Business Tech

All top five server vendors globally saw declines in revenue and shipment in the third quarter of 2009, with Sun Microsystems registering the biggest fall, according to the latest figures from Gartner.

In a report released Monday, the research firm noted that Sun saw its server revenue drop 32 percent and unit shipments dip 38 percent in the third quarter, compared to the same period last year.

IBM experienced a 12 percent decline in revenue growth, though it clocked the highest revenue in the market for the quarter at $3.4 billion. Hewlett-Packard and Fujitsu saw their revenue decline 15 percent and nearly 11 percent, respectively. Dell was the only vendor with a single-digit revenue decline (5 percent) among the top 5 vendors, Gartner said.

Read more of "Sun sets lowest in server market at ZDNet Asia.

Global semiconductor sales are now expected to fall this year by 11 percent--an improvement over the previous estimate of a 17 percent drop, according to research released Monday by Gartner. And the outlook for 2010 is sunny.

Revenue is projected to drop this year to $226 billion, an 11.4 percent decline from last year's $255 billion. Next year however, it's expected to bounce back by 13 percent from this year's level, hitting the same $255 billion figure it did in 2008.

Personal computers are the largest factor driving semiconductor sales. In another recent report, Gartner said it expects demand for consumer PCs to continue, which will fuel gains in microprocessors and DRAM (dynamic random access memory) chips. But sales may not jump out of the starting gate.

"Both device types experienced lower revenue declines than the industry average, and DRAM began to be profitable for some vendors in the third quarter of 2009 after almost three years of losses," said Bryan Lewis, research vice president at Gartner, in a statement. "While most of the news has been positive to date, recent channel checks in Taiwan indicate there is concern that PC orders are slowing earlier than the seasonal norm and that 2010 may get off to a slow start."

Besides PCs, cell phones have also been a boon for semiconductor sales, noted Gartner, with their need for NAND flash memory.

"The revenue forecast for the commodity memory market -- DRAM and NAND flash -- has improved because of the stronger demand outlook, which means that pricing has strengthened more than previously forecast," said Lewis. "ASSPs [integrated circuits that perform a specific task] and memory, primarily NAND flash, also benefited from an improved outlook for cell phones."

Google CEO Eric Schmidt in an onstage interview Wednesday at the Gartner Symposium in Orlando, Fla.

(Credit: Stephen Shankland/CNET)

ORLANDO, Fla.--Eric Schmidt runs a company that earns most of its money from consumers, but the Google chief executive believes business customers are the company's next big opportunity for growth after selling ads.

"Enterprise is a huge priority for the management team and me personally," Schmidt said Wednesday in an onstage interview in the belly of the enterprise technology beast, the Gartner Symposium here. "It's the next big billion-dollar opportunity after our display (ad) business."

Google might not be at the core of every company's operations, but Schmidt has some roots in the information technology community that assembles in force at Gartner Symposium. Before Google, he was chief technology officer at Sun Microsystems and CEO of Novell.

Google has a variety of business-oriented products and services--Postini for security, Checkout for online shopping, a search appliance for in-house search. But the highest profile effort is Google Apps, which in its premium incarnation delivers Gmail and an online office application suite for $50 per user per year.

Schmidt argues there's not so much difference between enterprise and consumer markets as there once was, and the gap is narrowing. Gmail is one example:

"Gmail's growth is accelerating from its current position of users as we seem to be gaining share from everybody else," Schmidt said. "That's a good example of the consumer and enterprise growing together."

And Google is primarily interested in areas where the two worlds collide. "We'll keep trying to find ways to span enterprise and consumer," he said.

When it comes to pricing, Google wants to fund its own work but not charge much. The biggest constraint from customers is feature availability, not price, he said.

"Most of the sales activity is a discussion about strategy. Our prices are so much lower than everybody else's, there's never a price discussion," Schmidt said.

The company considered giving its enterprise applications away for free but rejected the idea, he said.

"We looked at ad-supported enterprise applications and decided most corporations would not be comfortable with random ads showing up on somebody's desktop," Schmidt said.

