Wolfgang Schwab

Consumerization is having more and more impact on the overall development of the ICT industry as we can clearly see from the Apple and Google development. Like Microsoft overtook IBM as the largest US Technology Company years ago with the PC focus so does now Apple with the iPod, iPhone, and iPad. Apple stands for customer experience and drives innovation versus being fixed to the traditional IT space. The impact of the iPhone is undeniable and many IT organizations are struggling to achieve a better integration and security as well as standardization for smartphones in general.

Since the demand for more mobility started and was fueled with the availability and pricing for mobile data connection, the end user device has become a personal mobile device of many different forms. Social Networks, Web Services, and of course Smartphones have been additional drivers and enablers.

Over 4 Billion people are already connected mobile. Many companies are seeing this as a huge opportunity while others see it as a big threat. But latest when organizations think about the upgrade of Windows 7 and the future end user device in order to identify the right (licensing) strategy the question comes up – what is the client of the future? And when? Is it going to be a personal productivity tool and everybody brings their own device?

Are “desk”-top devices and “office” solutions outdated terminologies and products? How do we address the needs and capabilities of our digital natives, digital immigrants, as well as the digital aliens? Should we handle user groups or “cultural” groups differently? Innovation, flexibility, efficiency improvements and collaboration are often quoted as the driving factors, but also cost reduction and user demands / behaviors are important decision factors. Most IT organizations have not developed an IT Strategy with a close Business strategy alignment as the master plan, followed by an application and information architecture, which allows a longer-term and well thought-out “mobility” and “device” strategy.

Luis Praxmarer

Apple is sailing towards its fourth iPhone launch on the crest of a wave of market approval. Its iPad tablet has sold two million units in two months and is now going international, and it has overtaken Microsoft to become the largest US technology firm by market capitalization (230.68B vs. 224.88B on June 11, 2010) driven by a share price outperformance of 600% over the last 5 years (see chart). Wall Street analysts are doing little to question the sad contrast. In near-simultaneous client notes, Bank of America Merrill Lynch raised its target for Apple, saying the iPhone was nowhere near saturation, while Barclays Capital cut its target for Microsoft, citing fears over the mobile software strategy, which has been questioned and criticized by Experton Group many times over the last years.

• It is interesting to note that while the iPad was not developed as competition to the netbook, it has from a market perspective, overtaken netbook sales. While there are definitive differences between the functionality of the iPad and netbooks, it appears that the proliferation of applications, wireless communication and cloud computing is positioned to eliminate or reduce the significance of those differences.
• Apple itself does not market the iPad as a replacement for the laptop. However, when you look at the way in which the iPad is being used, namely email, texting and internet queries, it appears that the iPad is catering to an underlying market that does not need all of the functionality in a netbook or assumes that the new apps will deliver the bulk of the missing functionality.
• Another observation is that consumer preferences are changing. While most members of the new generation have mobile phones, ironically the use of the voice option has been replaced by texting. This is supported by recent articles in the trade press announcing AT&T’s intention to eliminate unlimited texting.

A new survey found that insurers plan to invest over $84 million per company over the next three years to improve their multi-channel distribution strategies. The survey, commissioned by Accenture Plc., asked senior executives at 125 major insurance companies around the world, equally divided between life and P&C insurers. Focal Points:

• According to this survey, nearly two-thirds of 125 global insurers do not consider their current distribution strategies as competitive. As a result, insurers plan to invest $84 million, on average, over the next three years to improve their mobile capabilities, digital marketing, including social networking, and channel integration, the survey indicated.
• Additionally, the survey results indicate that insurers plan on increasing efforts to tailor their marketing strategies to specific customer segments. Approximately one-quarter of respondents said that they will customize their products, promotions, channels, services, and pricing strategies over the next three years. The survey found that only 14 percent of insurers are currently doing this.
• Insurers cite the emergence of new technologies, changes in customer needs and attitudes, new regulations, and advice in the distribution of insurance products as the main factors contributing to the shift in investment priorities. According to Accenture, over 60 percent of insurers said that all services will be available online within the next three years. However, only 21 percent predict these services will be available on mobile devices within this time.

