Thursday
February 07 02:12 PM EST
By Robyn Weisman, www.NewsFactor.com
In an effort to sidestep
the cutthroat PC price war that has raged for at least the last year, many
high-tech companies have branched out into what is loosely called the IT
services industry
No company has done a
better job of making the transition from a hardware-oriented enterprise to one
that focuses on services than New York-based IBM (NYSE:
IBM - news). All
three analysts interviewed by NewsFactor for this article agreed that IBM's
Global Services Division is the worldwide market leader.
"They're the top
global IT services provider by just about any measure you would use -- in
revenue, certainly in the numbers of people they have, and the number of
customers," Julie Giera, vice president of IT services at Giga Information
Group, told NewsFactor.
Challenge from Merger
But there is an increasing
possibility that a merger between Hewlett-Packard (NYSE:
HWP - news) and
Compaq (NYSE:
CPQ - news) would
produce a combined entity that could give IBM a run for its money.
What would the new
HP-Compaq have to do to upstage the services giant? And what exactly is this
relatively new market called "services" that so many companies now see
as the Holy Grail of revenue?
No Single Thing
"There is no single
thing called 'services,'" Bobby Cameron, principal analyst with Forrester
Research's technology leadership team, told NewsFactor. "Think of it [more
as] a vertical stack of technologies."
The bottom stack in the
services pyramid, according to Cameron, consists of networks that are dominated
by the telecom companies. At this most basic level, the Internet, company
intranets and telephone networks are simply about the cables or fiber optic
lines that wire up a company's physical space.
"Come up a stack and
you get data centers -- rooms full of hardware and all the stuff that makes
those computer rooms run," Cameron said. "In general, they don't vary
a whole lot by industry or by any other kind of segmentation."
The third stack, Cameron
noted, comes under the category of "systems integration."
Systems Integration
Companies engaged in
offering systems integration services might build and provide software
applications, operate the applications, consult on them, or any combination of
the three.
This area of the services
industry is highly specific to individual industry segments, because business
activities that are typically automated are generally peculiar to particular
industries.
At the top of the stack
are services that operate around the business process itself. This area is
generally known as outsourcing. Here, a services firm actually runs a piece of
its client's business. Such services are very focused and are unique to
individual companies, not to the sectors to which those companies belong.
Companies like FedEx and
UPS, for example, which are now seen as independent vendors, were considered to
be outsourcing services early on, when many companies still delivered packages
using their own internal resources.
Gerstner's Vision
According to Forrester's
Cameron, IBM holds its dominant position in the services industry today because
the company "does absolutely every one of those services, except networks."
In large part, IBM owes
its supremacy to retiring CEO Lou Gerstner's vision for the company.
When Gerstner took control
in 1993, IBM was in the process of carving itself into multiple subsidiaries and
was spinning off -- or planning to spin off -- many of its divisions, including
its individual service departments, Giga analyst Giera explained.
Gerstner turned IBM 180
degrees away from this strategy, consolidating the company's varied services
divisions into what is now known as IBM Global Services.
Big Bulls-Eye
"[Gerstner] saw
services as a leading way IBM was going to be identified, rather than just an
afterthought or add-on to a hardware sale," Giera said. "So, he
fashioned IBM Global Services in such a way that the level of exposure they get
at the top tiers of the organization is almost unmatched.
"That, of course, is
what saved them," Giera added, "because [Global Services] smoothed out
all the revenue bumps that would have occurred without it."
Of course, IBM's success
in the sector means the company has now become everyone else's target.
As Giera put it, "There's
a big ol' bull's-eye painted on IBM."
Tuesday
February 5, 7:08 pm Eastern Time
By Ben Berkowitz
LOS ANGELES, Feb 5 (Reuters)
- Nearly half of technology managers at major U.S. companies expect high-tech
spending to be flat this year compared to 2001, while almost a quarter see it
falling, according to a survey presented on Tuesday by brokerage Goldman Sachs.
That cautious outlook
showed that corporate investment plans for computer systems, software, and
storage and security are starting to stabilize after being ratcheted sharply
lower in 2001 in response to a developing economic slowdown and amid a global
technology slump, the brokerage said at an investment conference it is hosting
in La Quinta, California.
