TECHNOLOGY TRENDS
Watch Out for Dell as a Services Competitor
May 23, 2006
Harvey Hindin, harveyh@ideasinternational.com
SERVICE NAME » IT Infrastructure Support Services
The US Federal Government Securities and Exchange Commission (SEC) Form 10K is not usually considered exciting reading. A required filing by firms subject to SEC rules, the document nevertheless can provide tidbits that indicate industry trends. This fact is well illustrated by Dell’s latest 10-K, 1 which shows Dell’s booming capability as an enterprise technology partner, OEM, and service provider. Dell’s services provider growth is the subject of this Technology Trends. The growth rate in what Dell calls Enhanced Services (see the Dell’s Enhanced Services sidebar, next page) is impressive enough for competing vendors, as well as users, to pay close attention (see the Dell Enhanced Services Growth table, left). Bottom line: Dell has grown services revenue by 81.4% in two years (in contrast to less than inspiring services growth at some other firms that sell hardware and software) and now boasts 10,000 services employees worldwide. 3 Dell’s focus is strictly on the IT infrastructure services market – how customers plan, maintain, and implement their IT systems. Dell does not play in the broader, traditional outsourcing, IT business consulting, or business process outsourcing markets. When these traditional outsourcing and consulting revenues are excluded from comparisons, Dell rises to the level of its competitors in terms of IT infrastructure services. 4 The figures in the table correlate with Dell’s stated desire to become a major player in the services business. For Dell, services represent growth with a far greater potential for profitable revenue than hardware or software. 5 In fiscal year 2006, enhanced services revenue increased 33% year-over-year compared to a 35% increase in fiscal 2005. Moreover, Dell is expanding its services offerings and capabilities globally, which has resulted in a 61% year-over-year revenue growth outside North America. Dell does not report margins on its enhanced services so it is unknown whether they are a real moneymaker for the firm. However, it is unlikely that Dell does anything that loses money. Unlike some of its competitors, Dell has shown that it can exist on small margins (currently 18% of net revenue) that would cripple others. If Dell can do well in services at margins lower than that of its competitors, it will be an even more formidable competitor. HP, IBM, and Sun are increasingly seeing Dell in the high end for services. As a result, these vendors are paying more attention to Dell. If Dell can continue to grow services at the rate it has grown them, it will be more and more of a factor to consider for both its competition and potential customers. Dell is steadily moving into the high-end services arena for high availability, mission critical, and disaster recovery environments. However, Dell is not yet a
DELL ENHANCED SERVICES GROWTH2
Fiscal Year End 03-Feb-2006 28-Jan-2005 30-Jan-2004 $B 4.9 3.7 2.7 % of Revenue 9 7 7
This document is copyrighted by Ideas International, Inc. (IDEAS) and is protected by U.S. and international copyright laws and conventions. This document may not be copied, reproduced, stored in a retrieval system, transmitted in any form, posted on a public or private website or bulletin board, or sublicensed to a third party without the written consent of IDEAS. No copyright may be obscured or removed from the paper. All trademarks and registered marks of products and companies referred to in this paper are protected. This document was developed on the basis of information and sources believed to be reliable. This document is to be used “as is.” IDEAS makes no guarantees or representations regarding, and shall have no liability for the accuracy of, data, subject matter, quality, or timeliness of the content.
TECHNOLOGY TRENDS
HP to Offer Unique MySQL Infrastructure Services
May 11, 2006
Gary Burgess, garyb@ideasinternational.com | Harvey Hindin, harveyh@ideasinternational.com
SERVICE NAME » IT Infrastructure Support Services
MYSQL SERVICE PARTNERSHIPS MySQL divides its service partners into three categories:
At the recent MySQL User Conference, HP announced consulting, integration, and support services for the MySQL Open Source database as part of its Open Source Integrated Portfolio (OSIP) offering, which includes the HP Open Source Middleware Stack (still being populated). The three-year, non-exclusive agreement will provide a variety of infrastructure and professional services offerings to those users opting for the MySQL open source database technology. Moreover, HP and its channel partners will resell MySQL Network Subscription Services. i Why is this announcement significant? Part of the infrastructure services HP will provide includes consulting, integration, and support for customers implementing MySQL Network database software into their IT environments (particularly those that are HP-based). Toward this end, MySQL personnel will train HP personnel so that HP can support the MySQL Network software as part of the HP software stack. But don’t customers already have a choice of similar capabilities from MySQL partners Dell, IBM, and Novell?
» MySQL Network resellers – such as
Dell, Ingram, and Bell Micro –that fulfill demand for MySQL Network but do not provide L1 or L2 support (support is provided by MySQL’s support team).
» MySQL Network resellers that also
provide L1/L2 support, such as Novell and SCO.
