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PGSEM Final Year Project<br />Merger & Acquisitions by Big IT CompaniesA study to identify the trend and strategyProf. R. Srinivasan (CSP)<br />Naveen Kumar K E (2008040)<br />Satyajit Paul (2008046)<br />Date – 19-Mar-2011<br />

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Project Overview<br />Understanding the strategies of the large Tech Companies by analyzing their acquisitions. Our study should help us develop an in depth understanding about the emerging technology trends & innovation and how those technology trends & innovation influenced the strategies of large technology companies.<br />Methodologies<br /><ul><li> Selection of companies based on predefined criterion.

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Data Collection Sources include company websites, Press Releases, SDC, Gartner Press Releases, Data Monitor.

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Study the individual companies.

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Develop the Taxonomy of Software Companies and find the market size.

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Fit them into the Taxonomy of Software Companies.

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Study the acquisitions of the companies over last 5 to 7 years

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Study some of the high growth segments.

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Observations & Insights.

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Predictions.</li></li></ul><li>Selected Companies<br />Hewlett-Packard <br /> Cisco Systems <br /> Oracle <br />Intel <br />IBM<br />Dell <br />Microsoft <br /> SAP<br /> EMC <br />Criterion Used for filtration<br /><ul><li>Fortune Top 100 companies by Revenue.

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Fortune Top 50 companies by Market Value.

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Fortune Top Computer Software Companies.

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Fortune Top IT Services Companies.

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Companies having operations in India.</li></li></ul><li>Worldwide IT Spending<br /><ul><li>Longer-term, server spending will be curtailed by virtualization, consolidation and, potentially, cloud computing.

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The infrastructure market (all the software to build, run and manage an enterprise) is the largest segment in terms of revenue and the fastest-growing through the 2014.

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The hottest software segments through 2014 include virtualization, security, data integration/data quality and business intelligence.

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Web conferencing, team collaboration and enterprise content management are forecast to have double-digit compound annual growth rates (CAGR), in the face of growing competition surrounding social networking and content.</li></li></ul><li>Computing Cycles<br />Source – Morgan Stanley (Nov, 2010)<br />

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Taxonomy of Technology Cos<br />Software as Service<br />Platform/HW as Service<br />Cloud<br />ERP<br />Software Services<br />CRM<br />Application<br />Supply Chain<br />BI&Analytics<br />Middleware & Integration<br />Content Managment<br />Servers, Tools & Platforms<br />Database<br />Security & Compliance<br />Operating System<br />Application Dev Software<br />Virtualization<br />Proj. & Portfolio Mgmt<br />IT Infra Mgmt<br />Networking<br />Servers<br />Unified Communication<br />Storage<br />Network & Nt Srvc Mgmt<br />Semi conductor<br />Network Infrastructure<br />

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Competitive Positioning - Present<br />Software Services<br />Application<br />Middleware & Integration<br />Servers, Tools & Platforms<br />Database<br />Networking<br />Operating System<br />Virtualization<br />Servers<br />Storage<br />Semi conductor<br />

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Company Analysis - ORACLE<br />Major Acquisitions -<br /><ul><li>PeopleSoft

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Siebel

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Hyperion

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BEA Systems

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Sun Microsystems

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Revenue in Software business growing substantially.

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With acquisition of Sun, Oracle has entered Hardware segment.</li></li></ul><li>Company Analysis - IBM<br />Major acquisitions:<br /><ul><li>Sterling Commerce

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Cognos

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Netezza</li></ul>Divestitures:<br /><ul><li>Personal Computing

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PLM Software</li></ul>Most recent focus <br /><ul><li>Cloud Integration

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Business Analytics</li></ul>Incremental Growth in Software, Middleware and Services<br />

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Company Analysis - HP<br />Major Acquisitions – <br /><ul><li>EDS

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3PAR

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3Com, Palm Inc.

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Mercury

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Strong growth in Services Revenue

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Consumer segment revenue stagnant

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Drastic reduction in revenue from HP Software

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Lack in Enterprise Software Offerings.</li></li></ul><li> Company Analysis – SAP<br />Two major acquisitions<br />Business Objects (Analytics)<br />Sybase (Mobile Solutions)<br />

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Company Analysis - Intel<br />Strong focus on Mobile & Security<br />Plan to compete with ARM technology for smart phone chips.<br />

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Company Analysis - Dell<br />Major acquisitions:<br /><ul><li>Perot Systems

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Equal Logic

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Compellent</li></ul>Some recent – <br /><ul><li>Ocarina

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Boomi

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SecureWorks

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Major decline in Desktop PC segment

