Buffett Goes Geek?

November 15th, 2011

In a move that many Warren Buffett and Berkshire Hathaway followers could call… ‘strange’, his company has systematically invested close to $11B in, [gasp] a technology company named:  International Business Machines (IBM).

While on the surface this move seems somewhat academic, one has to know that:

A) Mr. Buffett has historically been adverse to ‘technology’ companies

B) Mr. Buffett bets big on management and cash flows

C) Mr. Buffett has hired 2 stellar partners that will help take his company in different directions

D) Technology and Services are, and will continually be, tightly integrated

I feel this is one of Mr. Buffett’s more salient investments since the ~$34 billion investment in Burlington Northern Railroad Santa Fe at
the end of 2009.

Why would I feel this?

  • As of this writing, his investment has already netted his company a 12% gain from what was paid.
  • This acquisition made the Omaha, Neb., conglomerate IBM’s second-biggest shareholder as of: Sept. 30, 2011.
  • IBM shares have surged 28% this year
  • Many analysts predict a $210 median stock price by the end of 2011
  • IBM has adroitly, over the years, moved away from a pure ‘technology’ company to a ‘services’ company utilizing their technologies

HP and Dell can still try to learn and emulate IBM, but the first to market lead in a competitive market like this is very hard to make up.

Kudos to both IBM and Mr. Buffett, I see $300/share by Q2 2012.

 

TASCer

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Dell Inc. + Extreme Networks = Win / Win

August 23rd, 2011

Since Michael Dell took the CEO helm back in 2007, his company has made a significant shift in moving away from the staid and low-margin PC maker mentality to an IT services mentality; specifically cloud computing and mobility.

While I haven’t agreed with the majority of their acquisitions, execution, and maneuvering into this space, I do sense a great opportunity for them.

This great opportunity is in the form of Extreme Networks.

I feel that the key piece they are missing in their portfolio is networking, which will tie both aspects of their new mentality into a nice holistic package.

Mr. Dell stated during his June 29th keynote that: “Our focus now is on enterprise solutions that provide efficiency and flexibility.” Couple that message with their plans to
focus on:

  • Data Management
  • IT Services within Cloud Computing
  • Revamping their user computing model

It is readily apparent to me that they need the underlying communication framework and network technologies to make their vision a reality.

Granted, Dell has existing partnerships with Brocade and Juniper that can and will assist them in this regard, but why not bring this key piece of the information
technology equation in-house with a smart and timely acquisition?

Extreme is prime for the taking:

  • $265M market cap
  • Vastly under-valued
  • Management turnover
  • Investor dissatisfaction
  • 52 week range of $2.51 – $4.25

Mr. Dell, an offer of ~6$/share will fill out your portfolio and vision nicely, as well as make speculating investors such as myself very happy.

By the end of this year, I expect some action regarding this.

 

TASCer

 

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Desperate Times…

June 10th, 2011

To: Mr. Chambers and Board of Directors
Re: Not Working

It has been well over a year now and things are still not going well at all at Cisco.  The bad economy excuse has run its course at this point in time.

Add to that, you now have existing customers coming forward complaining about strong-arm sales tactics.

To me, this reeks of desperation and should be a catalyst for some serious changes.

Like I mentioned in an earlier post over a month ago, I say follow Google’s lead and clean house and get some new direction and leadership.

I’d hate to see a technology bellwether go down in this fashion.  Right the ship, the course is obvious.

 

TASCer

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CH-CH-CH-CHANGES…

April 19th, 2011

“Turn and face the strain”

David Bowie’s song seems very apropos for Cisco (NASDAQ: CSCO) these days.  After four (4) consecutive quarters of unsatisfactory earnings, Cisco CEO John Chambers wrote his employees a memo
notifying them of some pretty substantial CH-CH-CH-CHANGES on the horizon.

