Category Archives: Financial Results

AWS, Financial Results, IaaS, News & Analysis

AWS posts 60% boost as it creeps towards $10bn revenues

amazon awsAWS has continued its promising progress towards breaking the $10 billion barrier, after reporting revenues of $5.4 billion for the first six months of 2016, a boost of 60% from the same period last year, reports Telecoms.com.

Speaking during its Q1 earnings call in April, Amazon CFO Brian Olsavsky highlighted there was a very realistic chance the AWS business would exceed $10 billion in annual revenues, becoming the first cloud infrastructure company to do so. After another quarter of healthy growth, revenues were up 58% to roughly $2.9 billion, the team are well on track to exceed the ambitious target. Progress has been healthy over the last few quarters, but the team are looking to push the accelerator harder.

“We actually see nine availability zones in four regions coming out in the next – in the coming year,” said Olsavsky. “The impact on short-term is pretty much indistinguishable from the growth that we’re seeing in our expansion of our base customers in our existing regions, so we don’t see a large step-up from the addition of new regions relative to the large and rapid growth in the business itself.”

With new data centres popping up all over the world to meet the demand of the burgeoning cloud computing sector, AWS is keeping trend, opening up in Mumbai last month, as planning nine new availability zones within the next 12 months. The impact of these new assets are unlikely to be felt during the next quarter, though long-term there the current cloud leader could reinforce its position at the top of the leader board.

“Again, we like our position, our industry leading position in the cloud space, and we’re working on things that would incent more and more customers to accelerate their cloud conversion,” said Olsavsky. “The lower prices and services that we offer, and as I said, we’ll work on things that will make it easier and easier for customers to work with us with their hybrid data centers or transfer their volume to us.”

One area of growth which could have a more short-term impact is the new FedRAMP High compliance certification, which will allow government agencies the ability to use the AWS Cloud for highly sensitive applications and workloads like patient records, financial data, and law enforcement data. Government contracts represent lucrative wins in the technology sector, which could underpin the company’s surge towards $10 billion. The accreditation also creates a useful precedent for the business if/and the team look to expand its footprint with government organizations in the international markets.

AI, fibre, Financial Results, Google, News & Analysis

Google grows (again) but ‘Other Bets’ cost the giant $1bn

GoogleGoogle has reported its Q2 numbers, continuing a strong run of performances within the technology industry, though efforts to diversify its overall business are not paying off just yet, reports Telecoms.com.

The Alphabet brand was announced last year, with aim of allowing the team to invest in other projects more freely, without being impeded by the advertising business. It would appear the management team are not afraid to throw R&D money at its innovation team as it searches for another billion-dollar business, as the ‘Other Bets’ segment, which includes Google Fibre and the autonomous cars projects, accounted for an operating loss of $859 million. Revenues did grow to $185 million, up 150% on the same quarter in 2015, though this number was made almost insignificant by the $19 billion generated in the advertising business.

The technology industry on the whole has been providing strong numbers over the last couple of weeks, though there has been a question as to whether two advertising giants can co-exist. With Facebook reporting significant growth yesterday, advertising revenues across the period increased 63% year-on-year to $6.2 billion, these numbers were dwarfed by Google, perhaps demonstrating there is potential for both organizations to share advertising revenues, which are decreasing in value, and grow healthily.

With regard to the dwindling value of advertising revenues, Google would appear to be combatting this with volume. CFO Ruth Porat highlighted the mobile search capabilities were the primary driver behind the year-on-year growth, though the desktop and tablet search did also grow.

Numbers such as these will grab headlines, meaning it can be easy to forget about the Google cloud business, one of the top priorities for the Alphabet business moving forward.

On the same day which AWS reported revenues of $2.9 billion for the quarter, Google’s cloud business also demonstrated solid growth. Although the numbers are not specific, the ‘Other’ revenues segment which includes the cloud business, and other services such as Google play, accounting for $2.1 billion through the three month period, an increase of 33% on Q2 2015.

