Fortune’s 20 most profitable tech companies

A friend sent this to me…thought I’d share the Fortune list. Funny how vendors like Xerox, TI or even “MEMC Electronic Materials” (seriously, who are they??) get virtually no attention compared to the Yahoo’s & EBay’s of the world.

1. Microsoft: $14.1B
2. IBM: $10.4B
3. Cisco: $7.3B
4. HP: $7.3B
5. Intel: $7B
6. Oracle: $4.3B
7. Google: $4.2B
8. Apple: $3.5B
9. Qualcomm: $3.3B
10. Dell: $2.9B
11. Texas Instruments: $2.7B
12. Corning: $2.2B
13. Applied Materials: $1.7B
14. EMC: $1.7B
15. Xerox: $1.1B
16. MEMC Electronic Materials: $0.826B
17. Nvidia: $0.798B
18. Adobe: $0.724B
19. EDS: $0.716B
20. Lam Research: $0.686B

 

McKinsey releases 2008 Enterprise Software Survey

Via Nick Carr’s posting today. The McKinsey survey suggests:

• The software industry technology innovations of the past 2-3 years are nothing compared to new technologies we’re about to see
• This innovation is likely driven by SaaS/PaaS and Web Services/SOA with 31% and 25% of respondents selecting them as the most important trend impacting their business. Open source received 8% of the votes from 857 respondents, just above 7% for “Software industry consolidation”
• Currently 65% of software spending is through traditional license/maintenance models, with 19% coming from subscription/on-demand. These figures are “expected” to shift to 58% & 21% respectively by 2009.
• The majority of this shift toward subscription-based models is coming from companies with <100 employees.
• The top three criteria for selecting SaaS vendors are: “deployment speed, ease of Integration”, “vendor track record in SaaS” and “Costs”.
• Overall, control of software decisions split 83% / 17% between centrally controlled vs. business unit controlled. This split grows as the company size increases. For example, it’s down to 67% / 33% in companies with > 25,000 employees.

Lots of other good info (you can read more here). I wonder that last data point will impact OSS adoption. It’s probably a net positive for applications that business users interact with. Not sure if a business unit decision maker cares as much about middleware decisions though.

 

Save XP?

I stumbled across a “Save XP” petition that InfoWorld is hosting:

“Microsoft will end OEM and shrink-wrapped sales of Windows XP on June 30, 2008, forcing users to shift to Vista.

….

Millions of us have grown comfortable with XP and don’t see a need to change to Vista. It’s like having a comfortable apartment that you’ve enjoyed coming home to for years, only to get an eviction notice. The thought of moving to a new place — even with the stainless steel appliances, granite countertops, and maple cabinets (or is cherry in this year?) — just doesn’t sit right. Maybe it’ll be more modern, but it will also cost more and likely not be as good a fit. And you don’t have any other reason to move.”

More than 57,000 have signed it. Will you??? ;-)

Maybe more folks would sign a petition titled: “Save XP, Kill Vista” ?

 

Google Set to Announce Mobile Phone SW & Open Handset Alliance

Tom Krazit at News.com is reporting that Google will formally announce a mobile platform dubbed “Android”.

Tom writes:

“A software development kit for what’s being called “a complete mobile-phone software stack” is believed to be in the works and will be released relatively soon thereafter, the sources said. It’s not exactly clear what kind of software will come as part of that stack, but it’s said to include everything you need to run a phone.”

Google is also expected to announce the formation of the Open Handset Alliance, which includes vendors such as Qualcomm, Intel, Motorola, Intel, Spring NTT DoCoMo, and others.

It’s great to see Google herding cats towards a vision of “open handsets”. The apparent lack of Nokia and RIM in the Open Handset Alliance is troubling. It’s difficult to see any mobile phone alliance succeeding without involvement from Nokia (#1 overall) and RIM (leader in smart phone market & expanding into consumer space). But I guess you shouldn’t bet against Google…especially when Google sees future revenue coming increasingly form mobile scenarios.

 

Oracle makes $6.7B bid for BEA

Via Roy Russo’s heads up:

Oracle, in letter to BEA Systems’ board, offers cash at a 25% premium; says it seeks friendly acquisition.