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Slight increase in Laptop segment

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Average performance in other segments</li></li></ul><li> Company Analysis - EMC<br />Major acquisitions<br /><ul><li>VMWare (2003)

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RSA Security

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Data Domain

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Isilon Systems</li></ul>Very strong on storage segment.<br />% Share of Storage companies adopting VMWare for virtualization.<br />

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Company Analysis - Cisco<br />Major acquisitions<br /><ul><li>Scientific Atlanta

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Webex

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Navini Networks

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Starent

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Tandberg</li></ul>Major growth noticed in Unified Communications (Video, Internet technology) – reaching the end user segment.<br />

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Company Analysis - Microsoft<br />No big ticket acquisition but lot of small acquisitions, attempted Yahoo! buy.<br />Strong Presence in all the segments of Enterprise Software & Development Tools.<br />Enjoys the competitive advantage due to the use of in-house closed technology.<br />It has created a niche and enjoys monopoly in that space leading to extra-normal profit on all it’s softwareofferings.<br />High focus on Mobility and Entertainment Business.<br />One stop shop.<br />

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Acquisitions by Segments<br />

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BI & Analytics – Major Acquistions<br />2006 2007 2008 2009 2010 2011<br />

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Storage– Major Acquistions<br /> 2007 2008 2009 2010 2011<br /> 2007 2008 2009 2010 2011<br />

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Virtualization– Major Acquistions<br /> 2007 2008 2009 2010 2011<br />Rembo Technology<br /> 2007 2008 2009 2010 2011<br />

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Networking– Major Acquistions<br /> 2007 2008 2009 2010 2011<br />(ProCurve )<br /> 2007 2008 2009 2010 2011<br />

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Middleware – Major Acquistions<br /> 2007 2008 2009 2010 2011<br /> 2007 2008 2009 2010 2011<br />

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Trends – Mega Vendors<br />Mega Vendor<br />Mega Vendor<br />Server & PC Co<br />Database Vendor<br />

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Trend - Microsoft<br />

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Trends – Niche Players<br />Semi conductor<br />Storage<br />Network Infra<br />

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The Infrastructure Battle<br />

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Strategic Focus Area<br />BI & Analytics, Integration<br />BI, Middleware<br />Mobile Apps, Database<br />Storage, Mobility, Services<br />Storage, Mobility, Services<br />Storage, Virtualization, Security<br />Collaboration/Video, Unified Computing System<br />Wireless, Security<br />Mobility, Cloud Computing<br />

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Strategic Direction<br />Mega Vendors<br />Focused Vendors<br />

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Insights<br /><ul><li>IBM & Oracle stands out in managing acquisitions well including divestitures.

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IBM is best positioned for one-stop-shop offerings to large enterprise customers.

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Oracle is one-stop-shop in making. It lacks Services offering in order to grab big scale enterprise deals.

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Cisco, EMC and Intel – a significant strategic alliance in making, will give IBMs and HPs run in Storage and Cloud space.

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HP & Dell lacks strategic direction in the acquisitions.

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Microsoft has most coherent cloud strategy for the end users – both SMEs and large enterprises. </li></li></ul><li>Money Matters<br />

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Predictions<br /><ul><li>Oracle going for acquisition of a Services company that can provide scale – CSC is a good choice.

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HP & SAP forming strategic alliance – while HP lacks middleware and Software, SAP can not really pitch against Oracle and IBM due to lack of depth in it’s offerings. So, it has choice to remain a focused player or need to forge alliance with a large Server/Storage vendor.

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Dell acquiring Citrix. With EqualLogic and Compellent buys Dell is well placed in Server and storage. However Dell & Citrix would be strong alternative to EMC+Vmware, particularly in wake of it’s straining relation with EMC after Compellent buy.</li></li></ul><li>

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Emerging Trends<br />Consumer Computing moving to mobile and tablets. Its is experiencing explosive growth as never before.<br />Enterprise Computing moving to Cloud – Public Cloud as well as Private Cloud.<br />SMEs are ahead in adopting Cloud based Software Service, while Large Corporates prefer to have Private Cloud.<br />Private Cloud will experience higher growth over the Public Cloud.<br />Virtualization seems to be the hottest of all segments.<br />Storage is experiencing explosive growth driven by growth in social networking, videos and other user driven data (10x by 2011, 44x by 2020).<br />Security remains elusive for most of the vendors, remains the biggest concern for the corporates and potentially may slow down the growth of Cloud based computing.<br />

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Send an email to satyajit.paul@gmail.com for full report.<br />