“Many tremendous digital experiences are being built in the cloud today, and businesses are working to take advantage of the cloud as part of their digital transformation,” said Google CEO Sundar Pichai. “We’ve been integrating our cloud and apps products to create more unified solutions for companies large and small, and these efforts are paying off.”

Following on from Pichai’s previous comments on the role of artificial intelligence on the Google cloud platform, and the wider Google business, its importance has been reiterated once again. Machine learning is being prioritized as the differentiator for Google in a competitive technology market, and only last week the team introduced two cloud machine learning APIs for speech and natural language to help enterprise customers convert audio to text and easily understand the structure and sentiment of the text in a variety of languages.

In terms of footprint, the team are not done growing yet. At the end of last month, Google and friends completed work on a new trans-Pacific submarine cable system, which will help the team launch a new Google Cloud Platform East Asia region in Tokyo. Back in March, the team confirmed it would be investing heavily in expansion of its cloud footprint with 12 new data centres around the world by the end of 2017.

AWS has previously stated it intends to break the $10 billion barrier in cloud revenues during 2016, though Google may not be that far behind. With its history of not being afraid to invest, and the growth numbers which have been witnessed over the last few quarters, Google could be set to accelerate.

Artificial intelligence, Facebook, Financial Results, mobile advertising, News & Analysis

Facebook puts Twitter into crosshair

FacebookFacebook has reported healthy growth in advertising revenues over the last quarter, and also outlined its ambitions to take on Twitter and traditional search engine, reports Telecoms.com.

Speaking on the company’s quarterly earnings call, CEO Mark Zuckerberg highlighted his intentions to expand the boundaries of Facebook, mounting a challenge to conversation platform Twitter, building search capabilities for businesses on the social network, as well as directing notable investment into video capabilities. Advertising revenues across the period increased 63% year-on-year to $6.2 billion, with mobile accounting for 84%, though the team are seemingly not satisfied as it prepares to venture into new markets.

“We have a saying at Facebook that our journey is only 1% done,” said Zuckerberg. “And while I’m happy with our progress, we have a lot more work to do to grow our community and connect the whole world. That means making big investments and taking risks, focusing not just on what Facebook is but on what it can be.”

While Twitter was not mentioned specifically during the call, Zuckerberg outlined his intentions to make Facebook the platform where users search for and express their views on current affairs. Most users would currently search for and post updates to their immediate circle of contacts, though this is an aspect which Zuckerberg wants to change. When looking at keyword searches, the team claim there are now 2 billion searches per day of its 2.5 trillion posts, growing 33% over the last nine months. The challenges towards Twitter was not implicitly mentioned by the Facebook chief, though the team are seemingly on a mission to create a conversation platform which extends beyond an users immediate circle, a space which has been dominated by Twitter in recent years.

Another area of potential growth for Facebook is commercial search. According to Zuckerberg, over a third of small and medium businesses in the states do not have a website, though Facebook could provide an alternative. Setting up and managing a website can be challenging, as well as for those who are less technically able, the team are promoting the use of the platform to create company pages and build the online presence of these organizations through Facebook. Although this is a long-term ambition, and the team are not in a stage where notable revenues are realistic, it would appear to be a move to provide an alternative to traditional search engines.

“This is why Facebook pages are the mobile solutions for many of the 60 million businesses using our products each month in the U.S. and around the world,” said Zuckerberg. “We’ve made it easy for business owners to manage their Facebook page from their mobile device. Over 85% of active business pages use mobile, and 40% of active advertisers have created a Facebook ad on their mobile device.

“So when we talk about our strategy (commercial search), I often talk about how when we develop new products we think about it in three phases. First, building a consumer use case; then, second, making it so that people can organically interact with businesses; and then third, on top of that, once there’s a large volume of people interacting with businesses. Give businesses tools to reach more people and pay, and that’s ultimately the business opportunity.

“I’d say, we’re around the second phase of that in search now.”

Artificial intelligence is another area which ties into the commercial capabilities of search, as once AI is perfected by the team, it does offer the opportunity to dramatically increase the relevance of ads put in front of the consumer. While most adverts are placed on historical data and previous customer behaviour, the potential of AI is intuition, the ability to make human decisions on what a potential customer would be interested it. This quarter, Facebook announced the development of DeepText, a deep learning based engine that can understand the context of several thousand posts per second across 20 different languages. It’s the beginning of the move towards AI, but a promising start.