 

Some of the more noteworthy changes are:

  • Making it easier for customers to work with the vendor
  • Earning back some of the lost creditability
  • Refocusing on five key areas: routing, switching and services; video; collaboration; data center virtualization; and architectures
  • Restructuring their consumer business

 

While this list of changes seems great on paper, executing said list may prove to be much harder than they realize.

For example: Refocusing their strategy on five (5) key areas when they have moved aggressively into 30 new lines of business over the years would be a huge undertaking for a company with
~70,000 employees spanning the globe. I’m confident it can be done, but there will be pains and it will take some time.

Another example: Earning back some of their lost creditability can be a very tough proposition when there are other players in the market (re: Juniper, HP) that have had creditability,
if not cachet, for a number of years. In addition, customers are pretty fickle, and it takes some serious schmoozing to woo them back after experiencing frustrations with any vendor.

While I applaud Mr. Chambers for his corporate-wide memo and edict for change, I can’t help but wonder why it took 1 year of substandard earnings woes to be the impetus.

Granted, the economy is still slowly coming out of the recession, but there had to be some red flags raised on the non-performing lines of business and customer relations feedback.

It will be interesting to see if a much larger change a la Google’s re-organization will be needed to bring this company back to the forefront.

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Big Data Boot Camp

March 16th, 2011

On March 10th, IBM launched a Big Data skills initiative, which provides IT professionals and students no-charge access to 1,200 on-site skills boot camps.  These boot camps are held at: clients, partner, and university locations worldwide.  In addition, these boot camps will be held at the 38 IBM Innovation Centers, as well as on-line at DB2University.com.

Big Data is a catch phrase that typically refers to the tools, processes, and procedures allowing an organization to create, manipulate, and manage datasets that have grown so large that they become difficult to work with.  The sizes of these datasets are normally in the Tera/Petabyte + range.

While this may seem as a very altruistic gesture by Big Blue on the surface, one has to look past the word ‘free’ to see the pure marketing genius contained within.

In an increasingly heated battle between software and hardware behemoths (re: HP, Oracle), IBM astutely follows up its very successful nationally televised Watson project with an initiative which, per their press release, allows IT professionals and students to receive hands on training to learn:

  • How to use InfoSphere, DB2, Informix, Optim, and Guardium software to manage and integratedata flowing across and into their organization

 

  •  “Big Data” management and analysis skills including data federation, integration, and warehousing techniques using InfoSphere BigInsights, Streams, Warehouse and Information Server software

 

  •  Advanced skills such as data management planning, and data governance, quality and security strategies

 

  • Where to take advantage of free exams and testing to become certified on IBM Software in support of career advancement

 

Notice the plethora of IBM product names and certification path…..  

It would be a safe assumption that this free training will be utilized by far more individuals than it would have if it had an associated cost (no matter what the price-point would have been); this fact, in essence, allows this initiative to provide a new and immediate distribution channel for IBM, for a relatively small amount of expense/$$.

What a smart and innovative idea.  Kudos to the IBM Marketing team; I hope they are tracking this campaign as I am sure it will beat their forecasts.

Until next time,

TASCer

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The Google Shuffle

January 29th, 2011

In a move that many technology pundits have determined was long overdue, Google announced on January 20th, 2011 that in April of this year, co-founder Larry Page will replace Eric Schmidt as CEO of the mammoth technology innovator.

Mr. Schmidt, who was brought in a decade ago as CEO to assist the fledgling technology company by utilizing his proven technology business and leadership experience (Novell, Sun Microsystems and others) will now be focusing on M&A and government relations; while also remaining an advisor to both Mr. Brin and Mr. Page.

What could have been the catalyst for such a change you ask?

I believe the catalyst for this change could be due to a few key points such as:

  • The inherent bureaucracy that is bound to occur in a 24,000+ company is stifling innovation
  • The competition from likes of Facebook and Twitter
  • The entrepreneurial spirit that once defined the company has been diminished over the past few years
  • The leadership has, to this point, been run mostly as a triumvirate, which slows down the decision-making process
  • The need to find new revenue streams to make shareholders and analysts happy

With $35B in cash at their disposal, Google can do pretty much anything at this point and splitting up the 3-headed top management team into explicitly defined roles and responsibilities makes sense at this juncture in the company’s maturity.

