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Breaking News -
Commentary and
Analysis
Commentary and
Analysis
| All Contents Copyright 2005-10 J.Gold Associates, LLC All rights reserved |
Commentary and Analysis
June 23, 2009
Intel Finnishing it Connections, or, That’s Nokia with an IA
Today, Intel and Nokia announced a long term strategic relationship. There are 3 key parts to this agreement: Intel will
license Nokia’s technology for 3G HSPA cellular technology for use with its chips; Intel and Nokia will collaborate on
making their respective open source implementations of Linux for small devices (Moblin and Maemo) more
compatible; and they will collaborate on future Intel architectures (IA) for mobile devices. This is a compelling
partnership for several reasons.
First, Intel has had difficulty producing competitive cellular radio chips, going back a number of years to when it had
the XScale product line before divesting it to Marvel. Nokia, on the other hand, has had compelling Intellectual
Property (IP) in radio technology that clearly made it the world’s largest manufacturer of cellular phones. Intel rightly
understands that it needs to be able to offer a competitive cellular modem to fill in its communications product
offerings (e.g., WiFi, WiMax). This is critical in the netbook and Mobile Internet Device (MID) space where it has
targeted its Atom processors, and where it hopes to eventually make a play for smart phones as well with future, lower
powered models of Atom. Having 3G HSPA cellular chip competence is therefore critical. Intel would not specify
which chip family it would announce products for or when, other than to say it is for the IA set of products. However, we
expect the first products using this new capability will be Atom-based systems, and we expect first products to be
released in early to mid 2010.
It is interesting to note that Intel and Nokia did not discuss any relationship for 4G cellular technologies (Long Term
Evolution, or LTE) which will achieve significant market share in the next 3-5 years. Although we will see some LTE
systems in place in 2009/10, we do not expect critical mass to be achieved until 2012 at the earliest. So Intel does
have some time to assess what it needs to do. However, Intel does have a stake in a competing 4G technology, WiMax,
which it is pushing aggressively. We hope Intel does not assume that it will not need an LTE solution going forward, as
we are sure that it will, and it will need one no later than 2010/11 to stay competitive. This will complement, not
replace its WiMax offerings. Nokia does have significant IP in 4G as well, so an extension of this relationship in the next
couple of years to cover 4G, assuming all works out well, is likely. This means that Intel will not have to depend on third
party solutions for cellular chips as it does currently. It also eliminates Intel’s dependence on major suppliers like
Ericsson for modules and Broadcom and Qualcomm for chips. Qualcomm, in particular, is attempting to move
upstream into mobile processing (Snapdragon) which puts it in direct competition with Intel for its Atom processors.
This deal therefore eliminates the need for Intel to buy from a direct competitor.
In working with Intel, Nokia gets to have input on the long term evolution of the IA architecture as it relates to wireless
communications. This provides Nokia with some important benefits. Nokia is currently dependent on the ARM chip
architecture for most of its smart phones and its Internet tablets. Yet it rightly understands that the ARM architecture
falls short as it tries to move upstream and impact the netbook and MID market. By working with Intel, Nokia gets to
influence the design of Atom chips specifically targeted where Nokia needs to go; expanding from its smart phones
base and into more wireless entertainment devices. Using an Atom core built around the IA architecture has great
benefits for these higher level devices (e.g., existing application code, programmers and compilers), and Nokia’s
collaboration with Intel will influence these chips to include more wireless friendly capabilities. We do not envision
Nokia abandoning its core dependence on the ARM architecture in the short term, but longer term (2-3 years) we
expect Nokia to offer devices based on Atom, especially with System on Chip (SOC) designs. This could provide Intel
with a very large marketplace as such devices will be sold in the millions or tens of millions of units per year.
From the Operating System (OS) level, this partnership provides an advantage to both Intel and Nokia. Both have
competing Open Source solutions that are built on a Linux kernel, but provide a non compatible user interface.