``Budgets could gradually
loosen in the same way that they tightened over the course of 2001 as the
economy shows improvement,'' Goldman Sachs said in the report summarizing the
results of its survey of information technology (IT) executives at 100 companies
with revenues of at least $1 billion.
In the survey, 47 percent
of corporate managers said spending on information technology would be flat,
while most of the remainder were almost equally divided between forecasting
declines and increases. One percent of the respondents said they did not know
how IT spending would change this year.
In that cautious climate,
brand-name technology vendors could be poised to pick up market share, the
brokerage said.
``More often than not, our
respondents cite traditional market leaders as gaining share of their spending
in the current environment,'' Goldman Sachs said.
Among the companies
mentioned in that category were Microsoft Corp. (NasdaqNM:MSFT
- news),
International Business Machines Corp. (NYSE:IBM
- news),
Cisco Systems Inc. (NasdaqNM:CSCO
- news), Dell
Computer Corp. (NasdaqNM:DELL
- news) and
EMC Corp. (NYSE:EMC
- news).
The biggest gainers in
computer hardware were seen as Dell and IBM, with 39 percent of surveyed
managers and 34 percent, respectively, saying they would get more business.
The biggest share losers
were expected to be Compaq Computer Corp. (NYSE:CPQ
- news) and
Hewlett-Packard Co. (NYSE:HWP
- news) at 40
percent and 32 percent, respectively, the survey said.
Almost half of the
surveyed managers (49 percent) said their spending on laptop and desktop
computers would remain flat in 2002. Some 38 percent of managers said they had
lengthened their replacement cycle for personal computers.
With regard to software,
50 percent of managers surveyed said they would buy more from Microsoft, while
41 percent said they would increase spending with enterprise software vendor SAP
AG . Novell Inc. (NasdaqNM:NOVL
- news),
which sells network software, was seen losing sales, with 26 percent of users
saying they would buy less from the Provo, Utah-based company.
SPENDING PRIORITIES
INFLUENCED BY SEPT. 11
The top five spending
priorities for the year were influenced by the hijacking attacks of Sept. 11,
Goldman Sachs said, with managers listing security ???data networking, database
software, storage software and disaster recovery as key.
The lowest priorities for
the year included Linux servers and desktop PC upgrades to Microsoft's Windows
2000 and Windows XP operating systems.
More than two-thirds of
surveyed managers said they had no plans to use the open standards-based Linux
operating system in 2002. Only 1 percent of managers said Linux would be their
main system for running powerful servers over the next two to three years.
Just as last year's survey
showed too much confidence in tech spending budgets, this year's result may
point to an early excess of caution, the brokerage said.
Only about a quarter of
managers thought a year ago that their 2001 budgets would be flat, but over 40
percent of companies surveyed ended up with unchanged budgets.
Now managers are more
pessimistic: 89 percent of respondents predicted that growth in their IT
spending would be below 10 percent over the next five years.
That was below the 10-13
percent average annual growth in that spending since 1992, the brokerage said.
Tuesday
February 5, 8:00 am Eastern Time
SOURCE:
IBM
SOMERS, NY--(INTERNET WIRE)--Feb
5, 2002 -- IBM today announced 14 companies that are turning to its WebSphere*
software platform for their e-business operations.
IBM WebSphere is Internet
infrastructure software -- or middleware -- used to develop, serve and integrate
business applications and enable high-volume transactions over the Web. Nearly
50,000 companies worldwide now rely on WebSphere as their e-business middleware.
The new WebSphere
customers include J.P. Morgan Chase, First Data, Merrill Lynch, Morgan Stanley,
Fidelity, GAD, State Farm, State Street, Safeway, DaimlerChrysler, Volvo,
Verizon Wireless, Orange Communications and Zurich Schweis.
WebSphere has shown 11
consecutive quarters of double-digit revenue growth, climbing 43 percent in the
fourth quarter of 2001 and 50 percent for the entire year. The WebSphere
software platform is used by 75 percent of the top commercial banks in the
United States, 15 of the top Wall Street brokerage firms, seven of the eight
largest U.S. telecommunications companies, and 80 percent of the top U.S.
healthcare companies.
