Category Archives: Corporate

Appointment, Colt, Corporate, ETNO, News & Analysis

Colt gears up for cloud with new CTO appointment

Network Function VirtualisationColt has announced that its newly appointed Chief Technology Officer Rajiv Datta is to be given the brief to drive the service provider’s future cloud strategy.

Datta’s duties are described as ‘the creation of next generation of products and services, including SDN-based networks and digital customer experience’.

Datta has joined Colt’s Executive Leadership team to be led by Carl Grivner who took over as CEO on 1 January. Datta was recruited from AboveNet Communications, where he was chief operating officer for the fibre infrastructure provider as its annual revenues grew from $190m to $500m. New Colt CEO Grivner said Datta was recruited for his track record of transforming business.

Competition from cloud-based services such as Skype has affected the revenues for all European telcos, according to Reuters, which reported how Colt exited the wholesale market for voice calls in 2014.

However, according to a recent report from the European Telecoms Network Operators’ Association (ETNO), the year 2016 should see a return to growth in this sector, thanks in part to a thinning out of players, such as Colt, which also took the decision to pull out of the IT services market.

With an estate of 34 carrier-neutral data centres in Europe and seven managed facilities in Asia Pacific, Colt is to concentrate on cloud and data centre services. However, the data centre market is entering its own phase of consolidation and in November BCN reported market leader Equinix had bought its rival TelecityGroup. In this climate the change management skills of Datta will be invaluable, according to Colt CEO Grivner.

“Rajiv’s track record of transforming business performance will be invaluable in creating the levels of focus, speed and innovation that we need,” he said.

Corporate, IDC, M&A, News & Analysis, SanDisk, Western Digital

Western Digital buys SanDisk for $19 billion for its cloud driving flash

Disk CloudHard disk vendor Western Digital is to buy chip maker SanDisk for around $19 billion as the consolidation of chip-making industry continues.

Flash specialist SanDisk is one of the largest makers of NAND flash memory chips. The capacity of NAND Flash Memory products to store data in a small footprint, while simultaneously using less power but granting faster access to data, has made this technology particularly popular in the mobile, internet of things and data centre sectors, Increasingly, according to analysts, NAND is becoming the storage technology of choice in data centres that support cloud computing.

The market for NAND flash chips rose to $28.9 billion in 2014, according to IDC and SanDisk (with joint venture partner Toshiba) was the largest producer.

Meanwhile the market for traditional disk drives, where Western Digital is a market leader, is declining, say analysts. The commoditisation of hardware, driven by the software definition of data centres, has seen profit margins on sales decline, even if volumes are up.

Western Digital had a leading 44% share of the market for hard disk drives in 2014, according to statistics from market researcher IDC. However, it suffered a sales decline of 4% in its most recent financial year and the overall storage business also shrank, to $32.9 billion.

“With new storage companies coming through with all-flash systems based on consumer-grade substrate, it is not in WD or Seagate’s best interests to try and do economies of scale aimed more at the enterprise only,” said analyst Clive Longbottom, senior director at research company Quocirca. “By buying up consumer flash companies, they get that economy of scale for themselves.”

The disruption of the IT manufacturers by the cloud has changed the strategies of the encumbents like Western Digital, said Longbottom. “ Dell, HP, IBM and others do seem to be more worried about the new kids on the block than each other at the moment,” said Longbottom.

The cash-and-stock offer values SanDisk at $86.50 per share, or a total equity value of about $19 billion, using a five-day volume weighted average price ending on Oct. 20 of $79.60 per share of Western Digital stock. SanDisk’s shares rose 6.4% to $80 in pre-market trading. Western Digital’s shares were down 1.1% at $74.

The deal is expected to close in the third calendar quarter of 2016.

Corporate, Enterprise IT, Financial Results, IBM, News & Analysis, Quarterlies

IBM cloud service revenue up despite 14th quarterly revenue decline

IBM2IBM has posted an unexpectedly large drop in revenue and cut its full-year profit forecast, blaming the strong US dollar for dampening demand from China and emerging markets. Though cloud, big data, mobile and other strategic markets are growing, their rise is not enough to arrest a long term trend of decline.

IBM, which gets more than half its business from overseas, says it has been affected as the dollar is currently 17% up on its standing against a basket of currencies compared to this time last year.

Chinese sales were particularly affected, with fewer big deals being registered. As a consequence revenue from China fell 17%, IBM’s chief financial officer Martin Schroeter told analysts. Sales in Brazil, Russia, India and China combined were down 30%.

The company’s total revenue fell 13.9% to $19.28 billion in the quarter, below analysts’ average forecast of $19.62 billion.