Working together to build more compatibility into Moblin (created by Intel but now Open Sourced, although Intel is still
the major contributor) and Maemo powering Nokia’s Internet Tablets will have some important effects. First, by making
the user interface (UI) compatible, it will allow application providers to build a single application that runs on both
Linux distributions. Second, Nokia’s expertise in wireless requirements for an OS and UI, together with Intel’s expertise
in optimizing software for specific chips (with its compiler and newly acquired WindRiver expertise) will make a more
compelling and better/faster running system available to the end user. Finally, this collaboration could limit the impact
Google’s Android OS will have on the netbook market, as Google’s stated goal is to make Android netbook and MID
friendly. We would expect to see other companies (e.g., Novell, Canonical) support the Intel and Nokia efforts in this
regard, as both are already committed to supporting Moblin, and likely see Android as a long term threat.
Bottom Line: This strategic relationship is a win-win for both Intel and Nokia. It is also a win for the marketplace, as it
should allow more capable wireless devices to make their way to market in the next couple of years. And a more
converged Linux landscape in the MID and Netbook market will allow the market to expand more quickly as fewer
incompatibilities in applications and peripherals will exist. We expect to see further relationships develop between
Intel and other major stakeholders in significant niche areas of the market where Intel does not have the IP it needs.
The days of “do it all ourselves” are over for Intel. And Nokia also understands it needs more partnerships to stay ahead
of its competitors.
Ora-Sun: The Glass is Half Full
April 20, 2009
This morning, we found out that the Sun might rise again. Oracle has decided to spend approximately $7.4B to buy its
long time neighbor down the highway. This combination of two stalwarts instrumental in the rise of the Silicon Valley
high tech powerbase signals a regretful passing of a member of the old guard. But times change and Sun did not
change with the times (much as Digital, Compaq, SGI, Cray and others before it). The question is, why would Oracle, a
company who has been gobbling up companies over the past few years (e.g., Siebel, Peoplesoft, BEA) but with its own
set of challenges, want to move into hardware – a commodity, cut throat business? The answer is it probably doesn’t –
at least not directly. But this acquisition is attractive to both Oracle and Sun for different reasons, although it may not
be so attractive to end user organizations. Let’s look at who gains through this acquisition, to see who the winners and
losers might be.
From Oracle’s perspective, through acquisition of Sun it gets to control Java and the ability to kill off an imminent
threat to its database hegemony in the MySQL open source database. Control of Java, at the core of Oracle’s
enterprise software products and similarly for many of its competitors, is a real coup for Oracle and Larry Ellison. This
can’t make IBM (or SAP) very happy as it has also built its key business SW offerings around Java. It also puts Oracle in
even more direct conflict with Microsoft beyond the database and into its middleware efforts with .NET framework.
Obviously, Oracle is buying a large HW business. Oracle does gets the opportunity to up-sell the vast array of Sun shops
in which it may not currently have installed its back office suites. However, Oracle has attempted to get into the HW
business more than once in the past and was never very good at it- always allowing its products to die a slow, silent
death. We believe that Oracle will not stay in the HW business very long. Indeed, we would expect Oracle to take the
SW assets (primarily Java and Solaris), perhaps keep some key HW subsystems (networked storage – an increasingly
important market for Oracle’s analytics, BI and databases) and phase out or sell off the commodity HW business
(perhaps to IBM or HP). There is no advantage in Oracle owning a HW business. If anything, it is a disadvantage, both
in terms of alienating partners (e.g., HP, Dell, etc.) and in the challenge of making a profit on HW. If Oracle’s true
intent in this acquisition is to stay in the HW business, then the board needs to do some serious soul searching.
What about Sun? It gets to stave off its forthcoming collapse. This deal is really a life line to Sun, which it surely
needs. Sun had not kept up with the challenges of the new, commodity and Open Source based needs of its
customers. It is top heavy and can’t compete with leaner suppliers like Dell, HP and even IBM. IBM’s offer to buy Sun
fell apart on a number of points. But the Silicon Valley philosophy of McNealy and Ellison are more closely aligned
than those of McNealy and the IBM juggernaut would have been, so this may be a better fit overall anyway. But we
would expect significant changes to come to Sun once the acquisition is completed, including substantial layoffs and
the jettisoning of numerous products and technologies.
