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2011 in High Tech YTD Part 2: Management Shakeups at Google, HP, Microsoft etc.

Laura's Insights ITIC Blog / By

Revolving Door

In contrast to Apple’s stunning success, the first calendar quarter of 2011 was a revolving door for other Silicon Valley companies and executives. There were management shifts, shakeups and ousters at Advanced Micro Devices (AMD), Google, Hewlett-Packard (HP) and Microsoft. They were variously aimed at jumpstarting product momentum (AMD, Microsoft), polishing a tarnished image and placating stockholders (HP) and providing an orderly transition of power (Google).

You need a scorecard to keep up with all the comings and goings.

AMD’s board ousted chief executive Dirk Meyer in mid-January after only 18 months on the job. It then appointed Senior Vice President and CFO Thomas Seifert, as interim CEO while the search goes on for a permanent chief executive. Siefert continues as chief financial officer and says he does not want to be considered for the permanent CEO position. This is probably a smart move. AMD’s flamboyant co-founder Jerry Sanders spent 33 years as CEO (1969 to 2002), but everyone who’s followed has had a short tenure. …

2011 in High Tech YTD Part 2: Management Shakeups at Google, HP, Microsoft etc.Read More »

2011 in High Tech YTD Part 2: Management Shakeups at Google, HP, Microsoft etc. Read More »

2011 YTD in High Tech: Bold Aggressive Actions

Laura's Insights ITIC Blog, News / By

It’s hard to believe but the first quarter of 2011 is now a memory and we’re well into spring. The tone for the year in high technology was set in early January: fast, bold, aggressive action and sweeping management changes.

In the first four months of the year high tech vendors moved quickly and decisively to seize opportunities in established sectors (smart phones, virtualization, back-up and disaster recovery) and emerging markets (cloud computing, tablet devices and unified storage management). As 2011 unfolds, it’s apparent that high technology vendors are willing to shift strategies and shed executives in order to stay one step ahead of or keep pace with competitors. The competition is cutthroat and unrelenting. No vendor, no matter how dominant its market share, how pristine its balance sheet or how deep its order backlog and book to bill ratio dares relax or rest on its laurels for even a nanosecond.

Recaps of some of the year’s highlights thus far are very revealing. …

2011 YTD in High Tech: Bold Aggressive ActionsRead More »

2011 YTD in High Tech: Bold Aggressive Actions Read More »

ITIC 2010-2011 Infrastructure Trends Survey Shows Sharp Increase in Mobility & Use of Ipads, Smart Phones in the Workplace; Cloud Deployments Slow

ITIC Reports & Surveys / By

The sharp increase in remote and mobile workers is spurring the fast adoption of iPads in the workplace. At the same time, public cloud computing deployments among mainstream users remain slow and steady. These are some of the other survey highlights of the latest ITIC/Sunbelt Software survey on Desktop and Infrastructure deployment trends.

No Rush to the Cloud — Yet

Users on the Move: Number of Mobile workers increases

The survey results also confirm what has been widely reported: that greater numbers and percentages of users are spending more time telecommuting, traveling and generally working outside the corporate offices.

Over half – 58 percent of businesses say that up to 25 percent of their employees work remotely; another 18 percent of respondents said that between 26 to 50 percent of their workers are remote; 11 percent said that 51 to 75 percent work outside the office and seven percent of respondents said that 76 to 100 percent of their employees work remotely. It is significant that only 7 percent of the over 400 businesses polled say that none of their workers are remote or mobile. …

ITIC 2010-2011 Infrastructure Trends Survey Shows Sharp Increase in Mobility & Use of Ipads, Smart Phones in the Workplace; Cloud Deployments SlowRead More »

ITIC 2010-2011 Infrastructure Trends Survey Shows Sharp Increase in Mobility & Use of Ipads, Smart Phones in the Workplace; Cloud Deployments Slow Read More »

Happy 1st Birthday Windows 7; Now Can We Please Cancel Microsoft’s MidLife Crisis?

Laura's Insights ITIC Blog / By

Windows 7 is now officially a year old. Since it was released October 22, 2009, Microsoft has sold over 240 million copies of the operating system — approximately seven copies per second. That makes it the fastest selling operating system in Microsoft’s history or any vendor’s history. Some industry pundits estimate that Windows 7 sales will top 300 million within the next six-to-eight months.

Microsoft has plenty of other reasons to celebrate Windows 7’s first birthday. Windows 7 has also been one of the most stable, reliable and secure releases in Microsoft’s history.

