Monthly Research Update

Experton Group Weekly IT News

India, Intel SSD, and Sun Rays

By: Cal Braunstein

According to the Wall Street Journal, the Indian technology companies are undergoing a fundamental shift in their businesses, caused by current economic conditions. In other news, Sun Microsystems Inc. reported it almost doubled the number of shipments of Sun Ray thin clients in their last quarter over the previous quarter. On the R & D front, Intel Corp. unveiled its first solid state SATA storage drives (SSDs).

Focal Points:

• The Wall Street Journal reported the growth rates for the major technology outsourcers, such as Infosys Technologies Ltd., Tata Consultancy Services Ltd., and Wipro Ltd., have slowed considerably. Nonetheless, for fiscal 2008 Indian technology companies will export $23.1 billion in IT outsourcing services, $10.9 billion in business process outsourcing (BPO) – including call centers – and $6.4 billion in software and other products, according to Nasscom. Global banks and financial institutions account for almost half of the industry's revenue and the U.S. subprime mortgage meltdown has frozen new business opportunities in that sector. Approximately 11 percent of the $1.7 trillion spent on technology globally last year went to outsourcers. Average salaries in India are rising 12 percent a year, while attrition remains in double digits and is creeping up. To compensate, the technology giants are investing more on training and education initiatives at Indian universities. High attrition rates, currency appreciation, and wage inflation are causing enterprises to seek outsourcing work in Eastern Europe and the Philippines, the report states.
• Sun announced the company nearly doubled shipments of its Sun Ray thin clients during the fourth quarter of its 2008 fiscal year, compared to the third quarter. Sun Ray unit shipments are growing faster than the thin client industry at large, underscoring the increased appeal thin client and desktop virtualization solutions are experiencing among businesses and organizations, the company claimed. Strong market demand for Sun's Virtual Desktop Infrastructure (VDI) Software 2.0 and the ability to display Linux, Solaris, or Microsoft Corp. Windows desktops on the same device contribute to the growth of the market, officials stated. VDI now ships on approximately 25 percent of Sun Ray units since being introduced in March of this year. According to Sun, the Sun Ray thin clients take up half the space of a PC and consume less than 10 percent of a typical PC's power.
• Intel announced its first solid-state flash memory SATA processors for performance-oriented data storage. All the new processors feature MLC (multilevel cell) and SLC (single-level cell) storage. The new SSD product line is designed for use with laptops, handheld devices and servers. For the servers Intel offers SSDs with capacities ranging from 32 GB to 160 GB, both MLC and SLC. MLCs will become generally available in September, while the SLCs will be generally available in November of this year. For notebooks and desktops, SSDs are available now in the 4 GB and 8 GB capacities, with 16 GB becoming available in September. Intel states it has come up with an MLC flash chip that will provide 250MB-per-second read/write performance and can be expected to have at least five years of useful life in a notebook or PC application.

Experton Group believes the changing corporate IT business models and requirements are impacting IT product and service providers in all categories. Indian outsourcers can no longer count on business as usual and are seeking new ways to generate revenue streams and provide a meaningful value proposition to enterprises re-examining their sourcing strategies. Thin client and flash memory drive technologies have been in existence for more than a decade but not gained general acceptance. However, the need for faster access to data by today's high performance processors is driving demand for SSDs in client systems and servers, as hard disk drives performance has only increased 30 percent over the last 12 years while processor performance sky-rocketed 175-fold. The demand for anywhere access, energy conservation, security, total cost of ownership (TCO) improvements, and virtualization will precipitate platform re-evaluation and selection of thin client devices in functional areas where the full functionality of PCs are not required. IT executives should carefully analyze their hardware and outsourcing strategies, and not just build upon existing plans. Shifting business requirements, market dynamics, and technologies demand a fresh look at business plans before recommitting to them for the upcoming year.