This may be a good deal for Oracle and Sun, but is it good for the marketplace? Not really. End users get a more
controlling influence in Oracle that could ultimately mean fewer choices and increased prices. Oracle has a history of
being “pricey” and this probably won’t change. How will Java licensing change? Will there be Oracle proprietary
extensions (like in SQL)? What will happen to Solaris and Open Solaris? Oracle would be smart to spin out the HW
business as soon as possible. This may actually benefit IBM, HP and other Unix server suppliers, and may also signal
the death knell for the Sparc processor (to the benefit of Intel and AMD).
So the winner in this event is clearly Oracle, but Sun wins as well since it would have floundered without a rescue. The
losers are the end user organizations who can now expect higher prices for SW and fewer choices. Open Source is an
ugly word at Oracle. Of course, IBM and HP are short term losers but may ultimately gain if the Sun HW business suffers
or is sold off, which is highly likely (and both IBM and HP could ultimately bid for the business). And Microsoft and/or
Sybase may gain share at the edges if Oracle loses customers due to heavy handed terms and pricing, or may gain
some MySQL accounts.
Clearly, this acquisition by Oracle of Sun is a glass half full for business users.
SAP Goes Mobile – With A Little Help From a Friend
March 11, 2009
SAP has not been very successful in providing a credible smart-phone based solution for its many back-office suite
customers. It is finally taking a pragmatic view, abandoning its “not invented here” mentality and partnering with
Sybase, a leader in mobile infrastructure and multi-client capabilities. This is a critical step for SAP to maintain its
market share.
Over the past several years, SAP has repeatedly attempted to extend its suite of capabilities into the mobile world.
While it achieved some success with laptop-based extensions, particularly within areas like account management,
expense reporting and business intelligence, it never truly achieved an overwhelming acceptance by its client base.
More importantly, it was never quite able to build compelling extensions to its suite for the growing installed base of
smart phone devices. Part of the problem lie with SAP’s inherent engineering mentality which required it to rely on its
own tools and development environment (NetWeaver) to extend its platform to the mobile device. The problem is,
these tools were never quite up to the task. And although many third party mobile companies attempted to build task
specific extensions to SAP, this never really achieved critical mass.
With an ever increasing array of more capable smart phone devices (e.g., iPhone, BlackBerry, Windows Mobile)
coming to market and becoming an important component of day to day operations in most enterprises, SAP, under
pressure from its clients, felt compelled to take action. This time the pragmatists prevailed, and SAP decided to pursue
a course of partnership. It looked for a partner who had substantial mobile expertise and enough market presence and
size to both support its enterprise clients and allow future cooperative development. SAP found this partner in Sybase
and its iAnywhere suite of mobile enablement tools.
Sybase provides SAP with the necessary and proven tools and infrastructure for enterprise apps on a variety of mobile
devices. It also provides a rich user experience that includes a variety of features and functions that SAP currently
does not support (e.g., notifications of business processes, office suite integration, collaboration, on-device “widgets”).
Sybase also provides a rapid time to development toolset and includes a full suite of management and security
capabilities that ease deployment and keep TCO manageable. But the first solution resulting from this new partnership
will be relatively limited, and will only extend selected CRM capabilities of the SAP suite to mobile devices without
fully integrating with the rich client capabilities that Sybase provides.
We believe this is a good move on the part of SAP. It clearly needed a mobile device solution and sought out a
qualified partner instead of going it alone. SAP and Sybase engineering teams will work together over time to extend
the relatively limited functionality of the first phase of this project to include more functions and integration with
Sybase’s extensive client features, with the eventual goal of integrating the entire suite of capabilities from both
vendors’ products. And the two marketing teams will work together to promote this solution to existing SAP clients and
current Sybase clients that may also have SAP installed.