A three-quarters majority – 73 percent of the 400+ respondents to the latest joint ITIC/Sunbelt Software poll, gave Windows 7 an “excellent,” “very good” or “good” rating. …

Happy 1st Birthday Windows 7; Now Can We Please Cancel Microsoft’s MidLife Crisis?Read More »

Happy 1st Birthday Windows 7; Now Can We Please Cancel Microsoft’s MidLife Crisis? Read More »

Apple, Google Grapple for Top Spot in Mobile Web

2010, Laura's Insights ITIC Blog, News / By

Since January, the high technology industry has witnessed a dizzying spate of dueling, vendor product announcements.
So what else is new? It’s standard operating procedure for vendors to regularly issue hyperbolic proclamations about their latest/greatest offering, even (or especially) when the announcements are as devoid of content as cotton candy is of nutritional value. Maybe it’s just an outgrowth of the digital information age. We live and breathe instant information that circumnavigates the globe faster than you can say Magellan; the copy monster must be fed constantly. Or maybe it’s the protracted economic downturn which is making vendors hungrier than ever for consumer and corporate dollars.
Whatever the reason, there’s no doubt that high technology vendors – led by Google and Apple – are engaged in a near constant game of one-upmanship.
Apple indirectly started this trend in early January, when word began leaking out that Apple would finally announce the long-rumored iPad tablet in late January. The race was on among other tablet vendors to announce their products at the Consumer Electronics Show (CES) in Las Vegas in mid-January to beat Apple to the punch. A half-dozen vendors including, ASUSTeK Computer (ASUS), Dell, Hewlett-Packard, Lenovo, Taiwanese manufacturer Micro Star International (MSI) and Toshiba all raced to showcase their forthcoming wares in advance of Apple. It made good marketing sense: all of these vendors knew that once Apple released the iPad, that their chances of getting PR would be sorely diminished.
I have no problem with smaller vendors or even large vendors like Dell and HP, who rightfully reckon that they have to make their announcements in advance of a powerhouse like Apple to ensure that their products don’t get overlooked.
Apple vs. Google Battle of the Mobile Web Titans
But when the current industry giants and media darlings like Apple and Google start slugging it out online, in print and at various conferences, it’s overwhelming.
Apple and Google are just the latest in a long line of high technology rivalries. In the 1970s it was IBM vs. HP; in the 1980s, the rise of networking created several notable rivalries: IBM vs. Digital Equipment Corp. (DEC); IBM vs. Microsoft; Oracle vs. IBM; Novell vs. 3Com; Novell vs. Microsoft; Cabletron vs. Synoptics and Cisco vs. all the internetworking vendors. By the 1990s it was Microsoft vs. Netscape and Microsoft vs. pretty much everyone else.
The Apple vs. Google rivalry differs from earlier technology contests in that the relationship between the two firms began as a friendly one and to date, there has been no malice. Until August, 2009 Google CEO Eric Schmidt was on Apple’s board of directors. And while the competition between these two industry giants is noticeably devoid of the rancor that characterized past high tech rivalries, it’s safe to say that the two are respectfully wary of each other. Apple and Google are both determined not to let the other one get the upper hand, something they fear will happen if there is even the slightest pause in the endless stream of headlines.
Google and Apple started out in different markets – Google in the online search engine and advertising arena and Apple as a manufacturer of consumer hardware devices and software applications. Their respective successes – Apple’s with its Mac hardware and Google’s with its search engine of the same name have led them to this point: a head to head rivalry in the battle for supremacy of the mobile Web arena.
On paper, they appear to be two equally matched gladiators. Both companies have huge amounts of cash. Apple has $23 billion in the bank and now boasts the highest valuation of any high technology company, with a current market cap of $236.3 billion, surpassing Microsoft for the top spot. Google has $26.5 billion in cash and a valuation of $158.6 billion. Both firms have two of the strongest management and engineering teams in Silicon Valley. Apple has the iconic Steve Jobs who since his return has re-vitalized the company. Google is helmed by co-founders and creative geniuses Larry Page and Sergey Brin and since 2006 and Eric Schmidt, the CEO who knows how to build computers and make the trains run on time.
Fueling this rivalry is Apple’s and Google’s stake in mobile devices and operating systems. In Apple’s case this means the wildly successful iPhone, iPod Touch and most recently the iPad and the Mac Mini. Google’s lineup consists of its Chrome OS and Android OS which will power tablet devices like Dell’s newly announced Streak, Lenovo’s forthcoming U1 hybrid tablet/notebook due out later this year. The rivalry between the two is quite literally getting down to the chip level. Intel, which has for so long been identified with Microsoft’Windows-based PC platform is now expanding its support for Android – a move company executives have described as its “port of choice” gambit. Apple is no slouch in this area, either: its Macs – from the Mac Minis’ to the MacBook Pros, ship with Intel inside. Last week Nvidia CEO Jen-Hsun Huang weighed in on the Apple/Google rivalry on Google’s side, predicting that the tablet designs will converge around Google’s operating system.
But a stroll through any airport, mall, consumer home or office would give a person cause to dispute Huang’s claim: iPads and iPhones are everywhere. Apple recently announced that it has sold over two million iPads since the device first shipped in April. During a business trip from Boston to New Orleans last week I found that Apple iPads were as much in evidence as hot dogs at a ballpark.
Ironically, Microsoft, a longer term traditional rival of both Apple and Google is not mentioned nearly so often in the smart phone and tablet arenas. That’s because Microsoft’s Windows OS is still searching for a tablet to call its own. Longtime Microsoft partner HP, abruptly switched course: after Microsoft CEO Steve Ballmer got on stage and demonstrated Windows 7 running on HP’s slate, HP bought Palm and earlier this week acquired the assets of Phoenix Technologies which makes an operating system for tablets. That leaves Microsoft to promote its business centric Windows 7 phone which will run Xbox LIVE games, Zune music and the company’s Bing search engine. All is not lost for Microsoft: longtime “frenemy” Apple CEO Steve Jobs said recently that the new iPhone 4G will run Microsoft’s Bing fueling speculation that Apple will drop support for Google’s search engine. Both Google and Apple are still competing with Microsoft in other markets like operating systems, games and application software to name a few, but that’s another story.
There are other competitors in the smart phone and tablet markets but you’d hardly know it from the headlines. Research In Motion’s (RIM) Blackberry is still a market leader. But Apple and Google continue to dominate the coverage. I guess high technology just like sports revels in a classic rivalry. And this one promises to be a hard fought struggle.

