Big Stories of 2010

When HP sneezes, the Indian IT channel catches a cold. That’s the extent of the influence HP wields on channels. So when its largest business, the PC division, decided to completely transform its go-to-market (GTM), the extreme reactions from the channel were understandable.

While most HP partners welcomed the framework of the new GTM, it was the appointment of telecom distributors for the consumer business that emerged as the biggest bone of contention.

What made things worse was that the new GTM was being driven by the new PSG head, Sunil Dutt, who had no IT experience and had spent a large chunk of his professional life with mobile handset companies Nokia and Samsung.

Not surprisingly, many long-time HP partners saw the new GTM as a move to eliminate them permanently from the partner ecosystem. Undeterred by the reactions, HP, using the stick-and-carrot approach, persisted with the new GTM.

While the new model seems to have largely stabilized, it is yet to deliver results for HP in terms of market share gains. After losing PC market leadership in Q2 FY2010-11, HP continued to trail Dell in Q3.

HP, however, contends that the new GTM has already started delivering results because its partners have become profitable, and this would soon translate into them doing more HP PSG business and thus increase its market share.

Whether HP’s bold transformation delivers, and compels other PC vendors to review their distribution model, is a story to look out for—but next year.

Oracle’s Sun acquisition

With the acquisition of Sun, Oracle has become the most powerful software company. However, the company so far has failed to leverage the Sun channel.

Yes, Sun Microsystems was first-and-foremost a hardware company. But Oracle’s $7.3 billion buyout of Sun in January also gave it a lot of software, including Java, the Solaris operating system and the popular MySQL open source database.

Oracle was already a software powerhouse, owning the industry’s best-selling database, and holding a commanding position in applications and middleware. The foundational software that the Sun acquisition brings arguably makes Oracle the most powerful software company.

The acquisition of Sun also allows Oracle to assemble and sell complete hardware-software stacks from servers to operating systems and middleware to database and applications.

While the acquisition seems right for Oracle, it created fear and confusion among Sun channel partners—especially when Oracle executives outlined plans to build more strategic and direct relationships with its largest customers.

While partners agree that Oracle’s software and Sun’s hardware make a compelling combination, the complete lack of communication on the partner integration process, slow decision-making on special pricing, and lack of a clear GTM have frustrated Sun partners. What further angered them was Oracle’s decision to cut their maintenance renewals business.

This channel upheaval comes as Oracle is working to optimize its software with its hardware to make it more enticing for customers and partners.

But some Sun partners have other ideas, and are thinking of shifting to HP or IBM. These vendors, sensing partners’ frustration, are doing all they can to lure both Sun partners and customers.

Globally, Oracle’s decision to hire former HP CEO Mark Hurd as President is being seen by partners as a move to bring focus to the hardware business and channel. But if that doesn’t happen in 2011, and Oracle fails to play nice to Sun partners, it might lose them to rivals, and along with them, many Sun customers.

Intel’s move for McAfee

McAfee’s acquisition is integral to Intel’s vision of being at the heart of every IP-connected device, including mobile phones, PCs and even consumer electronics.

Intel’s move to acquire McAfee for $7.68 billion emerged as the most intensely-debated event in the IT world.

While many debated the rationale behind the acquisition, some saw it as a strategic move and key to Intel’s vision of being at the heart of every IP-connected device, including mobile phones, PCs and even consumer electronics.

Intel believes there is going to be an explosive growth of Internet and IP-enabled devices which will reshape communication, collaboration and commerce opportunities for individuals and organizations around the world.

As per industry estimates, the number of connected devices will grow from one billion
today to 50 billion by 2020. The current cyber security model isn’t extensible for providing protection to the heterogeneous world of connected devices, and a fundamentally new approach to security is required.

McAfee’s acquisition will give Intel the ability to effect a paradigm shift in such an emerging scenario. Not to forget the benefits that the acquisition can bring to Intel’s vPro platform.

For years Intel has been trying hard to integrate several hardware-assisted security, manageability and virtualization capabilities on its processors through vPro. However, the platform hasn’t fared as expected.

With McAfee, Intel can really accelerate its plans to have a stronger embedded security technology and also take vPro’s security benefits, and for that matter, any new security technology, directly to enterprises and consumers.

The deal is yet to close, so the channel is still a bit fuzzy on how exactly Intel will utilize all this new technology and intellectual property. Both Intel and McAfee have promised that they will keep their business and channel model intact, and have assured their channel that they will soon get to see the upside of this integration.

Much needed success for Microsoft

Overall, 2010 was a good year for the world’s largest software company.
Window 7 was a hit, and the company overhauled its partner program.