I feel that the spotlight will shine very brightly, and with laser-like focus on every move Larry Page makes in 2011.  With that said, I think he and his executive team will make great strides after a short period of re-organization down the ranks.

I also feel that many large companies in other industries can learn a myriad of lessons from this management and leadership shuffle; the pace of change in the world today is lightning-quick and the only proven way to counter-act complacency and competition is to be agile.

Until next time,

TASCer

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Is Dell Inc. Becoming a Serious IT Player?

December 19th, 2010

I have been pretty tough on DELL in a past post (re: Acquisition of Perot Systems), but a recent, and very rare, interview with CEO Michael Dell has me re-thinking my previous stance.

Questions: Was I too tough on them and did I miss something?

Granted, I hedged my bet/post with a relatively quick follow-up post regarding the incredible speed and efficiency they performed the acquisition of Perot, but still…. I did not expect this company to be doing as well as they currently are.

Answers: I do not believe that I was too tough, but I will acknowledge the fact that I did miss something. I missed the abilities of the founder to come back, re-take the reins and alter the vision, strategy, and operations of a brand that was previously pigeon-holed and on the downslide.

_________________________________________________________________________________

So…. I now find myself in somewhat of a conundrum regarding this technology player; and asking myself a new set of questions:

Questions: Are they for real and can their strategy be sustained?

Answer:  I believe that yes, they are for real and that losing the bidding-war on 3PAR to HP will probably benefit them in the long-term. However, 50+% of their revenue is still generated by PC sales and that is, and will continue to be, lessened by other pure-play PC OEM’s cutting into their margins. Along with that, they still have a steep mountain to climb in regards to Data Center (DC) solution providers such as: HP, IBM, and Cisco. 

Summary: With Michael Dell and his re-vamped management team back at the wheel doing what they are doing, one should not count this company out. I somewhat liken this to Steve Jobs’ history with Apple. However, I maintain my earlier stance on this company, and that stance is: too little too late and sustainability is a long shot.

Regards,

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How Difficult Can Counting Be?

November 6th, 2010

That is the question I asked myself when I found out that from fiscal 2005 through fiscal 2010, the Department of Homeland Security (DHS) has failed to come up with an accurate data center count and equipment inventory. This information comes from a recently released DHS inspector general report dated September, 27, 2010.

In an effort to physically consolidate data centers and manage certain services on an enterprise-wide level, the DHS as spent or budgeted approximately $560 million and yet STILL lacks an accurate and complete data center and equipment inventory. Please note that the title of report contains the verbiage:  ’Initiative Needs Improvement’…  You think? I don’t know about you, but I’m feeling very safe knowing that this extremely important department can’t even provide this very basic IT function. At least we have a color-coded threat system firmly in place…

In response to this damaging report, DHS Chief Information Officer Richard Spires disputed the auditor’s contention, noting that inventories become more detailed as the migration efforts comes closer to implementation and that the department is changing its plan to incorporate lessons learned and best practices from other data consolidation efforts. What? I may be out of school here, but shouldn’t accurate counts, inventories, locations, and functions be fully gathered BEFOREa migration effort is initiated? Also, I feel that the DHS could have, at the initiation of this project, contacted any mid-sized business and learned the requisite consolidation and inventory lessons it took them 5 years to start learning…

On top of all of this, it seems that DHS is also lacking a plan for decommissioning the legacy data centers once the consolidation effort is finally completed. Can you say increased cost over-runs due to leases and other related fixed costs? I’d love to see an ROI on this endeavor, along with a project plan….    

So the answer to the question: How Difficult Can Counting Be?

- pretty tough when a proper project plan with built-in risks and contingencies are non-existant  

I, for one, really enjoy learning about how my hard-earned money is being spent so ‘efficiently’ and ‘effectively’….