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Microsoft Azure Platform, BPOS Cloud Vision Must Address Licensing

Laura's Insights ITIC Blog / By

Microsoft did a very credible job at its TechEd conference in New Orleans last week, laying out the technology roadmap and strategy for a smooth transition from premises-based networks/services to its emerging Azure cloud infrastructure and software + services model.

One of the biggest challenges facing Microsoft and its customers as it stands on the cusp of what Bob Muglia, president of Microsoft’s Server & Tools Business (STB) unit characterized as a “major transformation in the industry called cloud computing,” is how the Redmond, Wash. software giant will license its cloud offerings.

Licensing programs and plans—even those that involve seemingly straightforward and mature software, PC- and server-based product offerings—are challenging and complex in the best of circumstances. This is something Microsoft knows only too well from experience. Constructing an equitable, easy-to-understand licensing model for cloud-based services could prove to be one of the most daunting tasks on Microsoft’s Azure roadmap.

It is imperative that Microsoft proactively address the cloud licensing issues now, and Microsoft executives are well aware of this. During the Q&A portion of one cloud-related TechEd session, Robert Wahbe, corporate vice president, STB Marketing was asked, “What about licensing?” He took a sip from his water bottle and replied, “That’s a big question.”

That is an understatement.

Microsoft has continually grappled with simplifying and refining its licensing strategy since it made a major misstep with Licensing 6.0 in May, 2001, where the initial offering was complex, convoluted and potentially very expensive. It immediately met with a huge vocal outcry and backlash. The company was compelled to postpone the Licensing 6.0 launch while it re-tooled the program to make it more user-friendly from both a technical and cost perspective.

Over the last nine years, Microsoft’s licensing program and strategy has become one of the best in the high-technology industry. It offers simplified terms and conditions (T&Cs); greater discounts for even the smallest micro SMBs and a variety of add-on tools (e.g. licensing compliance and assessment utilities), as well as access to freebies, such as online and onsite technical service and training for customers who purchase the company’s Software Assurance (SA) maintenance and upgrade agreement along with their Volume Licensing deals.

