IT industry analysis—2009 Week 26—on one page

SERVERS

• According to IDC, EMEA will be hardest hit by the downturn in server buying. Spending on servers will fall 33% to $12.4bn this year, with spending on enterprise servers falling a shocking 52% to $2.1bn. Delays to various chips—Rock, Nehalem and Tukwila—shoulder some of the blame. Midrange and high-end servers will not return to growth until 1Q11, forecasts IDC.
• A number of journals celebrated the 21st birthday of the AS/400, noting that with the mothballing of HP's MPE and the outsourcing of OpenVMS development to India, AS/400 is essentially the only surviving midrange platform. IT Jungle welcomed the formation in Japan of iManifest—a group of customers, ISVs, and resellers dedicated to promoting the AS/400 platform and growing the System i market. IT Jungle suggested that System i needs an advocate inside IBM.
  

SOFTWARE

• Oracle reported a 13% decline in new licence revenues to $2.7bn for the quarter ending 31st May. Oracle claims it is gaining market share at the expense of SAP, but it is comparing its best quarter (the last of the financial year) with SAP's traditional worst (the first quarter of its financial year).

SERVICES

• Accenture reported a 17% fall in revenue to $5.2bn for the quarter ended 31st May. Consultancy was down 20% to $3.0bn for three reasons: price pressures, the move away from large contracts, and customers postponing the decision to extend existing contracts. Outsourcing saw a 9% drop to $2.2bn, due to the continuing shift to lower cost resources and the lower volume of scope expansions on existing contracts. $6.6bn in new orders was booked.
• Ovum reported on the way Accenture handles client demands for cost-cutting on existing contracts: Accenture tries to shift the discussion to a discussion on the price or scope of the contract. With its flexible pricing models, Accenture describes its approach as 're-solutioning', rather than renegotiating.
• With recessionary winds still blowing through the USA and Europe, the stable West Asian markets have come to the rescue of many Indian IT firms. TCS reported revenue growth of 35% in the Asia Pacific region for the year ended 31st March. But the managed services and outsourcing market in the region is still nascent. “Regional customers still like to see work delivered in front of their eyes and are uncomfortable with offshoring and the remote model of service delivery,” said a Wipro VP.
• Wipro is looking to acquire companies with between $50m and $250m in annual revenue. Wipro is also offering more fixed-price contracts, because clients are looking to cut costs. (Previously Wipro billed customers according to the number of employees working on the project.)
  

CHANNELS

• After a Cisco manager said that the level of channel partner engagement in two key programes—managed services and financing—was lower than anticipated, partners have told Cisco that the complexity of its programmes is deterring them from getting involved. Others aren't engaging because of Cisco's requirement that they hand over customer details.
• According to Plimsoll, 29% of the UK's top 1,000 resellers should be rated as 'Caution' or 'Danger'. “Their management are now operating under severe financial pressure where even normal trading is proving hazardous. Many of these firms seem likely to be sold off; they are at an extremely high risk of failure unless they turn their performance around fast.”
  

SELLING

• CEO Hark Hurd has already met more HP prospects, customers and partners in 2009 than in the whole of last year. The reason is simply: the meetings work . The company has metrics which prove that getting top-level executives in front of customers and VARs leads to increased sales and more loyal buyers. Partner comments include:
• "He took the hard questions and had good, honest answers. He is HP's best salesperson in front of customers. He's believable and trustworthy."
• Mark is very articulate on HP's overall business, whether it's printers, servers, storage or PCs."
• "Customers were very impressed, very happy. It gave them a better understanding of HP's direction."
  

THE UK

• 37,000 IT services jobs are expected to be lost in the UK between 2008 and 2010, according to the centre for economics and business research. But the total should rise a little to 528,000 the next year.
  
• According to a survey by Experteer, an online recruitment company, the average UK salaries of IT specialists have dropped 6% in the past six months, from £66,000 to £62,000.
  
  

SOURCES USED IN THIS ISSUE:

ChannelWeb (www.channelweb.co.uk)
Computing (www.v3.co.uk)
CRN (www.crn.co.uk)
IDG News (news.idg.no)
Information Age (www.information-age.com)
IT Business Edge (www.itbusinessedge.com)
IT Jungle (www.itjungle.com)
MicroScope (www.microscope.co.uk)
Ovum (www.ovum.com)
The Register (www.theregister.co.uk)
Wall Street Journal (online.wsj.com)