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Merger & Acquisition by top Technology companies
The study analyzes merger and acquisition trends among major IT companies to understand their strategic implications and the impact on technology trends. Companies like IBM, Oracle, and Microsoft are evaluated based on acquisition activity, market positioning, and emerging trends such as virtualization and cloud computing. Key insights suggest a shift toward mobile and cloud services, with predictive recommendations for future acquisitions and alliances among the top firms.
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Merger & Acquisition by top Technology companies
- 1. Merger & Acquisitionsby Big IT Companies A 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
- 2. Project Overview Understanding thestrategies 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.
- 3. Selected Companies Hewlett-Packard IBM Microsoft Oracle Dell Cisco Systems Intel SAP EMC CriterionUsed 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.
- 4. 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.
- 5. Computing Cycles Source –Morgan Stanley (Nov, 2010)
- 6. Taxonomy of TechnologyCos Semi conductor Storage Servers Virtualization Operating System Database Middleware & Integration Application Cloud Software Services ERP CRM Supply Chain BI&Analytics Servers, Tools & Platforms Security&Compliance 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
- 7. Competitive Positioning -Present Semi conductor Storage Servers Virtualization Operating System Database Middleware & Integration Application Software Services Servers, Tools & Platforms Networking
- 8. 0 5000 10000 15000 20000 25000 30000 2005 2006 20072008 2009 2010 Services Hardware Software Major Acquisitions - PeopleSoft Siebel Hyperion BEA Systems Sun Microsystems Revenue in Software business growing substantially. With acquisition of Sun, Oracle has entered Hardware segment. Company Analysis - ORACLE
- 9. Company Analysis -IBM Major acquisitions: Sterling Commerce Cognos Netezza Divestitures: Personal Computing PLM Software Most recent focus Cloud Integration Business Analytics Incremental Growth in Software, Middleware and Services 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 2005 2006 2007 2008 2009 Services Servers Storage Software
- 10. 0 20000 40000 60000 80000 100000 120000 140000 2005 2006 20072008 2009 2010 Imaging and Printing Group Personal Systems Group Services Storage & Servers Software Company Analysis - HP Major Acquisitions – EDS 3PAR 3Com, Palm Inc. Mercury •Strong growth in Services Revenue •Consumer segment revenue stagnant •Drastic reduction in revenue from HP Software •Lack in Enterprise Software Offerings.
- 11. Company Analysis –SAP Two major acquisitions 1) Business Objects (Analytics) 2) Sybase (Mobile Solutions)
- 12. Company Analysis -Intel 1. Strong focus on Mobile & Security 2. Plan to compete with ARM technology for smart phone chips.
- 13. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2005 2006 20072008 2009 2010 Desktop PC Mobility Software & Peripherals Services Storage Company Analysis - Dell Major acquisitions: Perot Systems Equal Logic Compellent Some recent – Ocarina Boomi SecureWorks •Major decline in Desktop PC segment •Slight increase in Laptop segment •Average performance in other segments
- 14. Company Analysis -EMC Major acquisitions VMWare (2003) RSA Security Data Domain Isilon Systems Very strong on storage segment. % Share of Storage companies adopting VMWare for virtualization.
- 15. 0 10000 20000 30000 40000 50000 2005 2006 20072008 2009 2010 Service Other Advanced Technologies Switches Routers Company Analysis - Cisco Major acquisitions Scientific Atlanta Webex Navini Networks Starent Tandberg Major growth noticed in Unified Communications (Video, Internet technology) – reaching the end user segment.
- 16. 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. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 2005 2006 2007 2008 2009 2010 Entertainment and Devices Division Microsoft Business Division Online Services Division Server and Tools Windows & Windows Live Division 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 2005 2006 2007 2008 2009 2010 Windows & Windows Live Division Server and Tools Online Services Division Microsoft Business Division Entertainment and Devices Division
- 17.
- 18. BI & Analytics– Major Acquistions 2006 2007 2008 2009 2010 2011
- 19. Storage– Major Acquistions 20072008 2009 2010 2011 2007 2008 2009 2010 2011
- 20. Virtualization– Major Acquistions 20072008 2009 2010 2011 2007 2008 2009 2010 2011 Rembo Technology
- 21. Networking– Major Acquistions 20072008 2009 2010 2011 2007 2008 2009 2010 2011 (ProCurve )
- 22. Middleware – MajorAcquistions 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
- 23. Trends – MegaVendors ERP CRM BI & Analytics Middleware Server/Storage Database Vendor Mega Vendor BI & Analytics Cloud Smarter Planet* Server & PC Co Mega Vendor
- 24.