The mobile solution will not be sold or delivered directly by SAP. Rather, this will be a referral sale with the two
companies collaborating on the pre-sales efforts, but with Sybase providing all of the products, SW, and installation of
the solution. This means customers will have to deal with two companies, with some potential for finger pointing if a
problem arises. We believe this represents a small and manageable risk, but companies should be aware of it. And the
fact that this is a joint-sales approach can provide some level of cooperative leverage should a problem arise. A further
potential risk is if this partnership stalls or dissolves, thereby “orphaning” some installations. However, given the superior
mobility capabilities that Sybase provides, we believe any possible problems present manageable risk and allows
customers to move forward on their mobile deployments beyond what SAP is able to offer with its own initiatives.
Bottom Line: SAP needed to have a capable and credible solution for the growing installed base of smart phones in
enterprises. It needed extension of its suite of back-office products beyond the very limited mobile device capabilities
its own toolset could support. Sybase is a leader in the development and deployment of cross-platform mobile
solutions. We believe this partnership will dramatically help SAP with its “mobile image” and finally provide a credible
mobile solution. However, the first steps in this partnership represent fairly modest capabilities. SAP and Sybase must
move quickly to extend the capabilities to a large subset of the entire SAP suite to satisfy customer demand, or risk
losing business to SAP’s more mobile-enabled competitors.
Intel Declares War!
March 3, 2009
On the surface, this seems like a routine cooperative partnership announcement. Yet with this one action, if managed
effectively, Intel has almost assured Atom’s success as a major player in the growing world of consumer electronics.
Intel and Taiwan Semiconductor Manufacturing Company (TSMC), one of the world’s largest chip foundries, just
announced a marketing collaboration involving Intel’s Atom processor. Atom is Intel’s effort to downsize its processor
chips to fit into the realm of emerging smart devices below the Personal Computer space. TSMC will work closely with
Intel to port some of the Atom processors to its own process and design flows. TSMC will also have the ability to do
engineering on the chip to build customized versions for the large number of existing TSMC customers. However, Intel
will have ownership of the final device and the customer, as Intel will be selling the custom designed chips that TSMC
designs and builds in its foundry.
As PC sales wane, and their chip revenues along with them, Intel looks to additional sources for revenues. Consumer
products represent a massive potential market, though at clearly lower margins and price points. But, Intel’s cost of
operations makes it a supplier at too high a price to go after the cut-throat and highly price sensitive consumer market.
And Intel is not set up for customized, System On Chip (SOC) solutions the market demands. Enter a partner that can
bring all of this capability to Intel – TSMC.
This is a direct attack by Intel on competing processors, especially the ARM processor, which is trying to move
upstream from the smart phone and embedded gadgets market it currently dominates, while Intel is trying to move
downstream with Atom into this overlapping space. The battleground in the middle will be aggressive and likely
bloody, with huge potential returns. And while Intel’s attack is primarily on ARM, it also has profound effect on other
players – AMD, Qualcomm (Snapdragon), NVidia, TI, and even Marvel to whom Intel sold off its own ARM-based
processor (XScale).
This is a Win-Win for Intel and TSMC
Intel gets a vast new market potential for Atom since TSMC has connections to many consumer and lower end PC-type
products (e.g., MIDs, webtop devices, netbooks, media servers/set-top boxes, etc.), especially in the important Far East
markets (Taiwan, Japan). TSMC gets to offer a high performance processor it did not have to design, but that it can
customize for the clients who will take volume products. It also adds the ability to merge the work TSMC is doing on
WiMax enabled devices and couple it with Atom processors.
Intel gets to have customized designs done by TSMC for a number of volume customers, a service which Intel does not
generally do all that well, and is not set up to do efficiently. What Intel gets is a large potential for embedding chips in
products they might not otherwise be able to reach, and generating revenues from the chip sales.
This is a very symbiotic relationship. Intel brings the core Intel Architecture-based Atom. TSMC brings knowledge of
SOC creation and customization for specific customers, high volume production at low cost, and a customer base of
many consumer oriented vendors. It’s a win-win. One thing to note is that this is not an outsource of the Atom per se.
