Study Technology M&A by Tech Giants
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Transcript of Study Technology M&A by Tech Giants
Merger & Acquisitions by Big IT CompaniesA study to identify the trend and strategy
Prof. R. Srinivasan (CSP)
Naveen Kumar K E (2008040)Satyajit Paul (2008046)
Date – 19-Mar-2011
PGSEM Final Year Project
Project OverviewUnderstanding 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.
Methodologies Selection of companies based on predefined criterion. Data Collection Sources include company websites, Press Releases, SDC, Gartner Press Releases, Data Monitor. Study the individual companies. Develop the Taxonomy of Software Companies and find the market size. Fit them into the Taxonomy of Software Companies. Study the acquisitions of the companies over last 5 to 7 years Study some of the high growth segments. Observations & Insights. Predictions.
Selected CompaniesHewlett-Packard
IBM
Microsoft
Oracle
Dell
Cisco Systems
Intel
SAP
EMC
Criterion Used for filtration
•Fortune Top 100 companies by Revenue.•Fortune Top 50 companies by Market Value.•Fortune Top Computer Software Companies.•Fortune Top IT Services Companies.•Companies having operations in India.
Worldwide IT Spending
Longer-term, server spending will be curtailed by virtualization, consolidation and, potentially, cloud computing.
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.
The hottest software segments through 2014 include virtualization, security, data integration/data quality and business intelligence.
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.
Computing Cycles
Source – Morgan Stanley (Nov, 2010)
Taxonomy of Technology Cos
Semi conductor
Storage
Servers
Virtualization
Operating System
Database
Middleware & Integration
Application
Cloud
Software ServicesERP
CRM
Supply Chain
BI&Analytics
Servers, Tools & Platforms
Security & Com
pliance
Networking
Application Dev Software
Network & Nt Srvc Mgmt
Network Infrastructure
Content Managment
Software as Service
Platform/HW as Service
Proj. & Portfolio Mgmt
IT Infra Mgmt
Unified Communication
Competitive Positioning - Present
Semi conductor
Storage
Servers
Virtualization
Operating System
Database
Middleware & Integration
Application
Software Services
Servers, Tools & Platforms
Networking
2005 2006 2007 2008 2009 20100
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ServicesHardwareSoftware
Major Acquisitions -PeopleSoftSiebelHyperionBEA SystemsSun Microsystems
Revenue in Software business growing substantially.
With acquisition of Sun, Oracle has entered Hardware segment.
Company Analysis - ORACLE
Company Analysis - IBM
Major acquisitions:Sterling CommerceCognosNetezza
Divestitures:Personal ComputingPLM Software
Most recent focus Cloud IntegrationBusiness Analytics
Incremental Growth in Software, Middleware and Services
2005 2006 2007 2008 20090
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Services#REF!#REF!Software
2005 2006 2007 2008 2009 20100
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Imaging and Printing GroupPersonal Systems GroupServicesStorage & ServersSoftware
Company Analysis - HP
Major Acquisitions – EDS3PAR3Com, Palm Inc.Mercury
•Strong growth in Services Revenue•Consumer segment revenue stagnant•Drastic reduction in revenue from HP Software•Lack in Enterprise Software Offerings.
Company Analysis – SAP
Two major acquisitions1) Business Objects (Analytics)2) Sybase (Mobile Solutions)
Company Analysis - Intel
1. Strong focus on Mobile & Security2. Plan to compete with ARM technology for smart phone chips.
2005 2006 2007 2008 2009 20100
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Desktop PCMobilitySoftware & Periph-eralsServicesStorageServers and Network-ing
Company Analysis - Dell
Major acquisitions:Perot SystemsEqual LogicCompellent
Some recent – OcarinaBoomiSecureWorks
•Major decline in Desktop PC segment•Slight increase in Laptop segment
•Average performance in other segments
Company Analysis - EMCMajor acquisitionsVMWare (2003)RSA SecurityData DomainIsilon Systems
Very strong on storage segment.
% Share of Storage companies adopting VMWare for virtualization.
2005 2006 2007 2008 2009 20100
50001000015000200002500030000350004000045000
ServiceOtherAdvanced TechnologiesSwitchesRouters
Company Analysis - CiscoMajor acquisitionsScientific AtlantaWebexNavini Networks
StarentTandberg
Major growth noticed in Unified Communications (Video, Internet technology) – reaching the end user segment.