From TSS via CNN:

“We believe our all cash offer provides the best value for BEA’s shareholders and the best home for BEA’s employees and customers,” said a statement from Oracle President Charles Phillips. “This proposal is the culmination of repeated conversations with BEA’s management over the last several years. We look forward to completing a friendly transaction as soon as possible.”

 

IBM IMS, 40 yrs Strong

I ran into this piece of PR from IBM today.

“Initially developed to power the Apollo space program, IMS is recognized as the industry’s first modern database and transaction management software. Over the past three decades, the reliability, security and performance of IMS has led it to become the backbone for much of the world’s corporate data. In fact, almost ninety five percent of Fortune 1000 companies use IMS for their most critical IBM System z data management needs with more than 50 billion transactions running through IMS databases on a daily basis.”

I only highlight it because IMS (database & transaction processing system) is nearly 40 years old and customers still see value in it. IMS has added new features and capabilities to remain relevant to customers, but 40 years is a long time for any piece of information technology. Alternatives to IMS that have emerged, but few (if any?) provide the performance and reliability of IMS for a certain class of applications.

Just another reason why a one size fits all approach in the IT world doesn’t make much sense.

 

Track Comments Across the Web?

Wouldn’t it be cool if there was a way to track comments across blogs and discussion sites such as slashdot or TSS? Maybe this capability exists, and if so, PLEASE enlighten me. If not, I am happy to take credit for the idea that someone will implement and become a hundred thousandaire.

Here’s the problem:

We all have 100s or feeds that we follow in our trusty RSS reader of choice. If you’re like me, and read about 10% of the feeds that are tracked, you quickly realize that there are a handful of people on the Interweb whose opinions you respect and want to follow daily. Following their blogs via RSS does the trick 75% of the time. I’m beginning to think that the other 25% is just as important. For example, I follow what Roy Russo says on his Loopfuse blog. But I almost missed when he posted the following comment on Marc Fleury’s blog:

In response to a user who posted a comment in Chinese (which, for the most part, few of us in North America would be able to understand).

Roy Russo said…
I agree with the chinese guy.
September 28, 2007 7:12:00 AM PDT

ROTFL….I fear that I’m missing witty comments like this all the time.

Actually, a better example is Bill Burke’s comments during a TSS discussion on the bind that Interface21 & SpikeSource are in. Bill made some great points and I almost missed them because he made them on TSS (which I seldom read on a daily basis) versus his blog.

I used to tag all my comments with a del.icio.us “comment-SavioRodrigues” tag, but that became cumbersome very quickly. I want the ability to automagically attribute all my comments on the Interweb, regardless of website or username, to some comprehensive pile in the sky. If you have a wordpress.com username, this is possible, but only on wordpress.com blogs. I’m looking for this capability to be extended across domains and online properties. I know I’d use this feature to keep better tabs on what folks like Bill, Matt, Roberto, Alex or the Redmonk guys are saying.

I can’t be alone here…

Maybe someone in OSS land can help? (I can write the hello world portion of the code in BASIC to get us started!)

 

OSS & IT Analyst Firms

The Motley Fool has a pretty interesting article on IT analyst firms such as Gartner & Forrester.

I’ve worked with these firms for nearly a decade and do believe that they provide a valuable service to their customers and the IT market in general.

Some metrics for Gartner:

“Each year, Gartner’s 650 researchers attend 18,000 vendor briefings, along with answering 240,000 client inquiries.”

Obviously, not every client inquiry is of equal weight, but these numbers work out to 1.5 client inquiries per researcher per weekday.

Let’s set aside the client inquiry figure, which, even if each inquiry was from a different customer we’re only covering a very small subset of IT buyers. Even if a company is not a Gartner, Forrester, IDC, RedMonk, 451 Group or Entiva (etc.) customer, the company will be influenced by what these analysts say in the public media.

Analysts help customers make purchase decisions. Analysts also educate the market on new technologies. Even in open source land, the IT manager and CIO of a developer using your OSS product is much more likely to take something serious if they hear it from Gartner, Forrester or IDC first. Working with the large analysts will help your OSS business if you want *paying* customers in the enterprise. Boutique analysts like RedMonk, 451 Group or Entiva are going to be crucial in developing/refining your OSS business strategy. However, because of their size, these boutique analysts don’t have the reach of a Gartner or Forrester in terms of customer purchase decisions. You’ll need to work with both classes of analysts, because each bring a lot of (differentiated) value to the table.

