Showing posts with label IBM. Show all posts
Showing posts with label IBM. Show all posts

Thursday, April 04, 2013

Search for The Next ‘Hundred Zeroes’!

Technology Companies are setting up VC funding Arms, Raising optimism of a Great Inorganic Leap forward. Seriously, aren’t corporate venture funds already too overrated?

When Google founders Sergey Brin & Larry Page decided to take up VC funding of $12.5 million from Kleiner Perkins Caufield & Byers in 1998, they told the VC firm’s partner John Doerr that they were willing to hire an outside CEO, but they backtracked a few months later; saying they would like to go on their own. They were then taken by Doerr to meet a number of CEOs like Andy Grove of Intel, Jeff Bezos of Amazon & Steve Jobs of Apple to really appreciate what a CEO’s job entailed. Finally, they relented on the outsider proposition, provided the outsider was Steve Jobs and no one else, before finally being convinced to explore further!

Considering Steve Jobs’ iconic personality and a high probability of a clash of equals, that may not have been a genuinely good idea. But this anecdote from Steven Levy’s book titled In the Plex: How Google Thinks, Works & Shapes Our Lives, really underscores how Google’s founders never really were comfortable letting their baby being run by anyone but themselves. The inevitable happened this year, when Page took the reins as CEO and Eric Schmidt became Chairman. Page already is talking about taking Google back to its start up days when it comes to the culture of innovation.

They have always been concerned about the company slowing down on growth. Levy mentions that they once fired all the middle managers for that! In fact, though not all may take such extreme action, that reflects a genuine concern of technology companies beyond a certain size, as they risk getting blown over by the next disruptive technology in a dynamic industry. This fact has proved true for companies like Microsoft, Yahoo!, HP, BlackBerry, Dell, IBM and Google itself, to an extent. Apart from a number of initiatives to get the company on the innovation drive again, which include working on book search and autonomous vehicles, one of the Google’s most ambitious moves is with respect to its VC firm Google Ventures, which has earmarked $200 million to fund promising start up companies (touted as a move to find the next Google?). That’s significantly large by VC standards and Google claims that it has a special secret algorithm that can help it find what the next big start ups would be. Apart from Google itself, a number of big technology names are on the list of corporate venture funds like IBM, Intel, SAP, Microsoft and National Semiconductor. But how successful can this VC model led by technology companies be?


Source : IIPM Editorial, 2012.
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Thursday, October 18, 2012

SUN, IBM: ACQUISITION TALKS COLLAPSE

Sun must ideally go back to the negotiating table with IBM; it will be tough for it to survive on its own

Having Sun in its kitty would have helped IBM position itself in the high end segment of corporate computing and in the nascent market for cloud computing services. As a matter of fact, IBM would have enjoyed a 65% market share in the Unix-based servers market and about 42% share in the overall server market (addition of 10%). However, IBM was not too happy with the close relationship that Sun shared with its arch rival Oracle and given the kind of market scenario, it would make no sense to pay more to get its hands on an ailing company. But the vibes from Sun were apparently not too optimistic. So what''s in store for Sun with IBM now walking out?

Currently the mcap of Sun, which has been criticised consistently by analysts for being a stodgy technology driven company that cared less for customer demands or market trends, stands at $4.97 billion (as on April 10, 2009). That was why the company never really recovered as the server market got commoditised with time. IBM was actually paying a $2 billion premium for the company, which is currently in the midst of terrible times. The ongoing financial crisis has led to a further weakening of demand for Sun’s high-end servers and it has lost a whopping $1.9 billion in the last two quarters of the current fiscal. Furthermore, the company has already handed out pink slips to about 2,800 employees to trim costs and it is feared that the number can increase if the situation does not improve in the short term. According to Richard L. Ptak, Managing Partner, Ptak, Noel & Associates, “The problem for Sun is also that its management gives no indication that they recognise the problems that the company faces, let alone understand or solving them." Many would argue that though the server business is being hit, Java still continues to be a star product for this company. However, in 2008, out of the total revenues of $13.8 billion, only $200 million came from Java. It is ironical, therefore, that the company changed its ticker symbol to Java from SUN at NYSE, thinking that Java would ultimately drive the company forward. As per Wall Street analysts, there are chances of revenue slipping further for the next several years, given the present scenario.


Source : IIPM Editorial, 2012.

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