After the Windows Vista debacle, Microsoft saw a much needed success with Windows 7 launch. The executives spent better part of 2010 patting themselves on the back. In the 12 months, following the launch of Windows 7 in October 2009, Microsoft has sold more than 240 million licenses of, putting it on track for 300 million licenses by year end.

In May, the company launched Microsoft Office 2010. The new release of its flagship desktop application suite that remains one of its cash cows.

Microsoft tried (successfully) in 2010 to convince everyone that it was indeed making much progress in cloud computing against Google and Amazon. As of November, the company had over one million customers of BPOS and more than 12,000 paying Azure customers. To strengthen its cloud story further, it launched the cloud-in-box Azure appliance, and upgraded and rebranded BPOS to Office 365, moving its online offerings from the 2007 version of its products to the 2010 version.

It launched Windows Phone 7, arguably its most important product this year. Windows Mobile, its earlier version in the mobile OS sweepstakes, faired poorly against Apple iPhone, Google Android and other competitors.

The most important development from the channel perspective was the overhaul of its partner program, renamed the Microsoft Partner Network. Gone are the Gold and Certified partner designations, replaced with 29 specific-technology competencies. The goal under the new program is to upgrade partner skills, and get them to add more value through services. The new structure took effect from November 1, and it will be another 12 months before all partners are aligned to the new MPN.

In 2011, Microsoft will have to continue its momentum on the cloud front and ensure that it doesn’t drop the ball on product innovation as Google readies Chrome for launch.

Wake up to the cloud

While 2010 will be remembered as the year when cloud computing moved from hype to realization, 2011 is when its real impact on the IT ecosystem will be felt.

It’s being hailed as the most disruptive technology after the Internet.

After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing—pay per use, multi-tenancy and managed services—began resonating strongly with customers in 2010.

In part this can be explained by macroeconomic factors because the financial turbulence of the past two years compelled organizations to scrutinize every expenditure.

Cloud computing will completely disrupt the current business and IT delivery models, and partners need to be ready for it.

Sample this: IBM recently said it expects cloud computing to add about $3 billion of net growth to its business by 2015. However, for that to happen, IBM will have to actually grow its cloud business by $12 billion, as the growth in cloud computing is expected to erase $9 billion worth of sales of its current hardware, software and services.

It’s easy to see that cloud computing will have a considerable impact on resellers. Analysts believe that though in the short-term it will present several opportunities to resellers, it will eventually result in a shakeout of the entire IT ecosystem.

To stay relevant, the IT channel will need to move toward a service-led model, become a trusted advisor to customers, assist them in moving their applications to the cloud and provide legacy system integration.

Distributors will need to look beyond their traditional role of pick, pack and ship operations, and become knowledge leaders for the channel and deliver strategic services in the process. Providing guidance to resellers on how to make the transition to cloud services will be critical.

While 2010 will be remembered as the year when cloud computing moved from hype to realization, 2011 is when its real impact on the IT ecosystem will be felt.

Major realignment in the IT ecosystem

Many IT companies undertook internal reorganization, and realigned their global partnerships and alliances

The past year has seen major shift in the IT landscape. Coming out of a global recession, many IT companies undertook internal reorganization. They also rolled out new partner engagement frameworks, and realigned their global partnerships and alliances.

This was primarily driven by the significant changes emerging in customer behavior, new concepts such as cloud computing and unified computing taking center-stage, and the ongoing consolidation in the IT industry.

While Microsoft overhauled its internal operations and launched a completely new partner program, Cisco restructured around a new business model and also transformed its partner organization in order to expand the scope of its partner ecosystem. Similarly, Dell, EMC and Symantec also saw changes in their operations and new leaders taking charge.

Old alliances broke up and new partnerships and alliances were inked. Cisco and HP broke their long partnership to take on each other, while the strong partnership between Dell and EMC started showing cracks. On the other hand Cisco formed strategic partnerships with EMC, NetApp, Citrix and VMware.

The changes in partner engagement focused on increasing technology specialization. Symantec’s new and enhanced partner program lays more focus on partner specializations and certifications than on revenue targets, while Microsoft’s new MPN focuses on competencies. The vendors’ message to partners seems to be: ‘Invest more in us and we’ll invest more in you.’

As we go forward, changes in the consumption model will lead to further consolidation in the
IT industry and a new ecosystem—which won’t look anything like the old ecosystem—will eventually emerge. We will see a lot of this happening in 2011.

