Symantec Splits Up. Perhaps 2 Is Better Than 1.

Symantec Splits Up In A Series Of Silicon Valley Heart Breaks.

First,  EBay Inc (EBAY) decided on 30^th September to spin off its PayPal payments unit from its market place business. Then Hewlett-Packard Co. (HPQ) announced their split on 6^th October into two companies by end of fiscal year 2015.  Barely a week away, Symantec (SYMC) announced its plans on 10^th October to separate the company into two with an even more aggressive deadline of end December 2014.

Symantec’s split essentially reverses its $13.5 billion acquisition of storage company VERITAS Software in 2005, and follows the trend of splitting up to focus on faster growing business.

1. WHY SPLIT

The reason given was that the security and storage industries are changing at a fast pace. Both businesses need different strategies, investments and go to market. Symantec said the split will allow each company to:

• Focus on growth opportunities, research and development  investments, and go-to-market capabilities
• Reduce operational complexity
• Enhance strategic flexibility, pursue partnerships, and develop independent mergers and acquisition strategies
• Set distinct capital allocation policies

2. SECURITY
 
Michael A. Brown will continue as the President and CEO of Symantec focused on security. 

• This business will focus on Symantec and Norton end point security and cyber security services. 
• According to Gartner, Symantec is the market leader at $4.2 billion with 18.7% market share, almost double of the nearest competitor McAfee at 8.7%, followed by IBM at 5.7%.  The market is expected to reach $38 billion by 2018. 

In the security segment, Symantec helped pioneer anti-hacking technologies and its Norton product line, made it one of the best known security vendors.  However, it has increasingly found itself out of step with the security industry. Symantec faces escalating threats from professional hackers who rage battles beyond traditional security protection of viruses and cyberthreats.  The recent data breaches at Target Corp, eBay, Home Depot and JPMorgan show how hackers are finding new sophisticated ways against advanced detection systems.

On top of that, Symantec’s anti-virus software which is attached to PC sales took a beating with the PC slum, as its software was often bundled with the new computers.  Symantec had failed to catch onto the mobile market boom with mobile security. If Symantec wants to be successful in security, it must gear itself towards where more than half of the market spends and the fastest-growing security areas  of services, which includes consulting, outsourcing and implementation. 

3. INFORMATION MANAGEMENT

John Gannon will be General Manager of the new information management business. 

• This business will focus on backup and recovery, archiving, eDiscovery, storage management and information availability services. 
• Symantec claims to serve 75% of Fortune 500, estimated at 15% market share. This market is expected to grow to $16 billion by 2018.  Symantec’s appliance products have a 27% year on year growth and its back up products are among the leaders in the segment.

The information management market is likely to grow with new investments in virtualization, software defined data center technologies and cloud solutions.  Increasing data growth requires technology for data management from back up, recovery, access, storage anywhere and everywhere.

4. WHAT'S NEXT

The split up companies are up for grabs from EMC, HP, Cisco, Netapp and private investors.  It would be interesting to watch who will buy which company up, depending on the investors' focus on revenue from the cash cow or growth.

Technology - the secret to winning F1

Technology events have never gotten more exciting!  We had a total sensory experience at IBM ASEAN’s Xcite event with Infiniti Red Bull Racing Team.

Al Peasland (Head of Technical Partnerships, Red Bull Racing) was our speaker who gave us a TED-style sharing of the partnership between IBM and Red Bull Racing.  We experienced the Infiniti Red Bull spirit of fun and philosophy of “performance and reliability” with Al’s passionate delivery and interactive presentation.

 

Performance is great but if it doesn't happen when you need it, you cannot consistently win the race.  If it is just  about reliability, you may not become the best without pushing performance.  Both are important to keep staying ahead and winning.

Al shared, “Platform Computing is the back bone infrastructure for high performance computing, which helped Red Bull Racing with the design of the car, the analytics and the race strategy.”  It is used to plan into the future, to create all the what if scenarios and to predict what may happen in the two hour race.

When the single focus is to win races and championships, every element of the design and manufacture of Formula One racing cars is critical. With Formula One regulations becoming more stringent each year, Red Bull Racing is designing the entire car in a virtual world and parts are machined directly from 3D CAD models. Red Bull Racing also collects massive amounts of data from wind tunnel testing and from the car during races. These processes demand extensive use of simulation and data analytics, and a first class IT infrastructure.

Infiniti Red Bull Racing is ahead of the league that is embracing Platform Computing, a software from IBM Systems & Technology Group.  Also sometimes known Elastic Storage for Software Defined Environment. It helps to maximize the potential of computing power by pooling resources, managing them efficiently across multiple groups, so that one can run many iterations, simulations and analytics to get business results fast.  This is the winning formula to harness the benefits of unstructured data and data explosion.

We are glad to be the technology innovation partner that drives the winning Formula One car.  Technology - platform computing technology - is the secret to winning!

Catch Al's interview: https://plus.google.com/101708759635909645335/posts/MmgQDhqx3Yj
Read more: http://www.slideshare.net/annephey/blog-2014-1016-infiniti-red-bulls-secrets-to-winning-f1-races

HP Splits Up. Is Two Better Than One?

The IT industry is just getting more exciting.

Hot off the heels of IBM’s sale of its x86 server business to Lenovo, providing the momentum for Lenovo to repeat its success in 2005 when it acquired IBM’s PC division to become the number one vendor, HP makes a major announcement to spin off its PC and printer division into a separate company.