As with other social media brands, video has been outlined as a priority for the team, building on the theme of consumer trends towards mobile. Most recently Facebook has been focused on the implementation of live video, though Zuckerberg highlighted the team will continue to invest in video platforms, to capitalize on the growing role of video in social media.

“We’re also working on new tools to help people express themselves and understand what’s going on with the people they care about. Ten years ago, most of what we shared and consumed online was text. Now its photos, and soon most of it will be video. We see a world that is video first with video at the heart of all of our apps and service.”

The shift towards mobile is fast changing the way customers consume and interact with media, most notably video. Before the phenomena of video can be capitalized on, the right capabilities need to be in place, and firstly this means investment.

All-in-all, most people would comment this has been a successful quarter for the social media giant. Total revenues are up to $6.4 billion, a 59% increase, daily active users standing at 1.13 billion on average for June 2016, an increase of 17% year-over-year, and monthly active users at 1.71 billion as of June 30, 2016, an increase of 15% year-over-year. Facebook has arguably been the most successful company at capitalizing on its captured audience, and should it effectively build capabilities in the conversation and search segments, it will be a worrying sign for Twitter and more traditional search engines.

apps, Financial Results, Mobile, News & Analysis, Niantic Labs, Nintendo

Nintendo shares slump before Tokyo regulators step in to stop decline

Pokemon GO 2Nintendo has released a statement in which the company outlined the limited impact Pokémon Go will have on its annual revenues. Following the news, around $6.7 billion was wiped from the company’s market capitalization.

While Pokémon Go has proved to be one of the most successful product launches in recent years, as its release broke numerous records in markets around the world. EE stated it saw 350,000 downloads in the UK even before the app was officially released as users found another means to download it, such as accessing the US app store via a VPN. The success of the app is not under question, though Nintendo has not altered its annual revenue forecasts due to the limited role it has in the app itself.

“Taking the current situation into consideration, the Company is not modifying the consolidated financial forecast for now,” the statement read. “The Company will make a timely disclosure when the Company needs to modify its financial forecasts.”

Niantic Labs is an American company spun out of Google, who license the rights to the game from The Pokémon Company, who in fact own the Pokémon franchise. Nintendo itself owns roughly 32% of the voting rights to The Pokémon Company and therefore only entitled to a modest slice of the revenues from the game itself. Analysts at investment firm Macquarie Group estimate Nintendo will only be entitled to roughly 13% of the revenue generated by the Pokémon Go app.

Although many organizations would have done due diligence surrounding the game, the relationship between Niantic Labs, The Pokémon Company and Nintendo, as well as the potential for profit, it would appear the news caught certain individuals off-guard, as a substantial proportion was wiped off Nintendo’s market capitalization.

The announcement was made following the close of the markets on Friday, though this has led to a busy morning following the weekend. 18%, or $6.7 billion, was wiped off the market capitalization of Nintendo, though this could have potentially been worse, as regulations in the Tokyo market prevented a larger drop, as the maximum single day move allowed by the market is 18%. How much the shares would have shrunk if trading had continued will remain unknown, though Nintendo is still showing a net gain of 15% since the launch of Pokémon Go two weeks ago.

“The Pokémon Company is the Company’s affiliated company, accounted for by using the equity method. Because of this accounting scheme, the income reflected on the Company’s consolidated business results is limited.”

While this would appear to have come as a shock to certain investors in the Nintendo business, there is still potential for growth and long-term wins. In-app purchasing in the Japanese market will likely grow over future weeks, and the game has not been launched in two of the worlds other prominent app markets, Korea and China. There could be some big wins in these two markets, though it would be worth noting both have restrictions on the Google Maps product, potentially offering challenges for the way the app operates, and its overall success.