Company Analysis - Microsoft• No big ticket acquisition but lot of small acquisitions, attempted Yahoo! buy.• Strong Presence in all the segments of Enterprise Software & Development Tools.• Enjoys the competitive advantage due to the use of in-house closed technology.• It has created a niche and enjoys monopoly in that space leading to extra-normal
profit on all it’s softwareofferings.• High focus on Mobility and Entertainment Business.• One stop shop.
2005 2006 2007 2008 2009 20100
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Entertainment and Devices DivisionMicrosoft Business Di-visionOnline Services DivisionServer and ToolsWindows & Windows Live Division
2005 2006 2007 2008 2009 20100
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Windows & Windows Live DivisionServer and ToolsOnline Services DivisionMicrosoft Business Di-visionEntertainment and Devices Division
Acquisitions by Segments
BI & Analytics – Major Acquistions
2006 2007 2008 2009 2010 2011
Storage– Major Acquistions
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Virtualization– Major Acquistions
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Rembo Technology
Networking– Major Acquistions
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
(ProCurve )
Middleware – Major Acquistions
2007 2008 2009 2010 2011
2007 2008 2009 2010 2011
Trends – Mega Vendors
ERP
CRM
BI & Analytics
MiddlewareServer/Storage
Database Vendor
Mega Vendor
BI & Analytics
Cloud
Smarter Planet*
Server & PC Co
Mega Vendor
Trend - Microsoft
Pureplay Software
Mobility
Cloud Computing
Trends – Niche Players
Wireless
Mobility
Security
Virtualization
SecurityPrivate Cloud
Web Collaboration
Video Collaboration
Unified Computing
Semi conductor
Storage
Network Infra
The Infrastructure Battle
Virtual Computing Environment (VCE)
Cisco
VMWare
Intel
EMC
Strategic Focus Area
BI & Analytics, Integration
Storage, Mobility, Services
Storage, Virtualization, Security
BI, Middleware
Mobile Apps, Database
Storage, Mobility, Services
Wireless, Security
Collaboration/Video, Unified Computing System
Mobility, Cloud Computing
Strategic DirectionMega Vendors Focused Vendors
Insights IBM & Oracle stands out in managing acquisitions well including divestitures. IBM is best positioned for one-stop-shop offerings to large enterprise customers. Oracle is one-stop-shop in making. It lacks Services offering in order to grab big
scale enterprise deals. Cisco, EMC and Intel – a significant strategic alliance in making, will give IBMs and
HPs run in Storage and Cloud space. HP & Dell lacks strategic direction in the acquisitions. Microsoft has most coherent cloud strategy for the end users – both SMEs and
large enterprises.
Money Matters
Company name P/E ratio Mkt Cap ($ b) Revenue ($ b) Net profit margin (%)Microsoft Corporation 11.47 227.37 62.48 30.02Intl. Business Machine... 14.24 204.79 99.87 14.85Oracle Corporation 25.32 170.17 65.22 22.87Intel Corporation 10.8 123.5 43.62 26.76Cisco Systems, Inc. 14.28 104.48 40.04 19.40SAP AG (ADR) 29.08 71.69 16.9 14.57EMC Corporation 30.9 56.24 17.01 11.58Dell Inc. 11.42 29.78 61.49 4.28Hewlett-Packard Company 13.18 105.84 126.03 6.95
Microso
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Oracle
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Intel Corp
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Cisco Sy
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SAP AG (A
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EMC Corp
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Dell In
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Hewlett
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Company
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P/E ratioMkt Cap ($ b)Revenue ($ b)Net profit margin (%)
Predictions Oracle going for acquisition of a Services company that can
provide scale – CSC is a good choice. 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.
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.
Emerging Trends• Consumer Computing moving to mobile and tablets. Its is experiencing
explosive growth as never before.• Enterprise Computing moving to Cloud – Public Cloud as well as Private
Cloud.• SMEs are ahead in adopting Cloud based Software Service, while Large
Corporates prefer to have Private Cloud.• Private Cloud will experience higher growth over the Public Cloud.• Virtualization seems to be the hottest of all segments.• Storage is experiencing explosive growth driven by growth in social
networking, videos and other user driven data (10x by 2011, 44x by 2020).• 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.
Send an email to [email protected] for full report.