Experton Group believes the insurance industry is not the only sector late to market to recognize the shifts in consumer demands. Early adopters that integrate the newer distribution channels into their business processes (and not make them separate silos) will gain a leadership advantage. However, the processes need to be customer-centric and user friendly rather than product or provider based otherwise customer adoption and usage will be limited. IT executives in a number of industries still have an opportunity to show corporate and line of business executives how to innovate using new technologies to drive revenues and market share. IT executives should take advantage of this window of opportunity and demonstrate their leadership, business acumen and innovation capabilities.

McAfee is acquiring privately owned Trust Digital to bring streamlined management and security solutions to the mobile device market. Trust Digital's management tools work on all the leading handheld platforms except those from Research in Motion Ltd., and are capable of helping operators and administrators deliver security and device management. Capabilities include centralized deployment, policy implementation and enforcement, and user assistance, all of which can be managed from a centralized management and reporting console. McAfee aims to integrate these offerings with its McAfee ePolicy Orchestrator console, to integrate management and security resources across mobile and desk-based endpoints. The acquisition price is undisclosed.

Experton Group believes McAfee has snapped up a good technology and solution provider in Trust Digital. The company has been working aggressively to transform itself from a security provider to an integrated management and security vendor offering both hosted and traditional software offerings. Secure and consistent management of mobile platforms looks a bit like the Wild West right now, and IT executives should watch to see how well McAfee can transform Trust Digital's products into a logical and integrated extension of their other enterprise platform offerings.

Symantec Brings Security Suite to Mobile Devices. Just days after rival McAfee bought into the mobile security market, Symantec has announced Norton Everywhere, an extension of its platform for non-PC devices, particularly smartphones. The company has released the suite of tools initially for Android and iPhone, with other operating systems to follow. It is also targeting the rising variety of devices connected to the internet using Wi-Fi, such as tablets, media players and the iPod Touch.

Dr. Carlo Velten

• Red Hat took the next step in cloud computing. Starting with RHEL 5.5, customers who have licenses to the premium edition support for RHEL or RHEL Advanced Platform can deactivate those licenses on their physical servers running in their data centers and reactivate them on Amazon's EC2 cloud. Companies purchasing new premium 24x7 support contracts will be able to use the Cloud Access feature of RHEL 5.5 to turn those licenses on within EC2 as well. Enterprises with basic or standard support contracts cannot activate their licenses in the cloud. A minimum of 25 premium support subscriptions for either RHEL or RHEL Advanced Platform is required before RHEL 5.5 instances can be activated on EC2. A RHEL premium support contract is priced at $1,299 per year, while RHEL Advanced Platform costs $2,499. Red Hat states it will now put new versions and releases of RHEL out on EC2 concurrent with licenses for on-premises hardware. Both 32-bit and 64-bit versions will be available.
• VMware and Salesforce.com jointly announced java applications developed on VMware's SpringSource will run on a Force.com hosted platform called VMforce. Java developers will be able to deploy their applications to the cloud without needing to buy or provision their own software or servers. Key to the stack is the planned vCloud App Core that will orchestrate and manage VMware's vSphere and application runtime layer, including the Spring Java framework and tc Server. It will also connect Java applications to the Force.com's services and infrastructure. Java applications will be able to take advantage of Force.com services, such as dashboard for search, application analysis and reporting, mobility, orchestration, and connection to Force.com's underlying Oracle database and the ability to rapidly bring up more instances.

Wolfgang Schwab

Experton Group believes Intel Corp. has declared its x86-architected microprocessors to be their general-purpose high-end powerhouse processors but will not be phasing out the Itanium line until the end of the decade. With the introduction of the Xeon 7500 servers (code named Nehalem-EX), Intel increased the number of processor cores to eight and added a number of reliability, availability, and serviceability (RAS) features that previously only existed in its Itanium servers. Intel believes it can grow the high performance computing (HPC) market with the new microprocessors. In the meantime, Intel says it will bring out at least two new generations of Itanium servers in support of its existing customer set. However, Microsoft Corp. and Red Hat Inc. are dropping support of Itanium servers in their next operating system product releases already. IT executives should understand the implications of these product paradigm shifts, the vendor roadmaps, and adjust their IT architectures and platform strategies accordingly.

