2011 can be considered a year of transition, but revolution captures it more accurately. The established technology players are showing uncharacteristic vulnerability. The new guard focused on content (Google and Apple) are taking control.
The Cloud is the medium in which the changes are taking place. I would hazard to say that 2011 was the year in which the IT industry visibly commenced its demise. And in parallel what we are seeing are the green shoots of the emerging information and knowledge industries.
The following are a (reverse chronological) sample of the main highlights of 2011.
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Software giant Oracle is known for its bullish style and its ability to deliver the figure to justify its posturing. The bullishness continues but the figures have turned south. Its recent quarter on quarter sales growth forecast fell by 5%, which in turn knocked 9% off the share price. Given Oracle’s reputation for market robustness, it is perhaps an indicator that 2012 will be a tough year for the IT industry.
Ratings agency S&P have dropped technology vendor HP's credit rating by two notches. This will make borrowing more expensive for the company. The rating remains several notches above junk status, which means that HP will still be perceived as a plausible investment option. HP has experienced a lot of uncertainty with having three CEOs in less than a year and just as many strategies. Current CEO Meg Whitman, who was previously CEO at eBay, is perhaps preparing HP for auction.
Cisco surprising itself
It's been a tough year for the network component provider. A drop in market confidence was followed by a significant and expensive overhaul. Cisco 2.0 has now reported its second quarter of exceeding analysts' expectations. CEO John Chambers reported a surprise surge in orders from US corporate, government and telecoms customers. Its shares jumped 4% in after hours trading when it announced its positive order growth news.
IBM names its first female chief executive ever. Virginia Rometty will take the helm from Sam Palmisano at the start of next year. Her strengths lie in sales, marketing and strategy, particularly in respect of IT services. She will also be the first IBM CEO to have not run the hardware business. So her profile is perfectly suited to where IBM needs s to go as opposed to where IBM has been.
It transpires in the authorised biography of the late Steve Jobs that the success formula for Apple was to focus on products and not sales. He claimed that once companies valued sales over product, the product would go downhill. He also indicated that Apple is entering the TV market. So it would appear that Apple is planning to take control of every channel consumers use to access digital content.
Having just launched a bold strategy that involved discarding the PC/consumer business and acquiring clever BI vendor Autonomy, HP's board have just kicked out CEO Leo Apotheker. In a surprising move, they have replaced him with Meg Whitman, ex CEO of Ebay. They have clearly lost their nerve. Given she is already financially secure, it is difficult to see what will motivate her, other than the challenge associated with having no experience of leading an organisation that does not focus on auctioning.
Sony is late to the party having just announced its Tablet S offering. This more or less coincides with HP and Sharp's departure from the market. Using the Android platform, it is a viable alternative to Apple's iPad, and Sony does have cachet in the lifestyle branding department. Microsoft is looking to blur the PC -- tablet market place with its forthcoming Windows 8, and thereby keep some control over the market. BlackBerry maker Rim shipped under 50% of it anticipated volume of PlayBook tablets, which contributed to its share price dropping 20%. One can't help but feel that the tablet game is over and it's time to get in line with the dominant player.
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Google exits tablet market
Google will have to pay $500m in settlement over displaying adverts from companies selling unlicensed prescription drugs. The companies are typically based in Canada and selling drugs that are manufactured in India and China and other places where the US Food and Drugs Administration are unable to exert control.
HP Re-Invent(s) itself
Technology giant HP took heed of its own 'Invent' tagline by announcing radical changes. Firstly it intends to spin off its PC and printer business. A good move as this is a relatively low margin business plus it enables HP to exit the consumer market and focus on the enterprise space. Secondly it is to acquire UK (clever) search software company, Autonomy for approximately $10 billion. It's not so obvious what the benefit is here. However given that Autonomy's software is used to help organisations make better decisions, it will now give HP something of interest to talk about when they push into the c-suite.
Lulz Security has been busy with its forays into the servers of Sony, the US Senate and the CIA. It appears to be a breakaway faction of the Anonymous online activist organisation. They seem to be both having fun whilst highlighting gaping vulnerabilities in their targets. The CIA attack seems to have been triggered by reports that the US will take cyber attacks from foreign countries as a legitimate reason to respond with military force. With this in mind Google has accused China of hacking into the emails of senior US and South Korean officials.
Free the Cloud
Apple is offering a free Cloud service that will dramatically accelerate the update of web services and put pressure on IT functions to deliver Cloud based services to their users. No more synchronisation of files and emails between devices with the iCloud. Apple appears to be demoting the importance of its hardware, which suggests that its core business is more likely to become service and perhaps even digital rights management based.
Google continues to gnaw away at Microsoft's foundations with the announcement of its Chromebook computers. Acer and Samsung are set to sell notebooks running Google's Chrome operating system. The focus will be on web based applications and companies will buy these Chromebooks as a service than as a product. This is a direct attack at the traditional PC model from which Microsoft has greatly benefited. This will be an exercise in marketing rather than engineering prowess because if organisations wanted to go down this Cloud-client route they already have the option to use a Linux based PC. But they haven't, which suggests there is no market yet for Google's offering.
All change in smartphone market
Nokia's dominance in the mobile phone industry took a significant turn when Taiwanese smartphone maker HTC's market value overtook that of the struggling Finnish giant. Of course the market valuations could easily flip again, but it is significant that a player that didn't exist in 1996 is now threatening Nokia. The mobile power axis has moved eastwards from Scandinavia to the Far East; Sony, LG Electronics and Samsung being other significant players. Nokia remains top in terms of volume, but judging by the devices I saw on show at a recent CIO event in Helsinki, I think it will lose that crown in the foreseeable future.
Cisco shake up
Networking and collaboration specialist Cisco has had to reconsider what its core business is in the light of a loss of analyst confidence. Its shares have fallen 35% in one year despite a 15% upturn on the Nasdaq Composite index. CEO John Chambers stated that it would refocus on its core markets in routers and switching, collaboration, data centre virtualisation and video. The demising of the Flip YouTube friendly video recording device suggests that Cisco is reversing out of the consumer space to focus on the enterprise market.
Zune player RIP
Microsoft has decided to ditch its Zune player and refocus its efforts on a software only strategy in the consumer electronics space. Apple appears to have out branded Microsoft. The word on the street is that Microsoft failed to out innovate its competitors in this space and has thus discovered that emulation is not enough to knock Apple off the perch. The arrival of the iPad2 was most likely the final nail in the coffin this month. Amazing what a few cameras and a choice of protective cover colours can do.
There is 'trouble at mill' again for Apple. Over one hundred workers at a Taiwanese touch screen manufacturer used by Apple have been poisoned by a chemical used to clean the screens. Previously the factory used alcohol for the job but then changed to n-hexane as it evaporated faster and thus sped up production. Apple has taken action on this. Nokia and HTC also use the same supplier. Some time back there was controversy surrounding one of Apple's Chinese manufacturers, where over a dozen workers committed suicide.
LinkedIn to float
Business social networking company LinkedIn has announced its intentions to go public this year. Possibly the recent valuation of Facebook at $50bn might have triggered the founders into thinking about the big pay day. It will be interesting to see whether they change the business model to monetise their 90 million free subscribers. For some people the prospect of rebuilding their 500 plus contacts on another site may just warrant paying a small fee.
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