BTW, the article also makes the case against using analysts:

“The current model of analyst-intermediated, opinion-based technology buying and selling produces poor financial returns. Across the world, corporate managers spend more than $1 trillion a year on technology. To help managers invest, and technology marketers persuade, $2 billion a year is spent on technology analysts. Yet 70% of projects fail to deliver a financial return, according to the Standish Group and other commentators.”

(Funny enough, Standish Group is also an analyst firm). Should analysts bear the weight of these 70% of projects that fail? Would fewer projects fail if analysts were not involved in the equation? What is the ratio of project failures for similar companies that use analysts vs. companies that don’t?

Questions, questions, question…I better call an analyst ;-)

PS: I should state: “The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions.”

 

Is Sun Exiting the Server Business?

Dana’s post on the Sun & IBM deal has two very interesting statements:

“This is part of Sun’s exit strategy from the server business.”

And:

“In many ways, Sun is becoming Red Hat.”

On the conference call, Schwartz & Zeitler spoke about early work to get Solaris running on IBM mainframes. This work is very early and nothing may come of it, but it was apparently kicked off because of customer requests. Keep in mind that RHEL & SLES both run on IBM mainframes already. Maybe Dana’s right; Sun is becoming Red Hat.

Dana’s prediction on Sun’s server exit centers on:

Why stay in the hardware business with X percent profit margins when the software business has nearly 3X the profit margins? (Based on IBM results - See pg. 27/124 )

With KKR’s investment in Sun, this is a question I’m sure has been asked. However, such decisions are never so cut and dry. The majority of Sun’s revenue comes from their hardware business. I wasn’t able to find a HW/SW/Services split of Sun’s revenue. If you take their FY06 revenue of $13.068B and use IDC’s estimate of 2006 Sun software revenue you end up with a little less than 15% of total revenue is driven by Software. What’s more, the majority of Sun software revenue is attached to Sun hardware. While deals like this one with IBM will help to reduce the SW+HW linkage, I suspect Sun software revenues will remain largely (85%+ ?) driven from Sun hardware. Remember that Schwartz claims that Sun isn’t a hardware company, they are a System’s company. If Sun’s goal is to be a System’s company, then there is no way they can “exit the server business”.

I think that this deal is simply Sun’s realization that Solaris is a valuable asset that has been tied to Sun hardware for the most part. This would be fine if the market only used Sun hardware. According to Gartner estimates, in 1Q07, Sun’s server share was 10.3% of the total market spending. Remember when Apple came out with iTunes & the iPod for Apple systems only and then expanded to support Windows to address a larger market. Same story here; it just took a little longer for Sun to consider expanding the market reach of Solaris.

So, maybe Sun is becoming Apple? Nah ;-)

 

IBM to OEM Solaris on x86 Servers

I really try not to write about IBM news but this one is more about Sun than IBM…..

IBM & Sun announced:

“IBM will distribute the Solaris Operating System and Solaris Subscriptions for select x86-based IBM System x servers and BladeCenter servers to clients through IBM’s routes to market.”

This definitely sounds like Sun isn’t competing with Red Hat ;-) Note that I believe that there is nothing wrong with Sun (or anyone) competing with Red Hat. Competition is good for customers and good for vendors.

The deal is essentially an OEM relationship in which IBM sells the hardware and, based on customer requirements, could sell Linux, Windows or Solaris. If customers choose Solaris, the support subscription is delivered by Sun. IBM is compensated by Sun for their part in driving the sale of the Solaris support subscription. Note that the deal is different than what IBM or HP are currently doing with Solaris on x86. Yesterday, neither IBM, nor, HP were able to OEM or sell support subscriptions to Solaris on x86 servers. Today (well in 90 days apparently?), IBM becomes the only OEM vendor for Solaris on x86.

I was pleasantly surprised to hear Schwartz and Zeitler (IBM) that this deal is about customer choice. A few questions on the conference call asked:

“Won’t this deal increase the likelihood of an IBM HW customer who chooses Solaris to later move to Sun hardware? Or a Solaris customer who chooses IBM HW to later choose AIX or Linux?”

The answer from Sun & IBM was:

“You’re better off to meet customers with solutions that they are seeking versus trying to restrict the customer to one stack or another”.

Choice is a wonderful thing.