As analysts, we have perhaps different images of IT vendors than you do, so I thought it would be interesting this week to pull out the one thing about each of the major vendors that stands out as uniquely powerful—the not so secret weapon that defines them, if you will. This came from my meeting last week with VCE where I concluded what made them uniquely powerful wasn’t their product; it was something both more subtle and far more powerful. Let me begin my list, in no particular order.
IBMhttps://o1.qnsr.com/log/p.gif?;n=203;c=204663295;s=11915;x=7936;f=201904081034270;u=j;z=TIMESTAMP;a=20410779;e=iIBM’s power is in their strategic design. Of all of the companies in the technology segment, IBM is the only one that was, by design, immortal. I would be surprised if any of the other firms with which IBM currently competes are around in 30 years and equally surprised if IBM isn’t around in a century. This is because IBM institutionalized a process that trains executives and provides for a culture that allows the company to evolve with the market. While every company wants to live forever, only IBM has made that goal a high enough priority to achieve it.
Microsoft is the only company that has a product spread going from a gaming system (Xbox) that leads its market to an enterprise system (Windows Server) that leads in its segment, as well. This is a level of breadth that no other technology company has been able to successfully maintain—going from pure consumer electronics all the way up to large enterprise products and has found success at both ends. Apple tried to do servers and failed; IBM tried smartphones and PCs and couldn’t be competitive. Microsoft demonstrates an unmatched breadth. If it can pull the ends together into a stronger synergy, which is what their latest reorganization is designed to achieve, this result could be incredibly powerful.
Dell’s showcase is acquisitions. In a market where we generally have up to 90 percent of acquisitions fail, Dell has with virtually every recent acquisition, showcased that it can increase value and success for the acquired firm post-merger. It did this by taking and refining an IBM process so that the firm focuses on what is important in the acquired company and then resources protecting it. Interestingly, I think this learning is partially why it went private; Dell realized that some of that benefit, for the acquired companies, came from not having to focus excessively on quarterly numbers. Dell holds the gold standard on how to buy a company and increase its value rather than destroy it.
Joe Tucci at EMC is a master of creative organizational structures. From partnerships like VCE to captured and wholly owned companies like VMware and RSA, EMC has come up with a unique structure for virtually every one of its major new initiatives that allows the top executes to gain the status they want without leaving the company and the unit to gain the greatest benefit that a unique corporate structure can provide. EMC is surrounded by companies that Tucci has created, and the end result is a level of corporate diversity (in terms of structure) and creativity that is unmatched in the segment. (VCE should fall under EMC’s umbrella here as one of the examples of this amazing skill and capability).
HP is like the kid in class that gets the parental note saying he is underperforming but has the greatest potential. Of the smartwatches I’ve seen, HP had the most powerful but it never made it to market. Of the smartphones, only Palm ever really scared Apple last decade and HP killed Palm—accidently. In networking, it has an optical switch technology that could take over Cisco but it hasn’t gotten to market. HP has the Memristor, an amazing technology that could revolutionize storage and processes but it also isn’t in market. As a company, HP could own 3D printing but the solution isn’t yet ready to market. Any one of these, but particularly the last, could massively expand HP’s power and capability, but the company needs to get one of these into market. HP is literally on the edge of glory (Lady Gaga should sing their theme song).
Mining customers is Oracle’s strength and I’m not trying to be funny. The company has implemented a sales program that aggressively attracts the best sales people in the market, and it has created pricing programs that likely, if applied to stones, could get blood out of rocks. So much of what it has actually shouldn’t sell, and yet from a financial performance perspective, Oracle is a money machine. While customer satisfaction and loyalty do suffer, it never seems to reach a degree that actually does the firm physical damage. Oracle’s incredibly aggressive sales and pricing mechanism stands out as a massive financial asset for the company.
Wrapping Up: Best Practices
If you were to combine some of the skills each company has into a single firm, the result would be frightening. Take HP’s innovation, Microsoft’s breadth, EMC’s creativity, IBM’s longevity, and Oracle’s sales and pricing process—you’d quite literally have a company that could rule the world, and we’d probably be thankful to it. That’s kind of a scary thought as we go into the weekend.