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Microsoft Azure Sphere chip for end-to-end IoT security from the Cloud to Network Edge

“MediaTek is a good partner [for Microsoft] to have for its Azure Sphere secure IoT chip,” said Laura DiDio, principal analyst with ITIC. “They will provide a Wi-Fi controller, the processor will run Microsoft’s Linux-based IoT OS and you’ve now got a highly secure, connected device at a decent price point.”

Channel Futures, April 17, 2018

Microsoft Reorganization:

“Microsoft has actually been moving away from Windows and more towards the cloud, analytics and AI for the past ten years,” explained Laura DiDio, an analyst at ITIC. “This did not happen overnight.” DiDio pointed out that Nadella has made major changes quickly during his tenure. “That’s the way you have to move,” to stay relevant, she said. “You’ve got to be agile to stay ahead of the game.”

The changes don’t mean that Microsoft is totally giving up on Windows, DiDio said. But they do mean that Nadella is focusing the company’s energies around stronger assets.

“They’re de-emphasizing Windows,” she said, in order to become a stronger “player in cloud and artificial intelligence, because that’s where the money is.”

CNN Money, March 29, 2018

Failure to deliver reliability and uptime:

“Time is money,” DiDio says. “Systems, networks and connectivity devices are subject to failure. If the downtime persists for any significant length of time, it can be expensive in terms of monetary losses. It can disrupt operations, decrease worker productivity and negatively impact the organization’s business partners, customers and suppliers.

“A security outage of any significant duration can also be a PR nightmare and damage the company’s reputation, causing lost business,” DiDio says. “Reliability and uptime go hand in hand with a comprehensive, detailed backup and disaster recovery plan that also includes an internal operational level agreement that designates a chain of command in the event of any type of service disruption.”

Every organization should have a disaster recovery plan that includes an itemized list of who to contact at vendor organizations, cloud and third-party service providers, DiDio says. “The CISO should also know what the company’s contracts stipulate as the response time from vendors, cloud, and third-party service providers to respond to and thwart security incidents and track down the hackers,” she says.

CSO Online, November 21, 2017

Cal State University and Hartnell College Launching Cohort Program:

“Since 2013, the two institutions have promoted this program as a way to attract minorities, women and students who are the first in their families to attend college to Computer Science and STEM subjects. The Cohort program nurtures these students by having them take their CS classes as a group.” DiDio says. It also helps them adjust more quickly to college life by providing them with group study and life skills classes to help them stick with CS as a major and graduate.

“So far, so good. A 75% majority of students enrolled in the CSUMB/Hartnell CS Cohort program graduate. This is well above the national average of about 30%,” DiDio notes.

ITIC Corp, November 17, 2017

Burger King Ad Creates Whopper of a Mess:

“In the Internet of Things environment, where you can have “an ecosystem or ecosystems of ecosystems interconnected, the attack vector universe is potentially limitless,” noted Laura DiDio, research director for IoT at 451 Research.

The risks are “everywhere, and what you can do is mitigate risk to an acceptable level,” she told the E-Commerce Times — but that requires vendors to make secure products.

E-Commerce Times, April 13, 2017

United Airlines Customer Service Snafus:

United’s behavior was “cavalier and callous,” said Laura DiDio, research director for IoT at 451 Research.

“The deck is stacked against passengers these days,” she told CRM Buyer.

However, this situation “is a PR nightmare for United Airlines,” DiDio added, “and it’s not going away.”

CRMBuyer, April 11, 2017

In a deal that is a win-win for all concerned, Chinese PC maker, Lenovo Group Ltd. will purchase IBM’s low-end, commodity x 86 Server portfolios, related resources and operations for $2.3 billion, which includes $2.07 billion cash with the remainder in stocks.

The sale of the IBM x86 servers has been rumored for well over a year as Big Blue grappled with continuing pressure on its low-margin x86 servers. In its most recently completed fourth quarter, IBM’s revenue dropped 5.5% to $27.7 billion. Slumping hardware sales was the chief culprit for the revenue miss. IBM’s x86 server sales declined by 16% in the fourth fiscal quarter alone, following seven straight quarterly revenue declines.

Under the terms of the agreement, Lenovo will purchase:

  • IBM’s System x servers
  • The BladeCenter and Flex System blade servers and switches
  • The x86-based Flex integrated infrastructure systems
  • The NeXtScale and iDataPlex servers and associated software
  • IBM’s blade networking and maintenance operations

Additionally, Lenovo gets all of the aforementioned associated development, sales and marketing, finance, legal, integrated supply chain, operations, IT and manufacturing and Service and support (maintenance) operations. Also as part of the deal, Adalio Sanchez, General Manager, System x and Pure Systems in IBM Systems and Technology Group (STG) will move to Lenovo and assume the same role there. Approximately 7,500 IBM employees worldwide including those based at major locations such as Raleigh, North Carolina, Shanghai, Shenzhen and Taipei China will be offered employment at Lenovo. And since Lenovo’s U.S. headquarters in North Carolina is close by IBM’s Raleigh offices, it should be an easy transition for the majority of Big Blue workers.