HP Says…
According to HP, the firm is the only IT service provider that can serve as a single point of accountability for customers seeking to integrate and manage MySQL database software in an IT environment. In other words, by combining MySQL with its C&I and TS services, HP believes it is the first IT service provider to properly integrate and support/manage MySQL Network (see the MySQL Service Partnerships sidebar for details). We believe HP’s claims will ring true with many potential MySQL customers. HP has the edge because:
» MySQL Network resellers – such as
HP and Spikesource – that provide L1/L2 support and provide their own Professional Services (PS) and/or subcontract/resell MySQL PS. (Spikesource resells MySQL products and services but does not provide its own PS or sell hardware.)
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Third-party partners, or MySQL itself, provide Dell’s MySQL support (the onethroat-to-choke or single point of accountability issue for infrastructure services rears its head here). Neither IBM nor EMC (both are large MySQL partners with many service offerings) resell or support MySQL. While MySQL recently announced partnerships with these firms, they are limited agreements. IBM announced that MySQL works with WebSphere and IBM server hardware. EMC announced that MySQL works with EMC storage software as well as VMware. Neither vendor resells or supports MySQL Network. Novell charges for maintenance of SUSE Linux Enterprise Server (SLES) but does not receive license revenues for the SUSE open source platform. However,
»
This document is copyrighted by Ideas International, Inc. (IDEAS) and is protected by U.S. and international copyright laws and conventions. This document may not be copied, reproduced, stored in a retrieval system, transmitted in any form, posted on a public or private website or bulletin board, or sublicensed to a third party without the written consent of IDEAS. No copyright may be obscured or removed from the paper. All trademarks and registered marks of products and companies referred to in this paper are protected. This document was developed on the basis of information and sources believed to be reliable. This document is to be used “as is.” IDEAS makes no guarantees or representations regarding, and shall have no liability for the accuracy of, data, subject matter, quality, or timeliness of the content.
TECHNOLOGY TRENDS
IDEAS First Take: Microsoft Software Assurance Program Expands to Further Meet Customer Needs
March 17, 2006
Gary Burgess, garyb@ideasinternational.com | Harvey Hindin, harveyh@ideasinternational.com
SERVICE NAME
» IT Infrastructure Support Services
Following through on its September 2005 statement of intent, Microsoft announced an extensive upgrade to its much-heralded (and often attacked) Software Assurance Program this week. Key among the upgrades is beefed up bundled product support, which is the focus of this analysis. Software Assurance is designed to ensure customers have access to support, new version rights, new technology, and software resources throughout their Microsoft software lifetime (http://www.microsoft.com/licensing/programs/sa/default.mspx). Software Assurance is a long-running (four years) Microsoft licensing program that Microsoft designed to include access to software upgrades and other benefits for users, IT and management staff, and business decision makers who use Microsoft software in both the SMB and enterprise environments. Its upgrade pricing model is its key program feature, but user resistance to this feature meant the program, as a whole, did not get the acceptance that Microsoft was hoping for. However, the Software Assurance Program offers valuable lesser-known capabilities and these have been further improved with this week’s announcement. Among other changes to the program, Microsoft has broadened the range of products that qualify for support under the program, enhanced the type of support available, and allowed clients with Microsoft premium support contracts to carry over their bundled support as credits toward higher-level support offerings.
RECOMMENDATIONS FOR USERS
» Get Microsoft in your office to go over
the upgraded Software Assurance Program to specifically explain what it means for your environment and your ongoing Microsoft software expenses.
»
Microsoft has now extended the available phone support to 24x7 for all Windows Editions. Previously support was for business hours for Enterprise Windows server only, with 24x7 web support for after hours help on problems with Standard Edition Windows. The program expands the product support list and includes Microsoft Server, Windows, and Office System products. Unlimited web support for all server products covered by Software Assurance is now available during business hours. Microsoft has made it easier to use this support by allowing an unlimited number of contacts. Previously the number of allowed contacts was limited. For clients with higher-level Microsoft support contracts such as Microsoft Essential or Premier support, the bundled Software Assurance support can be converted for use in these programs. This move allows clients to better coordinate and leverage their Microsoft support entitlements. How much support does a company qualify for? For servers, for every $20K Software Assurance expense for server licenses and CALs, a client is entitled to one incident during the term of that Software Assurance contract.
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This document is copyrighted by Ideas International, Inc. (IDEAS) and is protected by U.S. and international copyright laws and conventions. This document may not be copied, reproduced, stored in a retrieval system, transmitted in any form, posted on a public or private website or bulletin board, or sublicensed to a third party without the written consent of IDEAS. No copyright may be obscured or removed from the paper. All trademarks and registered marks of products and companies referred to in this paper are protected. This document was developed on the basis of information and sources believed to be reliable. This document is to be used “as is.” IDEAS makes no guarantees or representations regarding, and shall have no liability for the accuracy of, data, subject matter, quality, or timeliness of the content.