AWS shows Cloud is NOT a high-margin business

AWSearningsLast week Amazon.com was the first of the large cloud service companies other than Rackspace to finally break out revenue and expenses for its cloud operation. The market was cheered by news that Amazon Web Services (AWS) last quarter made an operating profit of $265 million with an operating profit margin of 19.6 percent. AWS, which many thought was running at break-even or possibly at a loss, turns out to be for Amazon a $5 billion business generating a third of the company’s total profits. That’s good, right? Not if it establishes a benchmark for typical-to-good cloud service provider performance. In fact it suggests that some companies — IBM […]

By 2015 IBM will look like Oracle

So after five parts and hundreds of reader comments, what will IBM look like by the end of 2015?  It will look like Oracle.

With earnings per share meaning everything and a headcount mandate that can’t be achieved without totally transforming the company, IBM is turning itself into something very different. Gerstner’s service business that saved the company 20 years ago will be jettisoned, probably to a combination of U.S. and international buyers.

Look for the Global Services business to be sold to one or more Indian companies while the current federal business will be sold to one of IBM’s U.S. competitors.

Meanwhile IBM will move its business toward hardware and applications delivered by partners who carry the […]

Meg's Revenge

There is no joy in Round Rock.

Early this morning the database servers at Dell Computer went down hard. The company is unable to accept orders on its web site and almost 5000 Dell sales reps trying to meet their quotas in the last week of the quarter are unable to book sales. Today’s loss for the company is already over $50 million and rising.

The database system in question is Oracle running atop NonStop Unix on a Tandem NonStop (now stopped — what an irony) system made, of course, by Hewlett Packard. So Michael Dell is pulling his hair out at this moment while he waits to be saved by HP.

It could be a long wait.

I […]

By |October 27th, 2011|2011|87 Comments

MotoGoogle

Last week I announced that I’m planning my own Android phone and the next thing you know Google does the same thing!  Coincidence? I think not.  Our motivations are somewhat different, however, and their budget, at $12.5 billion, is marginally higher. I’ve had plenty of time to think about this as I drive the dogs across country to our next home in California and there’s quite a bit more to this Motorola deal than other pundits have been saying.

Yes, it has a lot to do with patents and that might well explain Google’s goofy bidding behavior during the recent Nortel patent auction. Maybe Google already knew it was going for Moto at that point. Certainly with these 17,000 patents plus the $1 billion worth […]

By |August 16th, 2011|2011|104 Comments

Why Leo Apotheker will be fired from Hewlett Packard

I don’t think Leo Apotheker is going to survive long as CEO of Hewlett Packard. This is not based on any inside information, just my own pondering. And when Apotheker does go down, I’m pretty sure I know who will take his place.

The players in this drama are Apotheker, various HP executives, and the HP board, with the important bit of information being that the board has changed substantially in composition since Apotheker was appointed last year. It’s a new board.

Leo Apotheker was a dark horse candidate to run HP. He’s German, comes from an enterprise software background at SAP, the big German software company, and has no history in hardware. All previous HP CEOs […]

By |February 23rd, 2011|2011|120 Comments