Intel will continue to build standard Atom chips in its own fabs for its mainstream customers while TSMC will only build
customized silicon in high volume.
Extending Intel’s Chip Business While Saying in Control
Intel gets to own all of the customers that come out of this relationship, requiring that all chips sold come from Intel.
That means Intel gets to set price, choose who the clients are and what they can build with Atom, and make the
margins it wants and needs. TSMC brings customers to Intel from its vast installed base, while giving its customers
potential new and powerful chips for the increasingly complex consumer electronics devices coming to market.
However, there could be some potential conflict if TSMC brings a customer and Intel says no, or wants to charge too
much, since Intel has ultimate control. Further, there may be some conflict over ultimate ownership of the
customization components. And there is a small risk that Intel may not easily be able to combine what TSMC builds in
its fabs as the processes are not identical. Overall, however, these risks seem minimal and manageable.
Bottom Line:
This is a smart move by Intel, and a win for TSMC as well. Unless something is inherently flawed with the architecture
or Intel is too controlling of the relationship (or tries to charge too much for the finished goods), it is almost certain that
Atom will be successful and permeate a large swath of consumer devices territory – an area in which Intel has
previously not been a major player.
June 23, 2009
Intel Finnishing it Connections, or, That’s Nokia with an IA
Today, Intel and Nokia announced a long term strategic relationship. There are 3 key parts to this agreement: Intel will
license Nokia’s technology for 3G HSPA cellular technology for use with its chips; Intel and Nokia will collaborate on
making their respective open source implementations of Linux for small devices (Moblin and Maemo) more
compatible; and they will collaborate on future Intel architectures (IA) for mobile devices. This is a compelling
partnership for several reasons.
First, Intel has had difficulty producing competitive cellular radio chips, going back a number of years to when it had
the XScale product line before divesting it to Marvel. Nokia, on the other hand, has had compelling Intellectual
Property (IP) in radio technology that clearly made it the world’s largest manufacturer of cellular phones. Intel rightly
understands that it needs to be able to offer a competitive cellular modem to fill in its communications product
offerings (e.g., WiFi, WiMax). This is critical in the netbook and Mobile Internet Device (MID) space where it has
targeted its Atom processors, and where it hopes to eventually make a play for smart phones as well with future, lower
powered models of Atom. Having 3G HSPA cellular chip competence is therefore critical. Intel would not specify
which chip family it would announce products for or when, other than to say it is for the IA set of products. However, we
expect the first products using this new capability will be Atom-based systems, and we expect first products to be
released in early to mid 2010.
It is interesting to note that Intel and Nokia did not discuss any relationship for 4G cellular technologies (Long Term
Evolution, or LTE) which will achieve significant market share in the next 3-5 years. Although we will see some LTE
systems in place in 2009/10, we do not expect critical mass to be achieved until 2012 at the earliest. So Intel does
have some time to assess what it needs to do. However, Intel does have a stake in a competing 4G technology, WiMax,
which it is pushing aggressively. We hope Intel does not assume that it will not need an LTE solution going forward, as
we are sure that it will, and it will need one no later than 2010/11 to stay competitive. This will complement, not
replace its WiMax offerings. Nokia does have significant IP in 4G as well, so an extension of this relationship in the next
couple of years to cover 4G, assuming all works out well, is likely. This means that Intel will not have to depend on third
party solutions for cellular chips as it does currently. It also eliminates Intel’s dependence on major suppliers like
Ericsson for modules and Broadcom and Qualcomm for chips. Qualcomm, in particular, is attempting to move
upstream into mobile processing (Snapdragon) which puts it in direct competition with Intel for its Atom processors.
This deal therefore eliminates the need for Intel to buy from a direct competitor.