Should the app launch in China and/or Korea, the story is likely to roll on for some time, though how large the ripples will be following Nintendo’s revelation will likely be seen sooner. The success of the Pokémon Go is not under question, though Nintendo’s brief taste of fame following the surge in share price over the last two weeks would appear to be coming to an end.

5G, Financial Results, Huawei, IoT, News & Analysis, Smartphone

Smartphones help Huawei to 40% revenue growth over H1

Huawei MWC 2016

Huawei has released financials for the first half of 2016 demonstrating a 40% revenue boost to $37 billion, partly owing to a healthy performance in the consumer business unit.

Although operating margin for the period has declined from 18% to 12%, the company posted stronger revenue growth for the period, slightly offsetting the decline. During the first six months of 2015 revenues grew 30%.

“We achieved steady growth across all three of our business groups, thanks to a well-balanced global presence and an unwavering focus on our pipe strategy,” said Sabrina Meng, Huawei’s CFO. “We are confident that Huawei will maintain its current momentum, and round out the full year in a positive financial position backed by sound ongoing operations.”

The decrease in the operating margin reflects the progress of the larger smartphone industry, as well as the competition which is increasing worldwide. Huawei currently sits in third place in global market share of the smartphone market, though it has been investing heavily to penetrate western markets in recent months. Samsung and Apple are currently defending their position as the top two, though Huawei’s efforts to chance the mid-range market are seemingly paying off.

Set against a backdrop of declining smartphone shipments, Huawei has held onto its strong position in the Chinese market, increasing its shipments from 11.2 million to 16.6 million in Q1 2016, compared to the same period in 2015. The move increased its market share from 10.2% to 15.8% taking it to the top of the Chinese leader board, while Apple lost ground dropping from 12.3% to 11%.

While this may be seen as unsurprising in some quarters of the industry, success in the international markets is becoming more apparent. According to research from Gartner, sales of smartphones to end users totalled 349 million units in the first quarter of 2016, a 3.9 percent increase over the same period in 2015. Samsung accounted for roughly 23% of the market, whereas Apple was just under 15%. Huawei increased its share 5.4% to 8.3%, taking it to third in the global market share tables. The company is expected to continue to ramp up its R&D focus over foreseeable future.

Although the company did not detail the enterprise business units figures though that is likely to be outlined in the coming weeks. The enterprise business, which includes cloud computing, storage, and SDN products, Safe City and Electric Power IoT solutions, did announce healthy growth of 44% to $4.5 billion during its annual Global Analyst Summit in April.

In the carrier business, the role of 5G and IoT was reaffirmed, and the team will be focusing on four areas within the telco industry, business, operations, architecture, and networks. While the carrier business has been demonstrating strong growth throughout the world, it has struggled in the US after its technology was effectively banned over concerns it would be used by Chinese authorities to spy on the US. While Huawei has continually denied the allegations, it has struggled to rebound and reassert itself in the market.

Elsewhere in the industry, competitor Ericsson has been experiencing slightly different fortunes after CEO Hans Vestberg resigned following another difficult quarter for the company. Last week, the company reported an 11% annual decline in net sales with pressure continuing to build against Vestberg.

cyber security, data centre, Financial Results, Intel, IoT, News & Analysis, Personal Computing

Intel grows despite the PC continuing its slow decline

IntelIntel has reported 3% growth, including a 5% boost in its data centre business, though the client computing unit continues its slow decline, reports Telecoms.com.

The company’s efforts to redefine itself are seemingly beginning to pay dividends as a 3% year-on-year decline to $7.3 billion in the client computing business unit was offset by healthy performances elsewhere in the organization. The data centre unit brought in $4 billion in revenues, up 5%, whereas IoT accounted for $572 million, an increase in 2%, and the security portfolio grew 10% to $554 million for the quarter. The Programmable Solutions group also saw a 30% boost to $465 million. Overall quarterly earnings grew 3% to $13.5 billion.

“Our top line results for the quarter came in right in line with outlook, and profitability this quarter exceeded our expectations,” said Brian Krzanich, Intel CEO. “Year-over-year growth this quarter was 3% overall, as we transform Intel into a company that powers the cloud and billions of smart connected devices. We continue to focus on growth in line with this transformation, as evidenced by results in the data centre, IoT, and Programmable Solutions business this quarter.”