Other Announcement Highlights

IBM is by no means abandoning its high-end server business. Among the other announcement highlights IBM will:

  • Retain its enterprise systems portfolio, including System z mainframes, Power Systems, Storage Systems, Power-based Flex servers as well as the PureApplication, PureData and SAP Hana appliances.
  • IBM and Lenovo will enter into broad-based strategic collaboration.
  • Lenovo will become IBM’s preferred supplier of x86 server technology.
  • Lenovo will license, OEM and resell IBM Storwize and tape storage technologies, the General Parallel File System, the SmartCloud Entry and elements of the x 86 system software portfolios, and the Platform Computing portfolio.
  • Integrated systems software components will move to Lenovo.
  • Higher-level management tools like System Director and Flex Systems Manager will remain with IBM and be licensed by Lenovo.
  • IBM and Lenovo will work together on patches to IBM software required by Lenovo.
  • Until the transaction is completed, the two companies will continue to operate independently.

The acquisition is expected to be completed later in 2014, pending regulatory approval. Once the transaction is complete, Lenovo will assume related customer service and maintenance operations. IBM will continue to provide maintenance delivery on Lenovo’s behalf for an extended period of time, so customers should see little or no or no change in their maintenance support.

Both the IBM and Lenovo executives enthusiastically applauded the deal with Steve Mills, IBM Senior Vice President and Group Executive of the Software & Systems Group, stating that the “The divestiture [of the x86 server line] allows IBM to focus on system and software innovations…such as cognitive computing, Big Data and cloud.”

Peter Hortensius, senior vice-president at Lenovo and president of its Think Business Group noted that the acquisition of IBM’s x86 server portfolio will enable Lenovo to increase its current two percent niche market in servers by sevenfold to 14%. To accomplish that goal and “generate costs synergy,” Lenovo will need to move most of the manufacturing from IBM’s existing facility in Virginia to Asia while keeping some R&D in the U.S.,” Hortensius said.

Analysis

To reiterate, Lenovo’s acquisition of IBM low-end, commodity x86 server portfolios is tactical and long term strategic win for all parties: IBM, Lenovo, their respective business partners, customers and the 7,500 IBMers who will make the move to Lenovo.

IBM and Lenovo have had a long, productive working relationship. In 2005 Lenovo bought IBM’s PC business including the popular ThinkPad desktops for $1.7 billion, by 2012, Lenovo had surpassed all rivals to become the world’s top PC market.

IBM is following the money and the market trends. IBM’s server business is the world’s second-largest, with a 22.9 percent share of the $12.3 billion market in the third quarter of 2013, according to technology research firm Gartner. In fact, IBM’s System z Enterprise mainframes and high end server market share and demand remain strong and solid. Overall IBM mainframes have in excess of 90% market share in that segment. IBM’s server business is the world’s second-largest. Big Blue currently has a 22.9% share of the $12.3 billion market as of the 2013 third quarter, according to statistics from Gartner Group.

The sale of the struggling x86 servers frees IBM to focus on what it does best: enterprise products and services, most notably, cloud computing and services and Big Data Analytics via its’ newly formed Watson Business Unit (BU) and its existing, soon-to-be-expanded Cloud Computing group. These are facts that IBM executives repeatedly emphasized during the conference call.

IBM is following the money & higher profit margins. No company has broader, deeper enterprise & services portfolio than Big Blue. And IBM’s sale of x86 Server business for $2.3B pays for its earlier investment of $1 billion in the new Watson BU headquartered in New York City earlier this month and the $1.2 billion it is investing in expanding its Cloud Computing portfolio in 40 global data centers in 15 countries on five continents.

Is the $2.3 billion sale much less than IBM’s rumored $6.5 billion asking price for the x-86 servers last summer? Probably. IBM’s decision to sell the x-86 commodity server portfolio and associated services and make a swift, clean exit. The alternative was to retain the x-86 server line and let it continue to bleed revenue and drain resources.

IBM is simultaneously shedding unprofitable products, while the sale of the x86 server lines effectively funds Big Blue’s expansion into leading edge and emerging market segments.

Selling the x86 line to Lenovo is an intuitive and obvious move that makes perfect business sense for IBM, Lenovo and their respective customers and business partners. Lenovo has a proven record, experience in high volume x-86 desktop hardware and a long history of working with IBM. Customers and business partners can be confident that Lenovo has a very high probability of succeeding with the x- 86 server businesses just as it has with IBM PCs.

Finally, there is the human element. The IBM/Lenovo x 86 agreement also positively impacts 7,500 Big Blue employees globally. They can transition to Lenovo which also has offices in Raleigh, NC, so few, if any, will have to move.  The IBM/Lenovo deal also opens the door wider for IBM to expand its existing footprint into China and the Pacific Rim.

Conclusions

In summary, IBM’s sale of its x-86 business to Lenovo is the best possible outcome for all concerned. Both companies must still execute once the transaction closes and gets the necessary regulatory approval. However based on past history, the likelihood of success is high. And IBM will be able to forge ahead unhindered in its quest for continued innovation in enterprise systems and the highly competitive cloud computing arena.



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