RIM Slides, HP Offers DC Architecture, Security Breaches
Lead Analyst: Adam Braunstein
In the latest round of disappointing news from smartphone vendor Research in Motion, Ltd. , the company declared that it will miss quarterly projections and has solicited the advice of two banks to help it evaluate future revenue options. To improve the energy efficiency of data center operations, Hewlett-Packard, Co.'s new Net-Zero Energy Data Center architecture works to marry renewable energy supply with IT workloads. Lastly, several security breaches leaked passwords onto the Web.
Focal Points:
- Things continue to decline for troubled smartphone vendor RIM as the company announced that it will miss previous estimates for its March-June quarter and that it has hired two banking firms to help it evaluate future opportunities. The company further declared that it intends to institute "significant" staff reductions this year as it aims to shave $1 billion out of its operating costs. Sales of BlackBerries in the U.S. have fallen more than 60 percent since 2009 while its stock has plummeted 93 percent since its high in 2008; reaching its lowest level since 2003. Hoping for a marked turnaround after the release of the highly-revised BlackBerry 10 later this year, new CEO Thorsten Heins has previously declared that the company will abandon the consumer market to focus on enterprise sales. The company now claims 78 million subscribers worldwide and accounts for approximately 6.5 percent of the global smartphone market. RIM's secure, managed network and robust patent portfolio could be worth north of $8 billion. Elsewhere, RIM also announced that it is discontinuing production of the 16 GB PlayBook tablet and will concentrate production on the larger 32 GB and 64 GB models.
- HP Labs has unveiled a new data center architecture, called the HP Net-Zero Energy Data Center, designed to cut total power usage by 30 percent and dependence on grid power by more than 80 percent. The model centers around a management architecture that marries IT workload planning and energy and cooling resources using four core HP modules. A prediction module forecasts costs and availability, a planning module balances workload with processing requirements, and an execution module allows for real-time management. Lastly, a verification and reporting module helps ensure gaps are closed between predictions and real-world behaviors. The paradigm calls for matching energy supply with energy usage required by the IT workload to maximize the usage of available energy. Non-essential, batch workloads that do not require immediate processing would be scheduled during daylight hours when power from solar arrays is most plentiful, for example.
- Several high-profile breaches were reported this week including one where 6.5 million LinkedIn passwords were leaked on the Internet. While it is unclear when the hack took place, a hacker possibly based out of Russia posted the hashed passwords sans usernames to a Russian forum over three days in the last week. One leading security firm surmises that about 60 percent of the SHA-1 passwords have already been cracked. LinkedIn has said that it is contacting users whose accounts have been compromised and instructing them as to how to reset their passwords. In an unrelated attack, dating site eHarmony has also admitted that an unknown quantity of member passwords has been stolen. Presidential nominee Mitt Romney had one of his personal e-mail accounts compromised this week by an anonymous prowler who was able to execute a password reset by correctly guessing the answers to password reset security questions. This follows the method employed to obtain access to one of vice presidential candidate Sarah Palin's personal accounts nearly four years ago.
RFG POV: RIM's prospects are getting grimmer for its future as an independent entity. The company is having issues selling its already-manufactured, old-style BlackBerry devices and is facing another write-down as it tries to unload them at severely discounted prices. While Heins is at least outwardly intent on restoring RIM to its former glory and keeping its independence, the market has moved so far beyond the BlackBerry and its closed-network paradigm. The company's two large assets consist of its patent stockpile and its secure, proprietary network; the sale or rental of either of which would potentially afford the company the cash to remain independent but would not further its position as a hardware vendor. Similarly, BlackBerry 10 is not enough of a game changer to win back converts or invite new users into the fold; thus, it will need to turn to adopting a licensing or sale of key assets. IT executives requiring the highest-levels of security should continue to use BlackBerry solutions for mobile users but should have exit strategies at the ready as changes are likely afoot. HP continues to cement its role as a leading provider of environmentally cost-effective solutions for new data center architectures and much can be learned from their latest architectural design. The demand for new computing, storage, and cooling resources along with the increasing rate of technology change are forcing enterprises globally to address operational resource constraints and cost concerns in new and innovative ways. The solutions chosen for new and upgraded data centers should incorporate the best practices demonstrated by leading technology firms that integrate concepts such as free cooling, renewable power, and resource optimization into their designs. IT executives building new data centers are advised to invest in technologies that meld energy savings, modularity, and rapid hardware refresh capabilities to maximize investments and enable needed IT agility. The latest set of password leaks demonstrates how no entity is immune from attack and that prestigious targets are among the most desirable. The attack vector used to expose hashed passwords for LinkedIn is not known as yet; however, the use of SHA-1 is somewhat disconcerting though expected. Despite SHA-1 hashes having known weaknesses that were identified more than a half-decade ago, it remains the most widely used of the hash functions. SHA-2 hashes have not yet been compromised and a new SHA-3 hashing schema will be selected later this year. IT executives should have guidelines requiring the replacement of compromised technologies within timelines appropriate to the perceived exposure, and where they cannot be replaced rapidly, additional layers of physical, technology, and verification security should be enacted.Â
CEO Surveys
Lead Analyst: Cal Braunstein
IBM Corp. and PricewaterhouseCoopers, LLC released results from their global CEO surveys. For the first time the IBM study identified technology as the most important external force impacting the business. Both studies recognized the need to employ finer customer segmentation and use IT to change business processes to take advantage of new opportunities.