Looking forward, the team is forecasting Q3 will bring in revenues of roughly $14.9 billion, which would represent 3% year-on-year growth. Client computing is expected to continue its decline in the high single digits, while double-digit growth is anticipated in the data centre business, funded by cloud players in the second half of the year. CFO Stacy Smith believes growth in the IoT, data centre and memory businesses will counteract any negative impact of client computing.

While the data centre business continues to demonstrate growth for Intel, overnight trading saw share price decline by 3% following the earnings announcement. Investors were anticipating higher growth levels for the data centre group, as Intel forecasted double digit growth previously.

Intel’s efforts to redefine the focus and perception of the business has been ongoing for some time, as the personal computing market segment, Intel’s traditional cash cow, has continued to erode. Back in April, Krzanich outlined the company’s future focus on the company blog, which is split into five sections; cloud technology, IoT, memory and programmable solutions, 5G and developing new technologies under the concept of Moore’s law.

“Our strategy itself is about transforming Intel from a PC company to a company that powers the cloud and billions of smart, connected computing devices,” said Krzanich in the blog entry. “But what does that future look like? I want to outline how I see the future unfolding and how Intel will continue to lead and win as we power the next generation of technologies.

“There is a clear virtuous cycle here – the cloud and data centre, the Internet of Things, memory and FPGA’s are all bound together by connectivity and enhanced by the economics of Moore’s Law. This virtuous cycle fuels our business, and we are aligning every segment of our business to it.”

While the IoT business only grew 2% year-on-year, it would be worth noting this is off the back of a healthy Q1 which saw the unit grow 22%. Krzanich linked the Q2 performance, which was below the teams expectations, to an inventory burn following a strong performance in the first quarter. The team now anticipate double-digit growth through the remainder of 2016.

This was also the second consecutive quarter in which the security portfolio was listed as a separate business unit, previously being incorporated into the software and services unit. The group itself has demonstrated healthy growth over the course of 2016, but has been the topic of speculation surrounding a sale.

Only last month the team were rumoured to be considering a sale of its security business, which was created following the $7.6 billion acquisition of antivirus specialists McAfee in 2010. Although security is one of the larger sections of the Intel business, it was not specifically mentioned as a focus point for the future business strategy during Krzanich’s blog entry in April. While the prospective sale has not been confirmed by the Intel team, separating the unit in the financials could indicate it is attempting to provide a greater level of transparency for potential buyers.

AI, Artificial Intelliegence, Azure, Cortana, Financial Results, Microsoft, News & Analysis, Public Cloud

Microsoft continues cloud transformation with 100% Azure growth

Microsoft1Microsoft has reported 5% growth to $22.6 billion as the Intelligent Cloud business unit led the charge, with the Azure public cloud offering more than doubling in revenues and compute usage, reports Telecoms.com.

The Intelligent Cloud unit, which includes server products and cloud services, Azure and enterprise mobility offerings grew 7% to $6.7 billion, while the Productivity and Business Processes, which includes Office commercial and consumer product lines as well as the Dynamics suite, grew 5% to $7 billion. Despite revenues in More Personal Computing declining 4% to $8.9 billion, Xbox Live monthly active users grew 33% year-over-year to 49 million and search advertising revenue grew 16% over the period.

“We delivered $22.6 billion in revenue this quarter, an increase of 5% for the quarter in constant currency,” said Satya Nadella, CEO at Microsoft. “This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations. The Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”

Cloud computing has once again brought Microsoft to the forefront of the technology industry following a challenging couple of years. It would appear the transition from software to cloud computing brand is being successfully navigated, though there were a few missed steps along the way, most notably the team’s foray into mobile. Microsoft is moving towards the position of ‘mega-vendor’, infiltrating almost all aspects of an organization (cloud, hardware, social, databases etc.), to make it an indispensable factor of a CIOs roster.