Shift toward automated managed services

Many leading enterprise VARs invested heavily in building AMS practice, replacing their traditional break-fix service models

A big transformation seen throughout 2010 among Indian enterprise VARs was the shift toward automated managed services (AMS). AMS is defined as the provision of end-to-end services by using remote infrastructure management tools.

According to a recent survey by Springboard Research, the IT managed services market in India is expected to reach $3.8 billion in 2013 from $1.6 billion in 2009, growing at a CAGR of 23 percent. Nearly 66 percent of the CIOs surveyed by Springboard plan to adopt and engage with a managed services model rather than a strategic outsourcing one.

CIOs, particularly of large enterprises, are adopting managed services as an alternative to strategic outsourcing because it allows them to access best-of-breed services without the fear of losing control of their IT.

Many leading enterprise VARs invested heavily in building their AMS practice, replacing their traditional break-fix service model comprising AMC, facility management and per-call support. They regard AMS as a move to scale up their services business and as the foundation for building a portfolio of their own white-label managed services.

While software provider Kaseya was at the forefront of enabling partners in AMS, other AMS tools providers such as Level Platform, LANDesk and Zoho also joined the party.

Kaseya claims to have sold more than one million end-point licenses of its AMS suite in India over the past two years, most of it in 2010. And over the last six months alone, the company says it has signed 550 new customers through its MSP and resale partners.

In 2011 the AMS story will only get more appealing as more partners realize that having a strong service portfolio is key to their future sustenance, and that having a scalable model supported by AMS is important.

WikiLeaks serves as an eye-opener

The WikiLeaks saga raises serious questions about the efficacy of infosec technologies as well as the credibility of certain online service providers

The ongoing WikiLeaks story has turned out to be more engrossing and intriguing than the best sci-fi movie. While it raises several questions, the primary one from the IT perspective concerns the efficacy of cyber and information security technologies.

A 22-year-old US army intelligence analyst, Bradley Manning, copied hundreds of thousands of classified documents from the world’s most secure US military network, SIPRNET, and saved them on a disk before giving it to WikiLeaks.

What followed was even more intriguing. Following the leaks, online service providers like PayPal, MasterCard and Amazon, bowing to US government pressure, excommunicated WikiLeaks.

In protest, supporters of WikiLeaks launched coordinated DDOS attacks, bringing the sites of the above companies down for several hours, and triggering a different kind of cyber warfare.

The WikiLeaks saga will most certainly have far-reaching implications for cyber and information security. Governments and private enterprises will review their security postures, and the state of cyber and information security will be reviewed under a completely new light.

The US government has already taken steps to address the glaring gaps in its security policy and cyber infrastructure, in an effort to prevent a recurrence of WikiLeaks. Other countries will no doubt follow suit.

But the events raise an even bigger question. The fact that MNCs like MasterCard, Amazon and PayPal toed the US government line and discontinued services to WikiLeaks creates strong doubts about all that talk of free enterprise. It should make Indian companies wary of using Amazon cloud services, or online payment gateway services from PayPal and MasterCard.

The mega uprising of tablets

The tablet promises to be the fastest ramping product category ever, and analysts predict it will take a big bite out of the global PC market in coming years

Year 2010 saw the creation of a new and revolutionary category of client devices, the tablet, which promises to be the fastest ramping product category ever.

When iPad was launched in April, Gartner had predicted tablet sales of 10.5 million by the end of 2010. By October, Gartner revised this projection to 19.5 million tablets.

Gartner has now predicted that 54.8 million tablet units will sell in 2011, followed by 103.4 million in 2012, 154.2 million in 2013 and over 208 million in 2014.

Currently iPad leads the tablet market, but with more handset manufacturers like Samsung and BlackBerry getting into the fray, and PC OEMs like HP, Acer, Dell and Toshiba also rolling out their tablets, the market will get more broad-based.

Gartner also believes that the growth of tablets will take a big bite out of the global PC market, so it has revised its PC shipment forecast.

Analysts believe that the sale of tablets will be consumer-driven, and that tablets will emerge as the third device for users apart from their notebooks and smart phones. While tablets will not replace notebooks, it will decrease the refresh of PCs among users. The netbook category will come under threat.

With Apple expected to launch its iPad version 2, more mobile and PC OEMs joining the bandwagon, and chip vendors like Intel and AMD planning to launch their platforms for tablets, 2011 will see several innovations in this market in terms of form factors and features.

While the rise of the tablet will create substantial opportunities for partners, it will also create challenges. With 3G around the corner, the first phase of tablet growth in India will be driven by telcos, while PC OEMs will increasingly rely on the telecom channel to push their products.

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Big Stories of 2010

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