Schmidt also said the era of the Netbook is arriving--in particular, Netbooks running Google's forthcoming Chrome OS, a browser-based operating system.

With advancements such high-speed networks and browsers that can store data on a local computers and display hardware-accelerated graphics, the PC is growing obsolete, he argued.

"Maybe in a year it'll be possible for procuring a Netbook that costs a factor of five or 10 times cheaper than what you're getting today," he said.

Chrome OS is due to arrive on Netbooks in about a year, he said, reaffirming the existing schedule.

Editor's note: This blog was updated several times during Schmidt's live interview. The final update was published at 2:50 p.m. PDT .

Gartner analyst David Cearley

(Credit: Stephen Shankland/CNET)

ORLANDO, Fla.--Cloud computing isn't going to be vapor much longer, Gartner said Tuesday.

The general idea--shared computing services accessible over the Internet that can expand or contract on demand--topped Gartner's list of the 10 top technologies that information technology personnel need to plan for. It's complicated, poses security risks, and computing technology companies are latching onto the buzzword in droves, but the phenomenon should be taken seriously, said analyst Dave Cearley here at the Gartner Symposium.

Gartner's top trends to watch.

(Credit: Gartner)

Specifically, companies should figure out what cloud services might give them value, how to write applications that run on cloud services, and whether they should build their own private clouds that use Internet-style networking technology within a company's firewall.

Cloud computing takes several forms, from the nuts and bolts of Amazon Web Services to the more finished foundation of Google App Engine to the full-on application of Salesforce.com. Companies should figure out what if any of those approaches are most suited to their challenges, Gartner said.

Gartner analyst Carl Claunch

(Credit: Stephen Shankland/CNET)

The advice came as part of a talk on top trends coming in 2010 that companies should incorporate into their strategic planning, if not necessarily their own computer systems. The full list of 10: 1. cloud computing; 2. advanced analytics; 3. client computing; 4. IT for green; 5. reshaping the data center; 6. social computing; 7. security--activity monitoring; 8. flash memory; 9. virtualization for availability; and 10. mobile applications.

Second on the list is virtualization--not just in the broad sense of technology that lets a single computer run multiple operating systems simultaneously, where it's become a fixture in data centers, but as a means to keep computing services up and running despite computer failures, said analyst Carl Claunch.

Virtual machines can be moved from one physical machine to another today. Later, by keeping two machines tightly synchronized, a failure in a primary machine can be eased over rapidly by moving the active service to the backup machine, Claunch said.

"We should start seeing this roll out in the next year or two from vendors," he said.

The Gartner hype cycle takes on the PC.

(Credit: Gartner)

For PCs, virtualization is arriving, too.

"Think of applications in bubbles," Cearley said. "They can run on client devices or up on a server," with virtualization providing the encapsulation technology to move the work around. The official corporate computing environment can run side by side with employees' home computing environment.

That, along with cloud computing, enables more freedom for people using PCs.

"We're looking at a time when the specific operating system and device options matter a lot less," Cearley said. "You could use a home PC or a Macintosh with a managed corporate image running on that particular device...We see more companies providing a stipend (for) employee-owned PCs."

Make your data center modular.

(Credit: Screenshot by Stephen Shankland/CNET)

Another idea: modular data centers. You don't have set up your IT gear in storage containers, but do divide them into pods that each have their own computing, power, and cooling, Claunch said. That makes it easier to pay as you go, to adapt to new technologies, and to increase energy efficiency by partitioning hot hardware from cooler hardware.

Green IT is important--and changing in its nature. It's not just a matter of buying efficient computers, but also of using computers to increase the efficiency of other parts of the business, Cearley said. For example, analytics can improve the efficiency of transportation of goods.

Next comes applications for mobile devices. "That has great potential for creating different experience or stickiness for your customers," Cearley said.

And mobile x86 processors from Intel and AMD could make software development easier, too, he added.

Social networking will happen internally and externally.