The Intelligent Cloud unit continues as the focal point of the company’s growth strategy, as Nadella claims nearly 60% of the Fortune 500 companies use at least three of the company’s cloud offerings, generating more than $12 billion in Commercial Cloud annualized revenue run rate.

“Companies looking to digitally transform need a trusted cloud partner and turn to Microsoft,” said Nadella. “As a result, Azure revenue and usage again grew by more than 100% this quarter. We see customers choose Microsoft for three reasons. They want a cloud provider that offers solutions that reflect the realities of today’s world and their enterprise-grade needs. They want higher level services to drive digital transformation, and they want a cloud open to developers of all types.”

AI has previously been positioned as one of the cornerstones of growth for the company, and this was reinforced during the earnings call, as Nadella noted the component of the Intelligent Cloud business unit. The Cortana Intelligence Suite, formerly known as Cortana Analytics Suite, is built on the company’s on-going research into big data, machine learning, perception, analytics and intelligent bots. The offering allows developers to build apps and bots which interact with customers in a personalized way, but also react to real-world developments in real-time.

“Just yesterday, we announced Boeing will use Azure, our IoT suite, and Cortana Intelligence to drive digital transformation in commercial aviation, with connected airline systems optimization, predictive maintenance, and much more,” said Nadella. “This builds on great momentum in IoT. This is great progress, but our ambitions are set even higher. Our Intelligent Cloud also enables cognitive services. Cortana Intelligence Suite offers machine learning capabilities and advanced predictive analytics.

“Central to our Intelligent Cloud ambition is providing developers with the tools and capabilities they need to build apps and services for the platforms and devices of their choice. The new Azure Container service as well as .NET Core 1.0 for open source and our ongoing work with companies such as Red Hat, Docker, and Mesosphere reflects significant progress on this front. We continue to see traction from open source, with nearly a third of customer virtual machines on Azure running Linux.”

The company exceeded analyst expectations for the quarter, which was reflected in pre-market trading which saw shares in the giant growing 4%. In terms of outlook for the next quarter, most business units are expected to be down a fraction on the Q2 reported figures, unsurprising considering the summer period. Intelligent Cloud is expected to bring between $6.1-6.3 million, Productivity and Business Processes $6.4-6.6 billion, and More Personal Computing $8.7-9 billion.

AI, Cognitive, Financial Results, IBM, News & Analysis

IBM makes cloud progress but reports another quarterly decline

IBMIBM revenues continued to fall for a 17th consecutive quarter despite beating analyst expectations and demonstrating healthy growth in its cloud and data business units, reports Telecoms.com.

The company reported a drop in revenues for Q2 of 2.8% to $20.24 billion, though this was an improvement on analyst expectations of $20.03 billion, encouraging shares to rise 2.6% to $164 after hours. The business units which the company deems strategic imperatives, cloud, analytics and engagement, gained 12% year-on-year, though this wasn’t enough to counter the impact of legacy technologies on reported earnings which fell to $2.5 billion from $3.45 billion in 2015. Overall, revenues are now roughly 25% lower than the numbers reported in 2011.

“We continued to deliver double-digit revenue growth in our strategic imperatives,” said CFO Martin Schroeter on the company’s earnings call this week. “Over the last 12 months, strategic imperatives delivered $31 billion in revenue, and now represent 38% of IBM.

“Growth was led by cloud, where our revenue was up 30% to $3.4 billion in the quarter, and over $11.5 billion over the last year so good progress in cloud. Looking at revenue from a segment perspective, the strongest growth came from cognitive solutions led by our analytics and cognitive capabilities and security.”

Schroeter was keen to emphasise the impact Watson is having on the business, as the team continue its journey to redefine Big Blue in the age of cloud computing. Numerous customers were listed as wins for IBM in the cognitive computing sector, as IBM continues to champion Watson as a platform to bring together the digital business with digital intelligence to improve decision-making and add intelligence to products and processes. Watson will continue to be the jewel in the crown of Big Blue as the company moves towards the new digital era.

Despite revenues continuing to fall the team has made a number of positive launches throughout the quarter. Quantum computing is now available on the IBM cloud, the team launched a new partnership with Box to counter the impact of EU-US Privacy Shield on its international business, and an expanded partnership with VMWare expanded the reach of its security portfolio.

