Projects, Media, Gadgets, and M&A

HP’s numbers, like those from rival Dell, disappointed the Street, and this raises the question of whether tech capital spending might be showing an impact from the “project” issues I outlined in Netwatcher this month.   Projects that advance IT overall just aren’t being launched as much, so spending is stagnating.  The explanations offered by HP and some Street analysts are different; it was the hard drive shortage, or it was the impact of tablets.  I don’t buy either one because only software escaped a shortfall versus expectations.  I’m seeing caution in data center investment, and I’m also seeing a general focus on applications (meaning software) for that project spending that remains.  These are signs of caution, and the caution means that CIOs and executives may still not be confident about 2012.  Certainly they’re conservative about tech.

Juniper joined into the M&A announcement craze, but its focus was on beefing up its security portfolio with Mykonos Software, a company that provides a “tar trap” deception-based technique for identifying attempted hackers.  The concept is applicable either to enterprise or service/hosting/cloud providers, and so it could be a valuable addition to Juniper’s portfolio.  That’s particularly true given that Juniper has no conspicuous mobile assets to leverage and has been so far unable to create a captivating cloud positioning for itself.  Security is a viable strategy for adding value above the network.  Users in our survey think that security is at least in part a network issue.  Given that, network-hosted cloud security should be a slam dunk to sell if it’s positioned well.  We’ll see if Juniper can do that.

More M&A should be expected in networking according to a Silver Lake report cited by Bloomberg.  What’s interesting is that the report postulates that bigger players like Alcatel-Lucent, RIM, and NSN might be on the block.  The driver would be the consolidation that accompanies commoditization in a given market.  I agree with the commoditization stuff, but I’m not sure that it’s advanced far enough for consolidation to take place, or that the biggest players would be where everyone would start.  If you need IP and Ethernet, why not buy somebody smaller and cheaper, and ultimately why buy into a commodity industry if you’re not there already.  Who then buys these big players?  Ericsson is the only one larger than the others, and it seems to have been working to shed a lot of equipment baggage.  Also, Alcatel-Lucent’s creation-merger demonstrated how difficult it is to pull off a big merger in the tech space.

In the video space, Comcast has decided to deploy its own streaming video service, but to say it’s a Netflix competitor as some have done is IMHO incorrect.  What Comcast is doing is creating a streaming TV Everywhere service for its current cable subscribers.  Like TV Everywhere overall, the new service (Xfinity Streampix) is designed to supplement broadcast TV consumption by making shows available online, not to encourage cord-cutting.

It’s not yet clear just how the repertoire of material in Streampix will compare with normal in-home VoD from Comcast, how the content will match up against services from Hulu or Nexflix or Amazon…you get the picture.  It seems to me that if Comcast were to put its broadcast material on the new service en masse, it could virtually stall the use of other streaming services by Comcast customers, which would be pretty smart.

In the tablet wars, Barnes & Noble has launched a down-market model of its high-end Nook to better compete with the Kindle Fire, and both these products are said to be in jeopardy if Apple comes out with a 7-inch iPad.  To make matters even more complicated, Sony’s Vita portable gaming device might end up impacting the whole space if gaming were to be a decisive need for the entertain-me-on-the-move set.  It’s primarily for games, but it also already has some social network and media apps.  Sounds like a tablet-a-be?  The tablet guys probably think so.

To make a tablet a competitive gaming device, you need to make it smaller and much better in terms of graphics performance, and you might also have to customize the GUI for easy access to controls, perhaps with a “gaming dock” that added buttons and other goodies.  All of this would throw the whole tablet space up in the air because current devices don’t have any of that.  So will that validate Sony’s Vita as another gadget, will it open up the tablet market for more competition, or both?  Too soon to say, but right now it doesn’t look like Vita is setting the world on fire.


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