Licensing from Premises to the Cloud
Microsoft’s cloud strategy is a multi-pronged approach that incorporates a wide array of offerings, including Windows Azure, SQL Azure and Microsoft Online Services (MOS). MOS consists of hosted versions of Microsoft’s most popular and widely deployed server applications, such as Exchange Server, PowerPoint and SharePoint. Microsoft’s cloud strategy also encompasses consumer products like Windows Live, Xbox Live and MSN.

Microsoft is also delivering a hybrid cloud infrastructure that will enable organizations to combine premises-based with hosted cloud solutions. This will indisputably provide Microsoft customers with flexibility and choice as they transition from a fixed-premises computing model to a hosted cloud model. In addition, it will allow them to migrate to the cloud at their own pace as their budgets and business needs dictate. However, the very flexibility, breadth and depth of offerings that make Microsoft products so appealing to customers, ironically, are the very issues that increase the complexity and challenges of creating an easily accessible, straightforward licensing model.

Dueling Microsoft Clouds: Azure vs. BPOS
Complicating matters is that Microsoft has dueling cloud offerings; the Business Productivity Online Suite (BPOS) and the Windows Azure Platform. As a result, Microsoft must also develop, delineate and differentiate its strategy, pricing and provisions for Azure and BPOS. It’s unclear (at least to this analyst) as to when and how a customer will choose one or mix and match BPOS and Azure offerings. Both are currently works in progress.

BPOS is a licensing suite and a set of collaborative end-user services that run on Windows Server, Exchange Server, and SQL Server. Microsoft offers the BPOS Standard Suite, which incorporates Exchange Online, SharePoint Online, Office Live Meeting, and Office Communications (OCS) Online. The availability of the latter two offerings is a key differentiator that distinguishes Microsoft’s BPOS and rival offerings from Google. Microsoft also sells the BPOS Business Productivity Online Deskless Worker Suite. It consists of Exchange Online Deskless Worker, SharePoint Online Deskless Worker and Outlook Web Access Light. This BPOS package is targeted at SMBs, small branch offices or companies that want basic, entry-level messaging and document collaboration functions.

By contrast, Azure is a cloud platform offering that contains all the elements of a traditional application stack from the operating system up to the applications and the development framework. It includes the Windows Azure Platform AppFabric (formerly .NET Services for Azure), as well as the SQL Azure Database service.

While BPOS is aimed squarely at end users and IT managers, Azure targets third-party ISVs and internal corporate developers. Customers that build applications for Azure will host it in the cloud. However, it is not a multi-tenant architecture meant to host your entire infrastructure. With Azure, businesses will rent resources that will reside in Microsoft datacenters. The costs are based on a per-usage model. This gives customers the flexibility to rent fewer or more resources, depending on their business needs.

Cloud Licensing Questions
Any cloud licensing or hybrid cloud licensing program that Microsoft develops must include all of the elements of its current fixed premises and virtualization models. This includes:

1. Volume Licensing: As the technology advances from fixed premises software and hardware offerings to private and public clouds, Microsoft must find ways to translate the elements of its current Open, Select and Enterprise agreements to address the broad spectrum of users from small and midsized (SMBs) companies to the largest enterprises with the associated discounts for volume purchases.
2. Term Length: The majority of volume license agreements are based on a three-year product lifecycle. During the protracted economic downturn, however, many companies could not afford to upgrade. A hosted cloud model, though, will be based on usage and consumption, so the terms should and most likely will vary.
3. Software Assurance: Organizations will still need upgrade and maintenance plans regardless of where their data resides and whether or not they have traditional subscription licensing or the newer consumption/usage model.
4. Service and Support: Provisions for after-market technical services, support and maintenance will be crucial for Microsoft, its users, resellers and OEM channel partners. ITIC survey data indicates that the breadth and depth of after-market technical service and support is among the top four items that make or break a purchasing deal.
5. Defined areas of responsibility and indemnification: This will require careful planning on Microsoft’s part. Existing premises-based licensing models differ according to whether or not the customer purchases their products directly from Microsoft, a reseller or an OEM hardware manufacturer. Organizations that adopt a hybrid premises/cloud offering and those that opt for an entirely hosted cloud offering will be looking more than ever before to Microsoft for guidance. Microsoft must be explicit as to what it will cover and what will be covered by OEM partners and/or host providers.

Complicating the cloud licensing models even further is the nature of the cloud itself. There is no singular cloud model. There may be multiple clouds, and they may be a mixture of public and private clouds that also link to fixed premises and mobile networks.