It was the 14th quarter in a row that IBM has posted a reduction in revenue. As IBM divests itself of low-margin businesses it has failed to make up the shortfall, yet, through cloud computing, according to analysts.

“This is another example of the massive headwinds that traditional tech stalwarts are seeing in this ever-changing environment, as more customers move to the cloud,” said FBR Capital Markets analyst Daniel Ives.

According to IBM CFO Martin Schroeter, weakness in IBM’s consulting and storage businesses account for the revenue shortfall, rather than the performance of its cloud services.

“I would characterize it as the consulting and systems integration business moving away from these large, packaged applications and the storage business moving to flash and to the cloud,” Schroeter told Reuters in an interview.

Revenue from IBM’s ‘strategic imperatives’, cloud and mobile computing, data analytics, social and security software, rose 17 per cent in the third quarter ending on Sept 30th.

IBM’s net income from continuing operations fell to $2.96 billion, or $3.02 per share, from $3.46 billion, or $3.46 per share, a year earlier.

At the close of trading yesterday (Monday) IBM’s shares had fallen 7 per cent this year.

cloud research, Corporate, HP, News & Analysis, strategy

HP revamps cloud and software sales as the future is hybrid

Hewlett-Packard’s software boss Robert Youngjohns is to assume control over the company’s cloud research and development and product management, according to report in Fortune.

An internal memo from chief executive Meg Whitman reports that HP is to revamp the way developments in cloud computing are to be managed, with a new management reporting to Youngjohns. HP currently makes $4bn in revenue from software sales.

Cloud research and development, will still be led by Mark Interrante and cloud product management under Bill Hilf but will now be part of the Youngjohn’s software organization

In November HP is to be officially divided into two entities, HP Enterprise (which will include the cloud computing organisation) and HP Inc which will sell printers and PCs.

The HP Enterprise Group, which made $28 billion in sales in 2014, sells servers, storage and network equipment, in addition to software. It’s thought that HP aims to move cloud development closer to the hardware platforms in order to facilitate sales.

The change is aimed at helping HP Enterprise to capitalise on four major market opportunities, according to Whitman’s memo. “At Discover, we introduced four transformation areas to align with a $1 trillion in total addressable market,” writes Whitman. “If we can deliver on the promise of these transformations, we will enable a new era in business for our customers – one where ideas can be turned into value at the speed of imagination.”

First, Whitman said, HP must take an application-first view of their infrastructure. “No two applications will have the same profiles and no two companies will have the same requirements, so our customers each need unique hybrid infrastructure solutions that allow them to seamlessly manage thousands of applications across traditional IT and public, private and managed clouds,” said Whitman.

If the future is hybrid infrastructure, Whitman said, Hewlett Packard Enterprise must be organized to bring together all the pieces for a holistic view from the data centre to the cloud. To accomplish this, HP needs to manage the natural alignment between its cloud and software products.

The unified Cloud and the CDI Sales and Presales teams will be firmly embedded in the EG regional sales structures. “By integrating Cloud into EG Sales, we will offer one face to the customer to enable their transformation journeys to a hybrid infrastructure,” said Whitman.

Corporate, HP, News & Analysis, redundancies, restructure

Hewlett-Packard to decimate its workforce as major split announced

HPHewlett-Packard is to cut 10 per cent of its workforce, which could mean up to 30,000 redundancies, as plans to divide the company in two unfold.

The losses will come when Hewlett Packard Enterprise (HPE) splits from the printer and PC business. The jobs cull will cost $2.7bn to carry out but will save the same amount in running costs every year, says HP.

The new structure proposed by chief executive Meg Whitman would steer HP Enterprise’s focus onto enterprises and government agencies while the PC and printing divisions would concentrate primarily on the consumer market.

Details have not been released about where the job cuts will be made, but Whitman told Wall Street analysts that the plan involves changing the nature of the workforce. The proportion of workers in what HPE calls ‘low-cost locations’ is expected to rise from today’s figure of around 42 per cent to to 60 per cent by 2018.

“We’ve done a significant amount of work over the past few years to take costs out and simplify processes,” Meg Whitman told a meeting of shareholders and Wall Street analysts, “these final actions will eliminate the need for any future corporate restructuring.”

Since the height of the dot com boom in 2000 Hewlett Packard’s stock has lost 60 per cent of its value. However, Hewlett-Packard remains one of the world’s largest technology companies, with revenues this year expected to top $50bn.

Earlier this year HP cut 55,000 jobs. These will not be the last of the job cuts, predicted Charles King, analyst at the Silicon Valley IT consulting firm Pund-IT. “The number is sadly larger than some people might have expected, but I think it’s a reflection of how much trouble HP has been having with its services,” said King.