In working with Intel, Nokia gets to have input on the long term evolution of the IA architecture as it relates to wireless
communications. This provides Nokia with some important benefits. Nokia is currently dependent on the ARM chip
architecture for most of its smart phones and its Internet tablets. Yet it rightly understands that the ARM architecture
falls short as it tries to move upstream and impact the netbook and MID market. By working with Intel, Nokia gets to
influence the design of Atom chips specifically targeted where Nokia needs to go; expanding from its smart phones
base and into more wireless entertainment devices. Using an Atom core built around the IA architecture has great
benefits for these higher level devices (e.g., existing application code, programmers and compilers), and Nokia’s
collaboration with Intel will influence these chips to include more wireless friendly capabilities. We do not envision
Nokia abandoning its core dependence on the ARM architecture in the short term, but longer term (2-3 years) we
expect Nokia to offer devices based on Atom, especially with System on Chip (SOC) designs. This could provide Intel
with a very large marketplace as such devices will be sold in the millions or tens of millions of units per year.
From the Operating System (OS) level, this partnership provides an advantage to both Intel and Nokia. Both have
competing Open Source solutions that are built on a Linux kernel, but provide a non compatible user interface.
Working together to build more compatibility into Moblin (created by Intel but now Open Sourced, although Intel is still
the major contributor) and Maemo powering Nokia’s Internet Tablets will have some important effects. First, by making
the user interface (UI) compatible, it will allow application providers to build a single application that runs on both
Linux distributions. Second, Nokia’s expertise in wireless requirements for an OS and UI, together with Intel’s expertise
in optimizing software for specific chips (with its compiler and newly acquired WindRiver expertise) will make a more
compelling and better/faster running system available to the end user. Finally, this collaboration could limit the impact
Google’s Android OS will have on the netbook market, as Google’s stated goal is to make Android netbook and MID
friendly. We would expect to see other companies (e.g., Novell, Canonical) support the Intel and Nokia efforts in this
regard, as both are already committed to supporting Moblin, and likely see Android as a long term threat.
Bottom Line: This strategic relationship is a win-win for both Intel and Nokia. It is also a win for the marketplace, as it
should allow more capable wireless devices to make their way to market in the next couple of years. And a more
converged Linux landscape in the MID and Netbook market will allow the market to expand more quickly as fewer
incompatibilities in applications and peripherals will exist. We expect to see further relationships develop between
Intel and other major stakeholders in significant niche areas of the market where Intel does not have the IP it needs.
The days of “do it all ourselves” are over for Intel. And Nokia also understands it needs more partnerships to stay ahead
of its competitors.
Ora-Sun: The Glass is Half Full
April 20, 2009
This morning, we found out that the Sun might rise again. Oracle has decided to spend approximately $7.4B to buy its
long time neighbor down the highway. This combination of two stalwarts instrumental in the rise of the Silicon Valley
high tech powerbase signals a regretful passing of a member of the old guard. But times change and Sun did not
change with the times (much as Digital, Compaq, SGI, Cray and others before it). The question is, why would Oracle, a
company who has been gobbling up companies over the past few years (e.g., Siebel, Peoplesoft, BEA) but with its own
set of challenges, want to move into hardware – a commodity, cut throat business? The answer is it probably doesn’t –
at least not directly. But this acquisition is attractive to both Oracle and Sun for different reasons, although it may not
be so attractive to end user organizations. Let’s look at who gains through this acquisition, to see who the winners and
losers might be.
From Oracle’s perspective, through acquisition of Sun it gets to control Java and the ability to kill off an imminent
threat to its database hegemony in the MySQL open source database. Control of Java, at the core of Oracle’s
enterprise software products and similarly for many of its competitors, is a real coup for Oracle and Larry Ellison. This
can’t make IBM (or SAP) very happy as it has also built its key business SW offerings around Java. It also puts Oracle in
even more direct conflict with Microsoft beyond the database and into its middleware efforts with .NET framework.