Among the cloud licensing questions that Microsoft must address and specifically answer in the coming months are:

• What specific pricing models and tiers for SMBs, midsize and enterprises will be based on a hybrid and full cloud infrastructures?
• What specific guarantees if any, will it provide for securing sensitive data?
• What level of guaranteed response time will it provide for service and support?
• What is the minimum acceptable latency/response time for its cloud services?
• Will it provide multiple access points to and from the cloud infrastructure?
• What specific provisions will apply to Service Level Agreements (SLAs)?
• How will financial remuneration for SLA violations be determined?
• What are the capacity ceilings for the service infrastructure?
• What provisions will there be for service failures and disruptions?
• How are upgrade and maintenance provisions defined?

From the keynote speeches and throughout the STB Summit and TechEd conference, Microsoft’s Muglia and Wahbe both emphasized and promoted the idea that there is no singular cloud. Instead, Microsoft’s vision is a world of multiple private, public and hybrid clouds that are built to individual organizations’ specific needs.

That’s all well and good. But in order for this strategy to succeed, Microsoft will have to take the lead on both the technology and the licensing fronts. The BPOS and Azure product managers and marketers should actively engage with the Worldwide Licensing Program (WWLP) managers and construct a simplified, straightforward licensing model. We recognize that this is much easier said than done. But customers need and will demand transparency in licensing pricing, models and T&Cs before committing to the Microsoft cloud.

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Application Availability, Reliability and Downtime: Ignorance is NOT Bliss

ITIC Reports & Surveys / By

Two out of five businesses – 40% – report that their major business applications require higher availability rates than they did two or three years ago. However an overwhelming 81% are unable to quantify the cost of downtime and only a small 5% minority of businesses are willing to spend whatever it takes to guarantee the highest levels of application availability 99.99% and above. Those are the results of the latest ITIC survey which polled C-level executives and IT managers at 300 corporations worldwide.

ITIC partnered with Stratus Technologies in Maynard, Ma. a vendor that specializes in high availability and fault tolerant hardware and software solutions, to compose the Web-based survey. ITIC conducted this blind, non-vendor and non-product specific survey which polled businesses on their application availability requirements, virtualization and the compliance rate of their service level agreements (SLAs). None of the respondents received any remuneration. The Web-based survey consisted of multiple choice and essay questions. ITIC analysts also conducted two dozen first person customer interviews to obtain detailed anecdotal data.

Respondents ranged from SMBs with 100 users to very large enterprises with over 100,000 end users. Industries represented: academic, advertising, aerospace, banking, communications, consumer products, defense, energy, finance, government, healthcare, insurance, IT services, legal, manufacturing, media and entertainment, telecommunications, transportation, and utilities. None of the survey respondents received any remuneration for their participation. The respondents hailed from 15 countries; 85% were based in North America.

Survey Highlights

The survey results uncovered many “disconnects” between the levels of application reliability that corporate enterprises profess to need and the availability rates their systems and applications actually deliver. Additionally, a significant portion of the survey respondents had difficulty defining what constitutes high application availability; do not specifically track downtime and could not quantify or qualify the cost of downtime and its impact on their network operations and business.

Among the other survey highlights:

  • A 54% majority of IT managers and executives surveyed said more than two-thirds of their companies’ applications require the highest level of availability – 99.99% — or four nines of uptime.
  • Over half – 52% of survey respondents said that virtualization technology increases application uptime and availability; only 4% said availability decreased as a result of virtualization deployments.
  • In response to the question, “which aspect of application availability is most important” to the business, 59% of those polled cited the prevention of unplanned downtime as being most crucial; 40% said disaster recovery and business continuity were most important; 38% said that minimizing planned downtime to apply patches and upgrades was their top priority; 16% said the ability to meet SLAs was most important and 40% of the survey respondents said all of the choices were equally crucial to their business needs.
  • Some 41% said they would be satisfied with conventional 99% to 99.9% (the equivalent of two or three nines) availability for their most critical applications. Ninety-nine percent or 99.9% does not qualify as a high-availability or continuous-availability solution.
  • An overwhelming 81% of survey respondents said the number of applications that demand high availability has increased in the past two-to-three years.
  • Of those who said they have been unable to meet service level agreements (SLAs), 72% can’t or don’t keep track of the cost and productivity losses created by downtime.
  • Budgetary constraints are a gating factor prohibiting many organizations from installing software solutions that would improve application availability. Overall, 70% of the survey respondents said they lacked the funds to purchase value-added availability solutions (40%); or were unsure how much or if their companies would spend to guarantee application availability (30%).
  • Of the 30% of businesses that quantified how much their firms would spend on availability solutions, 3% indicated they would spend $2,000 to $4,000; 8% said $4,000 to $5,000; another 3% said $5,000 to $10,000; 11% — mainly large enterprises indicated they were willing to allocate $10,000 to $15,000 to ensure application availability and 5% said they would spend “whatever it takes.”