- 25. Trends – NichePlayers Wireless Mobility Security Virtualization Security Private Cloud Web Collaboration Video Collaboration Unified Computing Semi conductor Storage Network Infra
- 26.
- 27. 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
- 28. Strategic DirectionMega VendorsFocused Vendors
- 29. 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.
- 30. Money Matters Company nameP/E ratio Mkt Cap ($ b) Revenue ($ b) Net profit margin (%) Microsoft Corporation 11.47 227.37 62.48 30.02 Intl. Business Machine... 14.24 204.79 99.87 14.85 Oracle Corporation 25.32 170.17 65.22 22.87 Intel Corporation 10.8 123.5 43.62 26.76 Cisco Systems, Inc. 14.28 104.48 40.04 19.40 SAP AG (ADR) 29.08 71.69 16.9 14.57 EMC Corporation 30.9 56.24 17.01 11.58 Dell Inc. 11.42 29.78 61.49 4.28 Hewlett-Packard Company 13.18 105.84 126.03 6.95 0 50 100 150 200 250 P/E ratio Mkt Cap ($ b) Revenue ($ b) Net profit margin (%)
- 31. Predictions Oracle goingfor 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.
- 33. Emerging Trends • ConsumerComputing 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.
- 34. Send an emailto satyajit.paul@gmail.com for full report.
Editor's Notes
- #3 An overview of the project - 1 slideAn overview of Technology Business - Taxonomy - 1 slideBusiness Size - Data from Gartner - 1 slideCriteria used to select the companies - List of companies - 1 slideCurrent Competitive positioning of companies - 1 slideAcquisition Slides of IBM, Oracle, SAP, HP, Dell, EMC - 6/7 slidesRevenue breakup and growth - Software business players, Server & PC Business guys and Niche players - 2/3 slidesAcquisitions by Segments - 3 slidesConclusion - 3 slides---------------------------------------------Total - 22 slides
- #4 We removed few companies like Google, Apple & Amazon from the list.
- #5 http://www.gartner.com/it/page.jsp?id=1339013
- #6 http://www.morganstanley.com/institutional/techresearch/pdfs/tenquestions_web2.pdfThis slide give a very critical perspective into how computing has been changing over a period of time.With explosive growth in Mobile Internet users, whole new horizon of opportunities are opening up.Consumer specific computing would move to Smartphones and Tablets while a large part Business Computing would move to cloud based computing – SaaS, PaaS, HaaS
- #7 In this slide, we would cover different segments in the Tech Business that are in use with various companies like Oracle or practiced by various analysts like Gartner.Some of the high growth sectors are shown in different color.
- #8 Based of their current product offerings.
- #9 Primarily a database provider. Oracle has transitioned completely into a mega vendor over 5 years due to acquisitions.ERP, CRM, BI, eCommerce, Middleware (all market leaders)With the acquisition of BEA, Oracle sought to accelerate the adoption of Java middleware technologies and Service Oriented Architecture (SOA) to enhance and extend its Fusion Middleware software.The acquisition of Sun was influential in many waysOwn Java technologies – on which a lot of technologies run.Have its own operating system Solaris – and integrate DB and SolarisCapture the server, storage business of Sun.
- #10 Ascential Software, Cast Iron and Sterling Commerce – all data integration companies. Using the combined technologies of IBM and Sterling Commerce, clients have the flexibility to manage these processes – and their networks of business partners – through public or private cloud computing environments.Lot of acquisitions in AnalyticsCognos – BI reportsCoremetrics, Unica – Web analytics – customer pref analysis, provide more relevant and targeted marketing communication on internet. Along with SI, demand generation, sales process automation, order processing and fulfillment.IBM has also strengthened its offering in networking mgmt and unified communication systems (video technology) with acquisitions of Micromuse and MRO Software.
- #11 EDS – Major services acquisition3PAR – Network storage leader – primarily viewed as HP’s urgency to strengthen its offerings in fast growing virtual data center and cloud computing markets.3Com – Purchase of network infra company – routers, switches, Palm – move to get into mobility devices and create mobile OS, appsArcSight – security solutions. For enterprise risk and compliance management.Mercury – Big acquisition in software space. But revenue figures indicated that HP didn’t take full value of acquisition.