WebSphere gained
significant market share in 2001 and is headed toward the industry's No. 1
position, according to analysts. Unlike competitors, WebSphere is a complete set
of integrated middleware products, built on open standards and IBM's legendary
strengths in reliably and securely handling enterprise-scale transactions
In addition, IBM offers a
complete set of industry-leading and award-winning application development tools.
The rapid adoption of WebSphere tools, including the industry's first tools to
deploy Web services, highlights how an increasing number of developers are
adopting WebSphere as their development software of choice. Today, more than
9,000 independent software vendors (ISVs) write applications on top of WebSphere.
There are more than 600,000 active WebSphere developers worldwide, nearly three
times the nearest competitor.
About IBM's (NYSE:IBM
- news)
WebSphere Software
WebSphere is Internet
infratructure software -- known as middleware -- that enables companies to build,
deploy and integrate next-generation e-business applications using open
standards. WebSphere transforms the way businesses manage customer, partner and
employee relationships. More information about the WebSphere software platform
is available at www.ibm.com/websphere.
Wednesday
February 6, 7:04 pm Eastern Time
By Siobhan Kennedy
NEW YORK, Feb 6 (Reuters)
- Microsoft Corp.(NasdaqNM:MSFT
- news), IBM(NYSE:IBM
- news) and a
host of rival technology competitors on Wednesday said they formed an
organization to work on standards to make it easier for companies share
information and do business over the Web.
The anticipated news sees
Microsoft and IBM coming together with a string of fierce rivals in the
technology sector -- including Intel Corp.(NasdaqNM:INTC
- news),
Oracle Corp.(NasdaqNM:ORCL
- news), SAP
AG, Hewlett-Packard Co.(NYSE:HWP
- news) and
Fujitsu Business Systems Ltd. .
The group, called the Web
Services Interoperability Organization (WS-I), aims to provide companies with a
standard way of using Web services -- the hot new market for software that makes
it easier for different computer systems to share information to carry out
business tasks such as purchasing or inventory checking over the Web.
The group brings together
rival camps split between using Microsoft's .Net Internet technology and Java, a
rival technology which was developed by Sun Microsystems Inc.(NasdaqNM:SUNW
- news)
Sun Microsystems, a bitter
rival of Microsoft, was noticeably absent from the line-up. But a spokesperson
said ``Sun has been and will be committed to supporting industry standards as
they emerge and evolve,'' adding ``WS-I is a good concept and bears looking into.''
The organization wants to
ensure that companies use the low-level technical standards -- UDDI, WSDL, XML
and SOAP --
that govern the
development of Web services in the same way, Bob Sutor, IBM's Program Director
for XML Technology said.
He likened it to the use
of the English language. There are lots of valid ways of putting the words
together to make sentences, but eventually people develop common phrases that
succinctly communicate what they want to say, Sutor said.
``The collection of
standards around Web services is much the same way,'' Sutor said. ``Once we
discover the ways that people use them, it's good to call those out because this
means that other people can start using them in the same way.''
This isn't the first time
these companies have come together under the umbrella of Web services. But the
news is nevertheless significant because it signals a growing acceptance among
technology sector rivals to work together.
Java and .Net offer
opposing ways for developers to write their software applications, therefore
forcing companies to chose between the two.
Web services are designed
to overcome these incompatibility problems by wrapping those software
applications in such a way that they can be used on any system, be it Java, .Net
or some other type of software system.
Sun Microsystems, however,
was noticeably absent from the list of companies supporting the alliance,
although companies such as IBM, BEA and Oracle, which support Java, said they
acknowledged that linking software applications to do business was a big issue
for their customers.
``We recognize that
applications built on our platform need to be interoperable with applications
built on other platforms,'' Byron Sebastian, BEA's senior director of product
management said, referring to the linking of Web services between different
systems.
IBM and BEA are bitter
rivals in the market for application servers, the basic software platform upon
which Web services and other types of software applications are developed.
As well as working on
existing standards, Sutor said the Web Services Interoperability Organization
would also work with Internet standards bodies, like the World Wide Web
Consortium, to ensure future Web services standards, governing such areas as
security, work together.