According to the survey findings, just under half of all businesses – 49% – lack the budget for high availability technology and 40% of the respondents reported they don’t understand what qualifies as high availability. An overwhelming eight out of 10 IT managers – 80% — are unable to quantify the cost of downtime to their C-level executives.

To reiterate, the ITIC survey polled users on the various aspects and impact of application availability and downtime but it did not specify any products or vendors.

The survey results supplemented by ITIC first person interviews with IT managers and C-level executives clearly shows that on a visceral level, businesses are very aware of the need for increased application availability has grown. This is particularly true in light of the emergence of new technologies like application and desktop virtualization, cloud computing, Service Oriented Architecture (SOA). The fast growing remote, mobile and telecommuting end user population utilizes unified communications and collaboration applications and utilities is also spurring the need for greater application availability and reliability.

High Application Availability Not a Reality for 80% of Businesses

The survey results clearly show that network uptime isn’t keeping pace with the need for application availability. At the same time, IT managers and C-level executives interviewed by ITIC did comprehend the business risks associated with downtime, even though most are unable to quantify the cost of downtime or qualify the impact to the corporation, its customers, suppliers and business partners when unplanned application and network outages occur.

“We are continually being asked to do more with less,” said an IT manager at a large enterprise in the Northeast. “We are now at a point, where the number of complex systems requiring expert knowledge has exceeded the headcount needed to maintain them … I am dreading vacation season,” he added.

Another executive at an Application Service provider acknowledged that even though his firm’s SLA guarantees to customers are a modest 98%, it has on occasion, been unable to meet those goals. The executive said his firm compensated one of its clients for a significant outage incident. “We had a half day outage a couple of years ago which cost us in excess of $40,000 in goodwill payouts to a handful of our clients, despite the fact that it was the first outage in five years,” he said.

Another user said a lack of funds prevented his firm from allocating capital expenditure monies to purchase solutions that would guarantee 99.99% application availability. “Our biggest concern is keeping what we have running and available. Change usually costs money, and at the moment our budgets are simply in survival mode,” he said.

Another VP of IT at a New Jersey-based business said that ignorance is not bliss. “If people knew the actual dollar value their applications and customers represent, they’d already have the necessary software availability solutions in place to safeguard applications,” he said. “Yes, it does cost money to purchase application availability solutions, but we’d rather pay now, then wait for something to fail and pay more later,” the VP of IT said.

Overall, the survey results show that the inability of users to put valid metrics and cost formulas in place to track and quantify what uptime means to their organization is woefully inadequate and many corporations are courting disaster.

ITIC advises businesses to track downtime, the actual cost of downtime to the organization and to take the necessary steps to qualify the impact of downtime including lost data, potential liability risks e.g. lost business, lost customers, potential lawsuits and damage to the company’s reputation. Once a company can quantify the amount of downtime associated with its main line of business applications, the impact of downtime and the risk to the business, it can then make an accurate assessment of whether or not its current IT infrastructure adequately supports the degree of application availability the corporation needs to maintain its SLAs.

Application Availability, Reliability and Downtime: Ignorance is NOT Bliss Read More »

Apple Gets More Entrenched in the Enterprise

ITIC Reports & Surveys / By

Apple Macintosh Enterprise Usage Continues to Grow

Apple Mac and OS X 10.x continue to make inroads in the enterprise.

ITIC’s 2009 Global IT and Technology Trends Survey shows that corporate enterprises continue to embrace the Apple Mac and OS X 10.x server operating system in numbers not seen since the late 1980s. ITIC polled IT managers and C-level executives at 700 corporations worldwide. Among the survey highlights:

  • Over two-thirds of the 700 survey respondents – 68% — indicated they are likely to allow their end users to deploy Macs as their corporate enterprise desktops in the next 12 months.
  • Almost one-quarter or 23% have a significant number of Macintoshes (> 50) present in their organizations. Apple Macs have long been a favorite of company executives, but the survey responses clearly indicate that Mac usage has filtered down to rank and file knowledge workers across the enterprise.
  • Half of all the survey respondents – 50% — said they plan to increase integration with existing Apple consumer products such as the iPhone to allow users to access corporate Email and other applications. This augurs well for the iPhone to establish itself as a viable alternative to Research In Motion’s (RIM) as a mobile device that allows users to access Email and other collaboration applications.