Focal Points:
- IBM released results of its fifth biennial CEO survey, in which the company interviewed more than 1700 CEOs with more than six years tenure in 64 countries. One of the top findings was that technology is now driving more organizational change than any other force, including the economy. In this regard, outperformers embrace openness, excel in executing tough changes, differentiate themselves through better data access and insights which are put into action, and are more likely to partner for innovation and driving revenues from new sources. The top three sources of sustained economic value come from human capital, customer relationships and products/services innovation. Internal and external collaboration are being used as tools for creating organizational change. The second finding was that CEOs create more economic value by engaging customers as individuals. These companies are investing in getting customers to share their insights into what they value individually, and when and how they want to interact. Then they develop and execute plans to interact using social media as well as traditional face-to-face engagements. Outperformers in this category strongly differentiate themselves through better data access, insight, and translation into actions. While big data is playing a role in this dimensional change, other factors are the old fashioned way of listening and capturing what employees see and hear, and then being where the customer expects the company to be.
- The third major CEO survey finding was that CEOs create more economic value by pursuing more disruptive innovation with partners and collaborating to drive new revenue sources. In some cases they create new industries while in others they merely move into new industries. Two of the keys to more effectively meeting the partnership challenge are making the partnerships personal and breaking the traditional collaboration boundaries. In effect, these companies are themselves becoming disruptors. While CEOs have shifted to address the transformational needs of the organization, CFOs are still concerned with controlling cost and improving efficiency. In a separate IBM retail study, IBM found most customers were willing to share information if they perceived there was a benefit to doing so. The greatest areas of reluctance for data sharing were in the categories of financial and medical data.
- The PwC study of more than 160 CEOs in the U.S. identified customer demand as the primary driver of corporate strategy in 2012. While the executives are slightly less optimistic than last year, 40 percent expect their own companies will grow and approximately the same number expect to complete a cross-border merger or acquisition this year. To deliver on their strategies CEOs are reconfiguring operations in local markets, nurturing talent and addressing potential talent shortages, and encouraging the free flow of ideas and innovations. Two significant findings in the survey were a major jump in the concern about competitive threats (73 percent of the CEOs are worried) and a considerable decline in anxiety about risk exposure (a 20 point drop to 19 percent). PwC notes that with more growth opportunities arising in distant lands business leaders are acknowledging that an overly conservative attitude will put their companies at a competitive disadvantage. Lastly, PwC determined that the top CEO priorities overseas are growing the customer base followed by access to the local talent base. Additionally, the PwC study confirmed one of the IBM findings – most CEOs were planning on entering into new strategic alliances or joint ventures this year.
RFG POV: CEOs are embracing the belief that true insights into customer wants and needs will generate additional revenues and loyalty, and customer needs may be better satisfied through acquisitions and partnerships than organic investment. CEOs are also recognizing technology must play a leading role in the areas of business analytics -- including big data collaboration and social media, and business process management. All this is driving cultural and organizational change. However, one of the perennial inhibitors to change is the human behavioral theory "culture eats process for lunch every day." Thus, business and IT executives must excel in executing tough cultural and process changes if they expect to convert their goals and strategies to reality. In that an Economist Intelligence Unit study found that 60 percent of executives believe their main vertical markets will be barely recognizable by 2020, it is imperative that the executives overcome their risk aversion and exposure concerns. Moreover, they must also step up to the challenge and provide the strong leadership required to transform the organization to meet the demands of tomorrow.