In terms of the specific segments, revenues in the cognitive team rose 4%, though this is down from 9% growth in the previous quarter, solutions software revenue was up 6% for the quarter, SAS was another area which recorded triple digit growth and Schroeter claims IBM’s security business outperformed the market by three times. The IBM interactive experience unit also demonstrated healthy growth, as the team continue its journey into an entirely new market for Big Blue.

“We have opened over 30 digital studios around the globe including new studios in Singapore and Seoul,” said Schroeter. “We also completed the acquisition of Aperto, a digital agency in Berlin with over 300 employees and a roster of enterprise clients such as Airbus and Siemens.”

One area which has caught the headlines in recent weeks is the impact of Brexit on the fortunes of the technology sector. Despite concerns from various corners of the industry, it would not have appeared to have a significant impact on the long-term vision of IBM.

“I don’t think that Brexit coming at the end of the quarter helped us at all, but we obviously finished kind of right where we expected to finish,” said Schroeter. “And when we look at our full view of the year, we don’t see an impact, if you will, that has any real materiality on us.

“What I typically observe in these kinds of instances is that our discussions with our clients have to go through a process of reprioritization. So as they reprioritize, the length of time that takes depends a lot on how much uncertainty they’re faced with. And obviously, the political leadership in Europe and the UK can help reduce that uncertainty, but we didn’t see – again, we don’t think it helped but it didn’t cause us to change our guidance.”

While revenues have continued to fall for the tech giant, it would appear to be heading in the right direction. The strategic imperatives business units are now accounting for a larger proportion of the overall figures, now 38%, indicating the tide may be turning for IBM. Schroeter also highlighted the team are not happy relying solely on the progress of Watson, as IBM has acquired 20 companies in the last twelve months, which are now beginning to contribute in a more significant manner.

Although progress is starting to be seen, it would be worth noting it has not been an entirely smooth ride for IBM. There have been numerous new product launches and advances into new market segments, though this has come at a cost of more than 70,000 redundancies over recent months. While there has been a slight increase in share price following the announcement, it would be worth noting previous performance has had an impact on IBM. Shares in Big Blue have dropped 17% since CEO Virginia Rometty took over in January 2012 while the S&P 500 index rose 70% during the same period.

Financial Results, IaaS, News & Analysis, Oracle, PaaS, Quarterly Earnings, Saas

Oracle sets sights on IaaS market as it reports 49% cloud growth

Oracle CloudOracle has reported its 2016 Q4 results stating growth over the period declined 1% to $10.6 billion, though its cloud business grew 49% to $859 million, reports Telecoms.com.

2016 has seen Oracle spend almost $2 billion on cloud-specific organizations, as the tech giant continues efforts to transform the Oracle business focus to the burgeoning cloud market. While Oracle could be seen as one of the industry’s elder statesmen, efforts in the M&A market are seemingly paying off as PaaS and SaaS continues to demonstrate healthy growth to compensate for the dwindling legacy business units. The team have also outlined plans to make strides in the IaaS market segment.

Growth in the SaaS and PaaS business has been accelerating in recent years as CEO Safra Catz quoted 20% growth in 2014, 34% in 2015, and now 52% over the course of FY 2016. Q4 gross margin for SaaS and PaaS was 57%, up from 40% during the same period. The progress of the business would appear to be making healthy progress, and Catz does not seem to be content with the current growth levels. The team have ambitions to raise gross margin to 80% in the mid-term, as well as seeing cloud year-on-year revenue growth for Q1 FY 2017 of 75% to 80%.

“For most companies as their business grows, the growth rates go down,” said Catz. “In our case, as the business grows, the growth rates are continuing to increase. Now, as regard to our cloud revenue accounting, we have reviewed it carefully and are completely confident that it is a 100% accurate and if anything slightly conservative.”

