Archive for January 13th, 2010

Here is an interresting article from Fortune´s Brainstorm Tech Blog.

“The biggest computing and networking companies in the world are getting bigger – and former partners are now fierce rivals. Is tech’s new strife good for customers?

The largest technology companies in the world are at war.

Sure, the executives who run Cisco, Hewlett-Packard, IBM, Oracle, and others appear to play nice: Cisco touts the “regular dialogue” between its CEO, John Chambers, and IBM’s chief executive, Sam Palmisano. Ann Livermore, an HP executive vice president, spoke at Oracle’s annual customer event in October and extolled the virtues of their partnership. And because large customers buy software, gear, and services from all the tech giants, their staffs must work together to get computers and networks up and running.

Don’t be fooled by the handshakes and air kisses. Increasingly these titans are invading one another’s territories in a bid to grab as much of the $1.5 trillion in projected 2010 worldwide corporate tech spending as they possibly can — and it’s going to get bloody.

Customers have cut their tech purchases, and when they do loosen their purse strings, they are buying software and services that help them run their systems more cheaply. To boost sales and profits in this low-growth environment, technology companies are bulking up by buying companies in entirely new businesses.

The endgame? Each aims to steal business from rivals by promising customers one-stop shopping for most, if not all, of their computing and networking needs.

Battling for each other’s turf

Corporate software maker Oracle (ORCL), under pressure from competitors that rent software and deliver it over the Internet rather than installing it on-site, is pushing into computer hardware with its planned $7.4 billion acquisition of Sun Microsystems (JAVA). When the deal closes (it still faces regulatory hurdles), Oracle will find itself battling partners IBM (IBM), Dell (DELL), and HP (HPQ), all of which also sell servers.

HP, whose legacy personal computer and printer businesses aren’t growing the way they used to, spent $13.9 billion in 2008 to acquire EDS, a specialist in managing and integrating corporate systems. That happens to be IBM’s biggest business. HP also has announced plans to buy 3Com (COMS), a maker of networking gear. (Take that, Cisco!)

Cisco (CSCO), in turn, has announced its own plans to enter the server market. (Take that, HP!) Dell is picking up Perot Systems for $4 billion to take on HP and IBM in services. IBM, meanwhile, has been quietly bulking up in software, hardware, and services: In the past six years it has spent $20 billion on 90 companies.

“It’s the industrialization of IT,” says Pacific Crest Research’s Brent Bracelin. “In the new world that will come about in the next three to five years, you’ll buy the entire stack. Will you buy it from IBM, from Cisco? From HP? That’s what the battle is all about.”

Fighting to dominate a new world order

Tech mergers in the name of world domination aren’t new. (Remember Compaq’s purchase of DEC, or HP’s acquisition of Compaq?) But this wave is also being driven by a coming change in technology. “We’re at an inflection point,” says Forrester Research analyst Andrew Bartels.

He describes a new generation of technology — call it smart computing — in which servers, computers, and networks come together to form a platform on which new applications are built. These new applications aren’t installed on machines in the workplace; instead they live in data centers and are delivered to users’ phones, laptops, and other devices via the Internet.”

Read the full article here.

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