TASCer

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Microsoft’s Cloud Services – Pretty Impressive

September 26th, 2010

The Windows Azure Platform is Microsoft’s general purpose cloud computing platform that, because of its flexibility, scalability, and choice, is catered mainly to software developers.

I recently assisted a client in setting up and conducting an extensive Proof of Concept (PoC) for both the Windows and SQL Azure components of this framework with AppFabric being a possibility in the mid to-long-term (re: Q2/Q3 2011.) 

The client’s desire was to test the feasibility, continuity, functionality, and performance of having database instances and proprietary applications ran from a Microsoft data center.

The initial setup could not have been much easier. After selecting one of the flexible pricing plans, all it took was giving the billing and account/service management information and away you go. The client decided on the Introductory Special (1 calendar month), and will use the PoC usage results of the introductory period (while paying overage charges if any are incurred) as a starting point/baseline to determine which plan will be selected if they do choose to migrate to production.

Below are my thoughts regarding Azure during this PoC.

POSITIVES:

  • SQL Azure has a very easy built in GUI firewall to help ensure security
  • SQL Azure takes care of much of the management of the database for you, including how to manage the underlying data files (re: your Create Database statements can be very simple.)
  • Did not experience any connectivity or performance issues thus far (2+ weeks of testing)
  • Creating the hosted services and storage for applications is very intuitive
  • Deploying applications from local environment to hosts is relatively easy and includes a STAGING environment
  • MS created a Platform Training Kit to assist in the learning curve
  • Excellent Billing and Usage reports / portals

NEGATIVES:

  • SQL Azure development Storage needs a tweak for non-SQL Express instances (need Windows Azure SDK installed)
  • No Data Centers (DCs) in the Western Region of US to select from at this time. Nearest was North Central US.
  • Platform is not currently industry certified, but Microsoft states that they are in the works (ISO27001
  • While deploying applications is relatively easy, it does seem to take quite a while to upload
  • Migration path could be a sticky proposition, fresh applkication development on the platform could be the better bet

In summary, while Microsoft has been somewhat late to step into this ‘cloud game’, I feel they have once again properly waited, watched, and learned from the early-to-market companies (and most likely adroitly acquired key Intellectual Property) and have put forth a very appealing cloud offering.

Next week I will be starting a comparative analysis of pricing plans for all cloud services providers using the PoC usage statistics to date.

I would love to hear about your experience(s) with this platform.

- TASCer

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VMware Sets Sights on Desktop OS

September 6th, 2010

At this years’ VMWorld, VMware announced that it will be developing a hosted service (due in 2011) that will allow the delivery of cloud-based desktop applications to any type of end-user device (re: iPad, Android or iPhone, Wintel machine, Mac, etc…)

Code named “Project Horizon”; this subscription service is being touted as a replacement for the traditional operating system (re: Microsoft) but detailed specifics regarding this project were hard to find.  

As Vittorio Viarengo, VP of Desktop Marketing for VMware states: “The role of the operating system is getting diminished every day on the server side”, and I can readily see VMware’s viewpoint that it is likely to move into the desktop space in the mid to long term. With that said, I believe there are some key caveats that need to be properly addressed:

  • Security
  • DR/BC/Central Point of Failure
  • Provisioning
  • Management
  • SLA

Does anyone remember how long it took to get the traditional desktop OS to even address these key bullet points? And this was on pretty standardized Wintel machines for the most part.

On paper, the hosted platform should take care of these issues pretty handily, but we all know there are always discrepancies between real life and what is presented on paper; especially when it comes to IT.

Anyway, I really like the way VMware seems to be innovating on all cylinders recently. This renewed (in my opinion) innovation, coupled with some great strategic acquisitions (Integrien, SpringSource, and TriCipher) makes me think they can move from being a company that simply virtualizes operating systems to a company that provides broader operating frameworks for both data centers and desktops.

I will definitely be keeping a close eye on this company, and on Project Horizon in particular, in the upcoming months

TASCer

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