Experton Group believes Intel has laid the foundation for the next phase of data center transformations, with other vendors (including AMD) contributing as well. Within five years enterprises could be operating from a single pane of glass agile, energy-efficient, high-utilization server pools that incorporate all their operating systems. Although the Itanium-based server market will shrink, Unix systems are not going away.  IT executives should develop their own vision of the next generation data center based upon enterprise requirements, vendor roadmaps, and independent opinions and then execute strategies that enable them to realize the vision.

Hewlett-Packard emerged as the surprise buyer for Palm, paying $1.2bn - the low end of expectations - for the Pre maker. The PC giant gains a relatively cheap shot in the arm for its smartphone strategy, some useful presence in its core enterprise market, and some technologies that could help it stake a claim in the emerging devices that sit between phones and notebooks - a vital territory in which any PC vendor must shine in order to sustain growth.

• The best that can be said for Palm is that it has found a buyer, something that was looking dubious as various interested parties, nearly all from Asia, dropped out. Some of its innovations will survive in the HP line-up, even if its venerable brand disappears in time. The future of its main technology asset, the advanced though underused webOS, is uncertain though. HP says it will keep the platform and build on it, but it is only likely to invest in it, at the expense of its current favorites, Android and Windows Mobile, if it can drum up the significant developer support that Palm failed to attract.
• HP timed its purchase well, staying under the radar while takeover talk boosted Palm's price, then swooping in once HTC, Huawei and others dropped out, forcing the share price down on fears that Palm would be left stranded. It is not clear whether Lenovo, which was understood to be in serious talks, dropped out too, but it obviously was not prepared to engage in a price war, even though the Chinese PC maker is an arch-rival of HP's. Like HP, it has recently beefed up its smartphone strategy, and looked to expand this beyond the enterprise and into consumer handsets and new device formats like tablets and smartbooks.

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Experton Group believes the conventional wisdom of purchasing all IT equipment is flawed and not a best practice under all conditions.  Finance and IT Executives have a myriad of choices today that did not exist a few short years ago. Executives should understand and incorporate these new approaches into their acquisition planning exercises. IT executives should vet their decisions with detailed, fully-loaded TCO analyses that compare the alternatives over comparable time periods (e.g., a three-year lease with refresh versus a five-year purchase) and then negotiate the best deals.
The Value of Leasing: Experton Group has identified 11 advantages that can be realized by leasing. Not all companies will be able to leverage all of these, but IT executives should understand the options and determine which ones are applicable and most relevant to the different equipment purchases that are on the drawing boards for the year.

1. No up-front capital expenditures and credit line preservation
2. Cost of capital
3. Operational expenses versus capital expenses
4. Technical currency through short refresh cycles
5. The ability to circumvent budget limitations
6. Licensing and Taxes
7. Potential for added services
8. The end of End-of-Life Worries
9. To generate cash
10. Improved financial management
11. Avoidance of asset ownership

IT executives should not only examine lease versus purchase options but should also evaluate cloud computing, outsourcing, software as a service (SaaS), and other options where appropriate. In all cases, IT executives should do a detailed, all-inclusive total cost of ownership (TCO) and total cost of acquisition (TCA) analyses to determine which option best meets the current business requirements and strategies.

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The UK and Ireland team already consists of 12 leading experts and is continually growing. Our seasoned IT industry analysts and consultants (each with more than 20 years practical industry experience) cover the traditional ICT domains (technical and management) as well as business process management and enterprise management.

Ashley Bassett can be reached at ashley.bassett@experton-group.com or per Tel.: +44 (0) 1252 628909.

The Fundamentals of the Cloud Computing Paradigm Shift: As opposed to older approaches used to virtualize computing resources and applications and enable service provision via the Internet (ASP, on-demand, grid…), the following factors make cloud computing shift the paradigms for web and corporate IT:

• More and more applications reside in the browser rather than the desktop
• Broadband infrastructure is available
• High-performance virtualization technologies

As an IT leader you need to understand this Paradigm Shift in the Data Center, Application Development, Service Management, and IT Organization and how it impacts your IT Strategy. And you need to be able to differentiate reality from future and false promises.

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