Vendor focus

Perfect storm

Foaud Rafiq Charakla

Google’s Motorola mobile takeover and HP?s PSG spin off are game changers and signs of the gathering storm

Nowadays a Microsoft employee carries a Window 7 phone. A second glance at the device itself and you may see the Samsung brand on the body. The device is neither a Galaxy SI nor a Galaxy SII. Cross check with Samsung and they will tell you, yes there were plans for launching a Windows phone, and yes a special device was fabricated for Microsoft, but no the launch plans are now abandoned. The current word is Windows 7 will be launched on a Nokia smartphone. However the Microsoft-Samsung connection is not out of the woods as yet. Again the word out is Microsoft is rolling its Surface application interface on a giant Samsung display tablet meant for the CEO cockpit interface and will show up in other related opportunities.


So if Samsung one of Google’s staunchest mobile phone platform vendors can ride the wind with Microsoft on the other side, Google’s takeover of Motorola Mobility in the month of August 2011 should in reality not be an eyebrow raiser. All manner of arguments and counter arguments about the $12.5 billion deal should fall flat in the face of a single fact.


Says a global leading technology vendor focussed on core banking and mobile banking applications and supporting over 7,500 mobile devices: “Things are changing so dynamically in the mobile space it is a little scary to tie yourself down to one thing.”


In fact from whichever point of view you approach the mobile application space, whether enterprise or consumer, the combination of demand, benefits, technology life cycle and aspiration have coalesced to form what IDC now calls the “perfect storm”.    


Serious damage to HP PSG’s future profitability if it does not spin off says IDC MEA’s Foaud Rafiq Charakla

Says Tim Dillon, IDC’s Associate vice president for Asia Pacific mobility research: “Organisations that continue to take enterprise mobility for granted will be swept aside in the new environment. Today, we’re seeing what we could call a perfect storm created by the evolution of different areas of technology combining to fundamentally and drastically change how organisations can use enterprise mobility to support business goals and strategies. New access networks, new devices, new mobile operating systems, applications, platforms and delivery models have come together to create true and all-embracing enterprise mobility.”


According to IDC, mobility issues are the number one IT issue that preoccupy IT professionals in the Asia Pacific, also the centre for the explosive growth of smartphones. Both Apple and Samsung with Android OS now dominate global mobile phone sales with their triple digit growth figures centred around smartphones. Latest IDC user research indicates that both Google and Apple are rated almost equally influential in defining the way forward for cloud based social media applications.


On the second game changer, HP’s spinoff of its personal systems group including desktops, notebooks, workstations and handhelds may not have a direct connection with IDC’s perfect storm, but it does represent the onrushing shakeout across commodity product segments and vendors with a diffuse focus.


However with the PSG announcement, “WebOS, one of the PSG handheld components has been eliminated from any opportunities” according to Fouad Rafiq Charakla, Senior Research Analyst at IDC MEA. In all probability this was because of the high entry barriers raised by Google and Apple in the mobility space.


The announcement has also created uncertainty among HP’s PSG customers. Enterprise customers who demand stability, guarantees and a clear roadmap of the vendor they choose will now be more cautious in choosing HP, according to IDC.


PSG’s $40.7 billion annual revenue with 7% net earnings is a respectable business for potential buyers like Lenovo and Samsung. However in the event that HP does not sell off this division, “they might have seriously damaged its future profitability by this announcement,” states IDC’s Charakla.


While the Compaq takeover at the turn of the century was orchestrated by Carly Fiorina and her draconian initiatives were probably the most disliked at the company ever, her vision of HP being the biggest in its business still commands the channels unswerving loyalty. Volume resellers may cut selling margins but swear positively on the volume rebates they earn when they sell through stocks pushed relentlessly into them by distributors. But all that maybe changing it seems triggered by the PSG announcement.


Insider talk at HP indicates that volume resellers of the printing business are next in line for a shakeup. IPG managers want them to move towards more print pack services and after sales customer engagement service – something which competitor Xerox has been doing for years now. Is HP slipping to a follower position from a leader vantage it has been used to dominating? Can it withstand the perfect storm?



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