- #12 SAP – a leader in enterprise apps segment with strong CRM, Supply chain solutions.Business Objects – Analytics tool to integrate with its software applications to analyze large amount of data to improve business performance with its reports.Follows Oracles acquisition of HyperionSybase – two purposeProvide its enterprise apps in mobileAcquire Sybase DB, removes dependence with Oracle DB
- #13 Lot of acquisitions and investments to enhance their wireless networking offeringsThe acquisition of Infineon enhanced its offerings in mobile wireless solutions and along with embedded devices acquisition of Silicon Hive, Wind River, Intel now goes head to head with ARM to create chips for smart phones. Big acquisition of McAfee – to provide security in hardware mobile.Recently came up with tablet “meebo” in collaboration with Nokia and in 2011, plans to come up with chips for smartphones. Clear strategic direction.
- #14 Major acquisitions in various segmentsPerot systems – to improve their service offeringsEqual Logic, Compellent – leader in network storage provider. With a view to provide virtualization solutions.Move into SaaS integration with acquisition of Boomi and SecureWorks
- #16 Cisco has given a lot of emphasis on is in Virtualization. Cisco has rolled out a product called Unified Computing System, which is a combination of (network + storage + server + virtualization).Tandberg, Starent Corp., WebEx, Navini Networks etc. which are very strong in video conferencing solutions, mobile based IP, internet communications, mobile WiMAX respectively.
- #19 IBM, SAP & Oracle are the top three players. Ref - http://www.gartner.com/it/page.jsp?id=1357514OutlookSoft Corporation was a Stamford, Connecticut based software company with products for business performance management including planning, consolidation, forecasting, budgeting, dashboards, predictive analytics and reporting. Along with OutlookSoft, other vendors in the performance management space include SAS, Cognos and Business Objects.SAF Simulation, Analysis and Forecasting AG, one of the global forecasting and replenishment software leaders in the retail and wholesale industries. Through the intended acquisition, SAP plans to further extend and complement its current planning, forecasting and replenishment solution portfolio for retail and wholesale companies.Netezza – Dataware house Appliance, BIOpenPages, a leading provider of software that helps companies more easily identify and manage risk and compliance activities across the enterprise through a single management system.ClaritySystems – Corporate Performance Magmt, Financial Governance.
- #20 Oracle -With Sun acquisition, Oracle is a new entrant in this space.IBM –Diligent – Data deduplicationStorwize – Data compression
- #21 Oracle -With Sun acquisition, Oracle is a new entrant in this space.IBM –
- #22 IBM -Traditionally IBM is strong player in Network Management and they have Tivoli in their portfolio.In Collaboration (or Unified Communication System), IBM has IBM Live & Lotus (notes, sametime etc)IBM’s recent acquisitions in this space are aimed at strengthening it’s position in Network Managment space further. However, with Blade acquisition, IBM will build its expertise in high-performance, low-latency Ethernet switches. HP –HP is present in Network Equipment manufacturing (Switched & Routers etc) through Procurve.HP’s offering in Netowork Management is OpenviewHP’s acquisitions are aimed at strengthening their presence Network Equipment further.Cisco –Cisco is traditionally strong player in Network Equipment Manufacturing i.e. Switches & Routers. But in recent past its under price pressure from very aggressive offerings from HP & Juniper.Recently acquisitions from Cisco are aimed at strengthening their presence in Collaboaration (Unified Collaboration System) further.
- #24 IBM traditionally has been Server, PC business, with good Db2 offering.Over years, good divestitures, good acquisitions in BI, Storage.Good partnerships with Juniper for networking and Vmware for virtualization.
- #27 Unique End-to-End Solutions EnablementAcadia—a joint venture of Cisco and EMC, along with VMware and Intel—focuses on speeding adoption of private cloud infrastructures through end-to-end enablement of service providers and large enterprise customers. they seek to virtualize their IT infrastructures and evolve to the private cloud.The Virtual Computing Environment coalition offers organizations of all sizes an accelerated approach to data center transformation with dramatic efficiencies that promise significant reductions in both capital and operating expenses.
- #29 IBM, Oracle, SAP and Microsoft are clearly heading towards mega vendors who can provide one-stop-shop.EMC, Cisco & Intel are focused players in Virtual Computing.HP and Dell seems to pursuing similar strategy. However both on services and in mobility they would be pitching against well-established players.
- #30 Every new IT trend goes through a cycle. At the end of a cycle, the industry faces an inflection point. We noticed Oracle, IBM and other focused vendors have a very clear cut strategy.However, we do notice that HP and Dell are not.
- #31 One interesting observation here – HP & Dell are the only two comapnies where the Market Capitalization is less than the revenue.
- #34 This slide is an extra slide and not for presentation.