In summary, the ITIC/Sunbelt survey responses show that businesses will find themselves challenged to do more with fewer resources. The respondents also exhibited their practicality and resourcefulness in extending the lifespan of still-useful technologies like Windows XP. However those who have the need and the budget, will get an able assist from emerging technologies like virtualization – and for those that correctly configure and deploy them – Vista and the Mac and OS X 10.x

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Apple Shines

Laura's Insights ITIC Blog / By

Apple rang in 2009 by celebrating a trio of milestones that were impressive by any standards including those of a company whose 32-year span has been filled with a cornucopia of noteworthy events. In quick succession, Apple posted the best financial results in its history: during the just ended 2009 first fiscal quarter it achieved record revenues of nearly $10.2 billion on record net quarterly profits of $1.61 billion and it sold an astounding 22.7 million iPods, another record. The icing on the cake: Apple’s flagship Mac computer celebrated its 25th birthday amidst the news that the Cupertino, California firm’s latest Mac Book and Mac Book Pro notebooks contributed to the overall financial bonanza with sales of 2.5 million units; a 34% gain in year-over-year unit shipments.

These feats would be extraordinary at any time but they offered even more cause for celebration due to their arrival during a week in which the news from almost all of Apple’s high-tech vendor counterparts ranged from disappointing to dismal to downright dire. Intel said it would shed up to 6,000 workers and close five manufacturing plants; Microsoft announced it will lay off 5,000 workers (the first such major action in its history) amidst declining demand for Windows PC solutions, and even the goliath Google saw a sharp decline in its 2009 first fiscal quarter profits.

With such a bountiful harvest, it was more than a little perplexing to read the headline in the January 22 issue of Silicon Valley.com column proclaiming: “Mac’s influence could wane.” Granted, the headline was a bit misleading. The article itself stated that things look good for Apple and its Macs in the near term, but what about the next 25 years? Good question.

Long term forecasts of even five years are more art or guesswork than science. But decades long prognostications are rarities unless you’re talking about Nostradamus or the Oracle of Delphi. So we’re left to forecast with the tools at our disposal – in this case, the facts. So here for your consideration is our Top 10 List concerning Apple’s health and well-being. It includes some little known facts of both a positive and even potentially negative nature.

10. Big Mac sales shrink. Apple Mac desktop sales dipped slightly even as sales of its notebooks and the lightweight Apple Mac Book Air soared. This is hardly surprising. Both the American and global consumers and workforces are becoming increasingly mobile, transitioning into an era of ever-more powerful notebooks, Netbooks (or minis) and PDAs. Critics argue that the commoditization of PC hardware will make it difficult for Apple or any hardware vendor to distinguish itself. As a result, Apple desktop sales may continue to contract along with those of PCs although they won’t become obsolete for many years. Meanwhile, Apple has a wide array of Mac Book, Mac Book Pro and the Mac Book Air products to take up the slack. The company also wisely cut hardware and OS X 10.x operating system prices to be more competitive with PCs.

9. iPod and iPhone. Apple sold a record 22.7 million iPods during the quarter, and the device has approximately 70% market share in the U.S. Worldwide market share percentages vary by country from 70% in Western Europe and Australia to well over 60% in Japan and over 50% in Canada. At the same time, iPhone sales in Q1 were 4.36 units million, representing 88% unit growth over the year-ago quarter. At some point, iPod and iPhone sales may reach saturation but that won’t happen anytime soon and when it does, Apple will most likely have another device in the offing.

8. Up, up and away. Data is no longer tied to the PC or desktop, it is moving to the cloud. Apple is right there in the cloud. Cloud computing is the new buzz word for delivering applications as services via the Internet. The first fruits of Apple’s cloud computing initiative involves the integration of Google’s cloud computing offering, the Google App Engine with Apple’s iPhone mobile computing platform. ITIC anticipates Apple will expand its reach into the cloud, again based on customer demand. Nearly half – 49% of the ITIC/Sunbelt Software survey respondents said they plan to increase integration between existing Apple consumer products like the iPhone to allow corporate users to access corporate Email and other applications over the next 12 months.