(Credit: Gartner)

Social-networking applications, broadly defined, also should be on company radar screens. The technology can take the form of internal corporate social networks, interactions with customers, and use of public services such as Facebook and Twitter.

Companies need to get a handle on what's going on--and potentially business purposes such as understanding how the corporate brand is perceived.

"Social network analysis will be moving from a somewhat arcane discipline to a much more mainstream component of your social computing strategy," Cearley said.

ORLANDO, Fla.--Cloud computing? It's got its place, but apparently not one very close to the heart of Hewlett-Packard Chief Executive Mark Hurd today.

At the Gartner Symposium here, Hurd said cloud computing has promise but that he and customers he speaks to are leery of moving important applications to another company's infrastructure outside the company's own firewall.

"I think it's a very attractive model, but there will be challenges," Hurd said. "At the end of the day, if you tell a CEO, 'Put our e-mail in the cloud,' a certain amount of CEOs will tell you not (to). If (HP Chief Information Officer Randy) Mott told me, 'Put the general ledger up in cloud,' I'd say go back to work, we're not doing that."

The cloud is real for many consumer services, he said. So why isn't it suitable for HP's core financial records stored in the general ledger? Security, for one thing.

"We get about 1,000 hacks a day. They're more sophisticated every month," Hurd said. "Security and reliability is a huge thing. It's unlikely we'd put anything outside the firewall that's material in nature that we couldn't 100 percent secure."

HP CEO Mark Hurd explains process re-engineering.

(Credit: Stephen Shankland/CNET)

Hurd also said cloud computing has a branding issue among CEOs he speaks to. In one gathering he was doing fine until he raised the issue.

"I got a lot of boos after that...From a nontechnical CEO perspective, 'cloud computing' does not sound very clear to them," he said. The message he gets from those CEOs: "If this cloud computing is so cool, try to break this down into simple clear services that help my business be a better business."

Moving beyond services
In an onstage interview, Hurd also described HP's overall strategy, starting with building blocks of servers, PCs, networking equipment, and storage at the foundation, working up through software and putting services at the top.

Well, at the top for now. HP is headed for another layer: specific services packaged for particular customer segments, or "verticals" in industry parlance.

"The natural outgrowth for us will be more focus for us on vertical solutions," he said. HP won't get into practices for human resources or executive compensation, but will work in areas in which it can extend its computing technology ingredients.

Hurd said that spanning this range of products and services means that scale matters, for example in bargaining with component suppliers. Here, he dinged competitor IBM for selling its PC business to Lenovo, though without mentioning Big Blue by name.

"When a company would sell off its PC business, for example, you would have a problem because you would no longer be as big a customer to all those people who supply products to that supply chain," Hurd said.

He also took a potshot when asked about how HP's strategy differs from IBM's.

"I don't follow them very closely," he wisecracked. "It sounds like they're trying to chase us."

Beefing up sales
Gartner analyst Donna Scott said big customers find HP easy to deal with, but for others, the company is fragmented.

Hurd acknowledged there are problems, but said HP is working on them.

"We have a strategy to sell more. If somebody is interested in buying more, our strategies are aligned," he deadpanned.

In particular, when it comes to revenue growth, HP is aiming at smaller companies, he said. At present 70 percent of spending on IT comes from HP's top 2,000 biggest accounts.

Hurd pointed to an emphasis on sales as one area where he's trying to shift HP's culture.

"(Company co-founder David) Packard used to say, 'If we build great products customers will find them,'" Hurd said. "We actually want to sell them too."

Revamping HP's own IT
Hewlett-Packard has focused on cutting costs of its own computing infrastructure. In 2004, the year before Hurd took over as CEO, "We had $79 billion in revenue. We made $3.5 billion (in net income). We spent $75.5 billion." So, he asked the company's staff, "What do you spend it on?"

IT was a big part of it, accounting for $4.2 billion. Of that 82 percent was just to keep things running.

"One of our big spends was IT. We had more IT professionals in the company than we had salespeople," he said.