Obviously, Oracle is buying a large HW business. Oracle does gets the opportunity to up-sell the vast array of Sun shops
in which it may not currently have installed its back office suites. However, Oracle has attempted to get into the HW
business more than once in the past and was never very good at it- always allowing its products to die a slow, silent
death. We believe that Oracle will not stay in the HW business very long. Indeed, we would expect Oracle to take the
SW assets (primarily Java and Solaris), perhaps keep some key HW subsystems (networked storage – an increasingly
important market for Oracle’s analytics, BI and databases) and phase out or sell off the commodity HW business
(perhaps to IBM or HP). There is no advantage in Oracle owning a HW business. If anything, it is a disadvantage, both
in terms of alienating partners (e.g., HP, Dell, etc.) and in the challenge of making a profit on HW. If Oracle’s true
intent in this acquisition is to stay in the HW business, then the board needs to do some serious soul searching.
What about Sun? It gets to stave off its forthcoming collapse. This deal is really a life line to Sun, which it surely
needs. Sun had not kept up with the challenges of the new, commodity and Open Source based needs of its
customers. It is top heavy and can’t compete with leaner suppliers like Dell, HP and even IBM. IBM’s offer to buy Sun
fell apart on a number of points. But the Silicon Valley philosophy of McNealy and Ellison are more closely aligned
than those of McNealy and the IBM juggernaut would have been, so this may be a better fit overall anyway. But we
would expect significant changes to come to Sun once the acquisition is completed, including substantial layoffs and
the jettisoning of numerous products and technologies.
This may be a good deal for Oracle and Sun, but is it good for the marketplace? Not really. End users get a more
controlling influence in Oracle that could ultimately mean fewer choices and increased prices. Oracle has a history of
being “pricey” and this probably won’t change. How will Java licensing change? Will there be Oracle proprietary
extensions (like in SQL)? What will happen to Solaris and Open Solaris? Oracle would be smart to spin out the HW
business as soon as possible. This may actually benefit IBM, HP and other Unix server suppliers, and may also signal
the death knell for the Sparc processor (to the benefit of Intel and AMD).
So the winner in this event is clearly Oracle, but Sun wins as well since it would have floundered without a rescue. The
losers are the end user organizations who can now expect higher prices for SW and fewer choices. Open Source is an
ugly word at Oracle. Of course, IBM and HP are short term losers but may ultimately gain if the Sun HW business suffers
or is sold off, which is highly likely (and both IBM and HP could ultimately bid for the business). And Microsoft and/or
Sybase may gain share at the edges if Oracle loses customers due to heavy handed terms and pricing, or may gain
some MySQL accounts.
Clearly, this acquisition by Oracle of Sun is a glass half full for business users.
SAP Goes Mobile – With A Little Help From a Friend
March 11, 2009
SAP has not been very successful in providing a credible smart-phone based solution for its many back-office suite
customers. It is finally taking a pragmatic view, abandoning its “not invented here” mentality and partnering with
Sybase, a leader in mobile infrastructure and multi-client capabilities. This is a critical step for SAP to maintain its
market share.
Over the past several years, SAP has repeatedly attempted to extend its suite of capabilities into the mobile world.
While it achieved some success with laptop-based extensions, particularly within areas like account management,
expense reporting and business intelligence, it never truly achieved an overwhelming acceptance by its client base.
More importantly, it was never quite able to build compelling extensions to its suite for the growing installed base of
smart phone devices. Part of the problem lie with SAP’s inherent engineering mentality which required it to rely on its
own tools and development environment (NetWeaver) to extend its platform to the mobile device. The problem is,
these tools were never quite up to the task. And although many third party mobile companies attempted to build task
specific extensions to SAP, this never really achieved critical mass.
With an ever increasing array of more capable smart phone devices (e.g., iPhone, BlackBerry, Windows Mobile)
coming to market and becoming an important component of day to day operations in most enterprises, SAP, under
pressure from its clients, felt compelled to take action. This time the pragmatists prevailed, and SAP decided to pursue
a course of partnership. It looked for a partner who had substantial mobile expertise and enough market presence and
size to both support its enterprise clients and allow future cooperative development. SAP found this partner in Sybase
and its iAnywhere suite of mobile enablement tools.
Sybase provides SAP with the necessary and proven tools and infrastructure for enterprise apps on a variety of mobile
devices. It also provides a rich user experience that includes a variety of features and functions that SAP currently
does not support (e.g., notifications of business processes, office suite integration, collaboration, on-device “widgets”).