7. Marketing. No one does it better. From the moment that Steve Jobs stepped onstage 25 years ago and unveiled his 20lb. baby, to the creative licensing of the Rolling Stones tune “Like a Rainbow”, to partnering with the Irish rock group U2 to help promote iPod usage, Apple’s marketing has always been stellar. Apple uses every available channel – from the airwaves to the street – to promote its brand. There are now 251 Apple retail stores open in 10 countries, with total quarterly traffic of 46.7 million visitors.

6. New gadgets. Users and industry watchers have grown accustomed to Apple debuting revolutionary new products at MacWorld and they disappointed when it doesn’t happen. It is unrealistic to expect that any company, even one as inventive as Apple, can deliver a iPod or iPhone every year. Meanwhile, users will have to “settle” for evolutionary innovations like new laptop batteries that will run for eight hours without re-charging and Time Capsule, an all-in-one 802.11n wireless backup router that includes up to 1 terabyte of disk storage.

5. Leadership. It’s impossible to overstate or understate what company founder Steve Jobs has meant to Apple. His 1996 return to Apple sparked one of the greatest corporate revivals since Lazarus. An iconic figure in Silicon Valley for over 30 years, Jobs’ future is now clouded by health concerns, and investors and industry watchers are rightly nervous. Only time will tell when or if Jobs will return. If he does not, it will be a devastating loss on many levels but it will not cripple the company’s ability to thrive and survive. Still, Apple must allay customer, investor and government concerns by being truthful and forthcoming regarding Jobs and the company’s future.

4. What’s in Apple’s Wallet? Cash — $28.1 billion to be exact and $0 debt. That’s more than Google ($15.85B); Microsoft ($20.3B); IBM ($12.9B); Intel ($11.84B) or Sony ($6.05B). Apple also has double digit profit margins of 14.70% and operating margins of nearly 19%; return on assets is 10.77% while return on shareholders’ equity is a robust 24.47%. Few if any corporations can boast such a healthy balance sheet, which leaves Apple free to invest heavily in R&D, marketing initiatives and other efforts to keep ahead of competitors.

3. Apple is hot – and cool. Consumers have always loved Apple and there’s nothing to indicate that will change. Consumer enthusiasm for iPods and iPhones has fueled the resurgence of Macs and OS X 10.x in enterprises. Everyone it seems has or wishes they had an iPod or an iPhone. Beyond that the latest joint ITIC/Sunbelt Software data indicates that Apple is increasing its presence in many markets thanks to the performance and reliability of the core products. Eight out of 10 businesses – 82% of the survey respondents – rated the reliability of the Mac and OS X 10.x as “excellent” or “very good,” while almost 70% of those polled gave the same high marks to the security of the Apple platform. Tellingly, 68% of the survey respondents said their firms are likely to allow more users to deploy Macs as their enterprise desktops in the next six-to-12 months.

2. Enterprising. Over the past three years Apple has made a comeback in the enterprise. The latest joint ITIC/Sunbelt Software survey of 700 companies worldwide indicates that nearly 80% of businesses have Macs in their environment and 25% have significant (>30) numbers of Macs. But while enterprise users love Apple, IT managers remain divided. The biggest drawback for the Mac is the dearth of enterprise-class third party management and performance enhancement tools but technical service and support is also an issue. Apple will have to address these points if the company expects or plans to challenge Microsoft’s dominance on business desktops. So far, Apple has been silent about its enterprise strategy but a new consortium of five third party vendors calling itself the Enterprise Desktop Alliance (EDA) is determined to promote the management, integration and interoperability capabilities of the Mac in corporate environments.

1. Mobile and agile, not fragile. The combination and plethora of Apple consumer and corporate devices makes for a powerful product portfolio with widespread appeal. Unlike many of its competitors Apple is not dependent on a single product or market segment. Hence, when sales decline in one sector, the slippage is offset by another product as we’ve seen with Mac notebooks picking up the slack for Mac desktops. This enables Apple to adjust both its technology plans and market focus accordingly, strengthening and insulating the company from cyclical downturns.

One of the hallmarks of Apple’s existence has been the ability to re-invent itself – not only changing with the times – but keeping its fingers on the pulse of an often fickle public and anticipating what its users and the industry wants. Apple is well positioned for both the near and intermediate term. It will have to stay focused, keep its edge and clearly communicate its strategy in order to maintain the same level of success it has achieved in the last 32 years.

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