"We had IT spread out. Everybody had a little bit of ownership," Hurd said. There were 87 data centers, 6,000 applications, 19,000 people, 24,000 servers, 20 petabytes of data stored at 700 data marts.

The company "flipped the model," cutting expenses and redirecting funds to the future instead. "Our spend is down 40 percent and our innovation is up 2X in dollars."

It was painful and HP made mistakes on the way, but it was a personal priority for Hurd.

"I get a lot of CIOs who show me how bad their IT is," Hurd said. When he sees it, "My first reaction is it's because of a bad CEO."

Free beer (in the Richard Stallman sense) accompanied the free software (not in the Richard Stallman sense). It's a good way to pack a showroom floor.

(Credit: Stephen Shankland/CNET)

ORLANDO, Fla.--Gartner offers a Justification Toolkit to argue the financial merits of attending the Gartner Symposium, but a show perk might carry more personal appeal: each attendee gets a free copy of Windows 7 Ultimate, packaged with a slab of chocolate.

Well, maybe not free exactly.

It costs $3,695 to attend the show. And as one wag commented, "The chocolate's the better part. You'll get fewer headaches."

Perhaps stung by the contrast between its Windows Vista's tarnished reputation and its flashy "The Wow Starts Now" promotional campaign, Microsoft is sticking to barer-bones marketing work with Windows 7. Microsoft is one of five premier sponsors of the conference, and giving freebies to a few thousand influential IT folks probably makes sense--especially given how many companies just stuck with Windows XP rather than upgrade to Vista.

ORLANDO, Fla.--You may not have looked closely at yourself in the mirror recently, but it appears you have a bloated applications portfolio.

When it comes to companies adding new abilities to their computing infrastructure, not enough thought goes into deciding whether it's really a good idea to do so and what the true cost of that change will be, said Gartner Vice President Andy Kyte. He spoke here Monday at the Gartner Symposium, a hub for information technology staff.

"Both business and IT managers are very happy to engage in the process of acquiring new applications," Kyte said. That has unfortunate consequences once the applications are running, though, he said.

"We're not interested in responsible parenting; we're interested in making babies," Kyte said. "The result: hundreds of orphan applications that wander the corridors of your enterprise, approaching every adult they see and saying, 'Are you my daddy? Are you my mommy?'"

ORLANDO, Fla.--Information technology spending is set for a rebound, but not much of one, Gartner said Monday.

Globally, worldwide IT spending should grow 3.3 percent from 2009 to 2010, said Peter Sondergaard, senior vice president of research, in a speech here at the Gartner Symposium. That puts it at about $3.3 trillion.

Even with Gartner's forecast, spending won't return to 2008 levels until 2012, he said. But purveyors of computing technology and services can be forgiven if they take some heart in the news given the gloomy climate.

"The IT market is exiting its worst year ever," Sondergaard said, with spending dropping a projected 5.2 percent from 2008 to 2009. More than half of IT budgets will be the same or smaller in 2010.

ORLANDO, Fla.--OK, IT managers, it's time to loosen up.

That's how analysts advised Gartner Symposium attendees here Monday, arguing that corporate computing departments shouldn't block social networking and that security shouldn't completely lock down communications with the outside world. And even if information technology authorities want to shut down such activity, they can't.

Carol Rozwell, a Gartner vice president

(Credit: Stephen Shankland/CNET)

"Banning access to social media from the corporate network is futile," said Carol Rozwell, a Gartner vice president. "The world we live in is digitally enabled and socially connected."

The advice reflects the transformation of the information technology world as the Internet steadily pervades more and more corners of everybody's life. Although the Gartner event historically has concerned itself with matters such as justifying the expense of a new enterprise resource management computing system, the broadening show reflects the growing scope of work that IT managers face.

Overall, companies must acknowledge that not everything is under control of their own top-down administration, said Peter Sondergaard, senior vice president of research at Gartner.

"We're moving from control to greater autonomy," Sondergaard said. Managers also must find an appropriate place on the spectrums of in here vs. out there and owned vs. shared.