Moving forward, CTO Larry Ellison highlighted the team plan on driving rapid expansion of the cloud business. The Oracle team are targeting growth rates which would double that of competitors as its ambition is now to be the first SaaS company to make $10 billion in annual revenue. The team are not only targeting the customer experience markets, but also the Enterprise Resource Management and Human Capital Management segments, where it believes there will be higher growth rates.

“We’re a major player in ERP and HCM,” said Ellison. “We’re almost the only player in supply chain and manufacturing. We’re the number one player in marketing. We’re very competitive. We’re number one – tied for number one in service.”

Secondly, the team will also be aiming to facilitate growth through expanding it IaaS data centre focus, which is currently an ‘also ran’ part of the cloud business. Ellison claims Oracle is in a strong position to grow in this area, having invested heavily second generation data centres, as well the potential for the combination of PaaS and IaaS for the company’s installed base of database customers, helping them move to the cloud.

“And we built, again, the second generation data centre, which we think is highly competitive with anything out there lower cost, better performance, better security, better reliability than any of our competitors, and there’s huge demand for it, and we’re now starting to bring customers into that,” said Ellison. “We think that’s another very important driver to Oracle for overall growth.”

The last few years have seen a considerable transformation in the Oracle business, as it has invested considerably in the development of new technology, as well as acquisitions, seemingly hedging its bets to buy its way into the cloud market. The numbers quoted by Catz and Ellison indicate there has been some traction and the market does seem to be reacting positively to the new Oracle proposition.

In terms of the IaaS market, success in this area will remain to be seen. Although Oracle has the potential to put considerable weight behind any move in this market, it is going to be playing catch up with some noteworthy players, who have cash themselves. Whether Oracle has the ability to catch the likes of AWS, Microsoft Azure and Google, as well as the smaller players in the market, remains to be see, though its success in the SaaS and PaaS markets does show some promise.

Cisco, Collaboration, data centre, Financial Results, IoT, News & Analysis, software

Cisco reports 3% growth for Q3 and sets targets on IoT market

Cisco corporateCisco has reported 3% year-on-year growth for Q3, topping $12 billion for the quarter, with its security business leading the charge, though the team have reconfirmed IOT, software cloud and collaboration markets are priorities for the future.

The security portfolio demonstrated revenue growth of 17% while deferred revenue grew 31% driven by the ongoing shift from hardware to more software and subscription services. The Collaboration portfolio grew 16%, while the team were also confident in the performance of its next generation data centre portfolio. The ACI platform grew revenues approximately 100%, exceeding a $2 billion annualized run-rate.

“We delivered strong Q3 results against the backdrop of the Macro environment that continues to be uncertain,” said CEO Charles Robbins. “Despite this uncertainty we executed very well, with revenue growth of 3%. The operational changes we continued to make will further enable our customers to leverage strategic role to network as they transform their businesses to become digital.”

Regionally, the America’s accounted for a 4% lift, whereas EMEA and APJ were slightly less at 2% and 1% respectively. The emerging markets demonstrated healthy results for the business, as BRICs increased by 4%, Mexico by 4%, China up 22% and India up 18%. The team highlighted while there was good growth in the public and service provider segments, the enterprise was not as positive as the team pointed towards pressure driven by macro uncertainty as the reasoning.

The quarter also saw Cisco as one of the more active players in the M&A market, completing five acquisitions over the course of the quarter. The $1.4 billion acquisition of Jasper Technologies now makes Cisco the largest cloud based IOT service platform in the industry, the team claims. Cisco also completed the acquisitions of Acano, Synata, Leaba and CliQr during the period, the latter a $260 million orchestration platform to help customers simplify and accelerate their private, public and hybrid cloud deployment. Cisco had already integrated CliQr with its Cisco Application Centric Infrastructure (ACI) and Unified Computing systems (UCS) prior to acquisition.

“These acquisitions are clearly focused on our key growth areas including IOT, software cloud and collaboration as well as continuing to strengthen our core,” said Robbins.

The IoT market has been a long time target of Cisco, with the Jasper deal adding to the ParStream acquisition last year. The acquisition offered the opportunity for instant analysis of masses of data at the network edge with minimal infrastructural or OPEX repercussions, the company claimed.