began to diversify into outsourcing, managed desktop and other contractual services. In the UK, contractual services revenues increased 10% compared with the first half of FY08. [3]
  

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FINANCIAL RESULTS

• Google declared a 3% increase in revenue to $5.5bn in 2Q09. CEO Eric Schmidt boasted of revenue gains from Google Apps sales, mobile ads, and even YouTube display ads. [4]
  
• IBM announced a 13% decline in revenue to $23bn in second quarter, with EMEA falling 20%. Worldwide STG revenues were down 26% to $4bn. Gross profits were down 9% to $11bn, but net profits were up 12% to $3bn. GTS (strategic outsourcing, integrated technology services, and business transformation outsourcing) was down 10% to $9bn in revenue; and GBS (consulting, systems integration, and application outsourcing) had sales of $4bn, down 15%. [5] [6] [7]
  

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SERVERS

• Now that Sun shareholders have approved Oracle's takeover, HP is trying to attract Solaris customers and migrate them to ProLiant or Integrity machines running Windows, Linux, or HP-UX. HP says that Solaris customers pay up to 80% more to run certain workloads on Sun iron than on comparable HP iron. HP is offering Sun shops free migration and TCO assessments if they consider ditching Sun iron for HP boxes. HP is also tempting customers with several financial incentives, such as deferrals of payments on leased equipment for 90 days and 0% lease offerings (in the USA and Canada). HP is also offering software discounts of up to 85%, and education discounts of up to 30%. [8]
  

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PCs

• Intel announced a 12% revenue increase over the previous quarter—its most dramatic growth in 20 years. But the $8bn revenue was still $1.4bn down on the same quarter of a year ago. But enterprise PC spending has not yet joined the party. As CEO Otellini put it: "Consumer purchases led the way, with a strong rebound in mobile-processor shipments." [9]
  
• According to Gartner, worldwide PC shipments totalled 68m units in the quarter, a 5% decline from the same period last year. "PC shipments in Asia/Pacific and the US were better than our expectations, but shipments in EMEA indicated ongoing weakness." [10]
  

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CLOUD COMPUTING

• Viviane Reding, the European commissioner for telecoms, says that European clouds should be set up to encourage small business take-up of on-demand IT services. Reding pointed out that nearly all cloud services are US-owned and US-based, and complained that "once again, the US has started to exploit a business model before Europe has managed to do so. We cannot let this continue. A recent study estimated that online business services could add 0.2% to annual GDP growth, create a million new jobs and allow hundreds of thousands of new SMEs to take off in Europe over the next five years. So what are we waiting for?" [11]
  
• Microsoft has revealed some details of its Azure cloud computing platform, which offers a pay-as-you-go virtual Windows Server to host .Net-based business applications on the internet. Datacentres in the US, Dublin and Singapore will be open in November to deploy applications on what Microsoft is touting as an inexpensive, massively scalable platform, with no hardware management for users. Azure services will have a service price, a charge for data storage and a charge for data traffic. A standard Windows Azure compute unit is $0.12 per hour, with storage charges of $0.15 per GB per month, with 10,000 transactions costing $0.01. [12]
  
• Microsoft has responded within a week of Google's announcement of the Chrome operating system, by declaring that a free version of Microsoft Office will run on the Web next year. Microsoft risks cannibalising one of its most profitable products. (Its business software division, which includes Office, made $9bn profit from $14bn in sales during the first three quarters of its 2009 fiscal year. According to a Forrester survey, about 80% of firms use Microsoft Office.) Microsoft declined to say how it would make money with the move, but hinted that its business model could include advertising and fees for premium services such as online storage of large files. [13]
  

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ACQUISITIONS

• Infrastructure ISV Software AG has made a €230m takeover bid for IDS Scheer, a maker of BPM (business process management) software. IDS Scheer, based in Saarbrucken, Germany, had approximately €400 million in sales during 2008. The combined company would have more than 6,000 workers and €1bn in revenue, according to Software AG, which is based in Darmstadt, Germany. Software AG said the acquisition would lead to growth through sales of the companies' combined SOA and BPM products, and through IDS Scheer's strength in SAP consulting services. This is the first major move by Software AG since it acquired webMethods almost exactly two years ago. [14]
  
• Perot has beaten Wipro and TCS to the $700m acquisition of the European business of BearingPoint. PricewaterhouseCoopers recently completed the acquisition of BearingPoint’s North American, Japanese, Chinese and Indian businesses, intended to give the consulting firm a strong presence in emerging markets. The 100-year-old BearingPoint was one of the world’s largest management and technology consultants, which was spun off as a separate firm from KPMG in 1999, but slipped into bankruptcy two years ago. [15]
  

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CONTRACTS

• Nortel’s contract to provide the networking infrastructure for the London 2012 Olympics has been cancelled and awarded to Cisco. Nortel’s latest strategy of selling off key parts of its business meant it would not be able to honour the contract with the Games’ organising committee. [16]