1.WHAT IS THE SPLIT
 

Former chief executive Leo Apotheker had proposed the move in 2011, 6 years after IBM sold its PC business.  It happened at the same time that HP’s disastrous acquisition of the British software company Autonomy.  Eventually, HP held on to its PC business amid shareholder pressure, resulting in Apotheker’s departure and Whitman’s appointment.  Meg Whitman who joined 3 years ago to turn HP’s fortunes around had dismissed her predecessor’s plan to carve up the firm but has now changed her mind in the fourth year of her five-year turnaround plan.

HP expects to complete the  split of HP into two public companies by end of 2015 fiscal year.  Shareholders will automatically own shares in both companies.

• Hewlett-Packard Enterprise to cover corporate hardware and services, which Whitman will head up, and
• HP Inc to comprise the PC and printer units, to be headed by Dion Weisler (the current executive vice-president of HP's printing and personal computing division). Whitman will be the chairman of the HP Inc board, thereby retaining influence in both businesses.

2.WHY SPLIT

"The decision to separate into two market-leading companies underscores our commitment to the turnaround plan," said Whitman. "It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-tern value for shareholders."

3. IMPACT OF SPLIT 

HP’s role in the IT market has been becoming increasingly unclear – with parts of its business moving toward growth areas, while others are being optimized to compete on the last era’s competitive battlefield.  This left the company in a tough spot, where new innovation efforts were often overshadowed by large legacy challenges.  HP has been addressing this through aggressive restructuring, ultimately shedding as many as 55,000 jobs by the end of FY2015. 

Whether HP’s efforts to reduce complexity and be more nimble with two large companies remains to be seen.  There are still many of the HP businesses that are not synergistic with different levers for success or where potential partners are unable to fit strategically with the company.

4. WHAT'S NEXT

Just when HP struck out at IBM by blatantly advertising that IBM customers and business partners should be worried about the x86 business sale to Lenovo, HP has now plunged into deeper uncertainty with their own company split.

It would be important for HP to quickly establish how different they will be after the split and what is the desired perception of HP to the world.

Managing a business divestiture. IBM closes sale of x86 server business to Lenovo.

Managing a business divestiture. 

IBM closes sale of x86 server business to Lenovo on 1st Oct.

 

On 1^st October 2014, the initial closing of the sale of IBM’s x86 server business to Lenovo started in most of the markets, including Asia Pacific. The 7,500 employees that work within the x96 unit across the globe will make the move to Lenovo’s Enterprise Business Group headed up by ex-IBM executive Adalio Sanchez.  This divestiture is a significant, strategic milestone for IBM and STG. 

1. WHAT CHANGED

The IT world has seen this x86 server become a fast-growing and lucrative technology that lifted sales at companies like HP and Dell, which still relied on them for billions of dollars in sales. As when IBM sold its personal computer business to Lenovo in 2005 which sparked success at both companies, this sale signals a change in the computing market.

Despite the competition, buying IBM’s x86 server business is a boon for Lenovo. Enterprise products are generally a higher-margin business than consumer gadgets. Lenovo’s own manufacturing capabilities and sales channels could help squeeze out more profits from the server sales.  


2. THE BUYER'S VIEW

 
Yang Yuanqing, Chairman and CEO of Lenovo said, “Lenovo will add a world-class business that extends our capabilities in enterprise hardware and services, immediately making us a strong number three in the global server market. By combining Lenovo’s global reach, efficiency and operational excellence with IBM’s legendary quality, innovation and service, I am confident that we can drive profitable growth.”


3. THE SELLER'S VIEW

On the other hand, IBM is turning its focus to higher end systems where it can generate competitive advantage.  “IBM will intensify the focus on our Power, mainframe and storage systems, where we can apply IBM’s valuable research and development capabilities to differentiate our offerings.  As we innovate in areas such as big data and cloud, allowing clients to capture value from opportunities in these segments.”says Tom Rosamilia, Senior Vice President of IBM Systems & Technology Group.

4. THE TRANSITION

 
Over the nine months, IBM has been preparing for this transition with a few key investments, including $3 billion in new chip technology to help IBM remain the systems innovation leader, $1 billion investment in Linux and open source technologies for Power Systems, $1 billion investment in Flash storage technology, and billion dollar investments in Watson ad cloud. These investments will help fuel renewed vitality and growth in our core STG businesses.

At such critical times, one server competitor who was fearful of the combination of IBM’s size and Lenovo’s profitability, showed their true colours with blatant competitive ads to undermine the confidence of customers and business partners on the server business.  We have chosen to ignore these ungentlemanly acts as baseless.


5. STEADYING THE TROOPS

I am privileged to be involved in the transition of the x86 team to Lenovo.  We have been going through a lot of planning for the integration of the business and a quick transition turnover of the business systems that supports how we operate.   IBM will continue to provide maintenance services to existing System x customers to ensure the transition between IBM and Lenovo is seamless.  IBM marketing has also been designed to support Lenovo marketing to ensure that our strong demand generation capabilities are transferred.

To the departed x86 colleagues, remember the “I love System x” campaign where you have demonstrated team work and confidence in our technology, regardless of the fear of the unknown new company.  Here’s a encouraging quote “Sometimes what you’re most afraid of doing is the very thing that will set you free.”  I wish you success in your new company.

To the IBM Systems & Technology Group team that remains, I wish you what I have experienced in supporting the transition. I have learnt so much more about the business, processes, people, differentiation and competitive advantage.  “A smooth sea never made for a skilled sailor.”