Sybase also provides a rapid time to development toolset and includes a full suite of management and security
capabilities that ease deployment and keep TCO manageable. But the first solution resulting from this new partnership
will be relatively limited, and will only extend selected CRM capabilities of the SAP suite to mobile devices without
fully integrating with the rich client capabilities that Sybase provides.
We believe this is a good move on the part of SAP. It clearly needed a mobile device solution and sought out a
qualified partner instead of going it alone. SAP and Sybase engineering teams will work together over time to extend
the relatively limited functionality of the first phase of this project to include more functions and integration with
Sybase’s extensive client features, with the eventual goal of integrating the entire suite of capabilities from both
vendors’ products. And the two marketing teams will work together to promote this solution to existing SAP clients and
current Sybase clients that may also have SAP installed.
The mobile solution will not be sold or delivered directly by SAP. Rather, this will be a referral sale with the two
companies collaborating on the pre-sales efforts, but with Sybase providing all of the products, SW, and installation of
the solution. This means customers will have to deal with two companies, with some potential for finger pointing if a
problem arises. We believe this represents a small and manageable risk, but companies should be aware of it. And the
fact that this is a joint-sales approach can provide some level of cooperative leverage should a problem arise. A further
potential risk is if this partnership stalls or dissolves, thereby “orphaning” some installations. However, given the superior
mobility capabilities that Sybase provides, we believe any possible problems present manageable risk and allows
customers to move forward on their mobile deployments beyond what SAP is able to offer with its own initiatives.
Bottom Line: SAP needed to have a capable and credible solution for the growing installed base of smart phones in
enterprises. It needed extension of its suite of back-office products beyond the very limited mobile device capabilities
its own toolset could support. Sybase is a leader in the development and deployment of cross-platform mobile
solutions. We believe this partnership will dramatically help SAP with its “mobile image” and finally provide a credible
mobile solution. However, the first steps in this partnership represent fairly modest capabilities. SAP and Sybase must
move quickly to extend the capabilities to a large subset of the entire SAP suite to satisfy customer demand, or risk
losing business to SAP’s more mobile-enabled competitors.
Intel Declares War!
March 3, 2009
On the surface, this seems like a routine cooperative partnership announcement. Yet with this one action, if managed
effectively, Intel has almost assured Atom’s success as a major player in the growing world of consumer electronics.
Intel and Taiwan Semiconductor Manufacturing Company (TSMC), one of the world’s largest chip foundries, just
announced a marketing collaboration involving Intel’s Atom processor. Atom is Intel’s effort to downsize its processor
chips to fit into the realm of emerging smart devices below the Personal Computer space. TSMC will work closely with
Intel to port some of the Atom processors to its own process and design flows. TSMC will also have the ability to do
engineering on the chip to build customized versions for the large number of existing TSMC customers. However, Intel
will have ownership of the final device and the customer, as Intel will be selling the custom designed chips that TSMC
designs and builds in its foundry.
As PC sales wane, and their chip revenues along with them, Intel looks to additional sources for revenues. Consumer
products represent a massive potential market, though at clearly lower margins and price points. But, Intel’s cost of
operations makes it a supplier at too high a price to go after the cut-throat and highly price sensitive consumer market.
And Intel is not set up for customized, System On Chip (SOC) solutions the market demands. Enter a partner that can
bring all of this capability to Intel – TSMC.
This is a direct attack by Intel on competing processors, especially the ARM processor, which is trying to move
upstream from the smart phone and embedded gadgets market it currently dominates, while Intel is trying to move
downstream with Atom into this overlapping space. The battleground in the middle will be aggressive and likely
bloody, with huge potential returns. And while Intel’s attack is primarily on ARM, it also has profound effect on other
players – AMD, Qualcomm (Snapdragon), NVidia, TI, and even Marvel to whom Intel sold off its own ARM-based
processor (XScale).
This is a Win-Win for Intel and TSMC
Intel gets a vast new market potential for Atom since TSMC has connections to many consumer and lower end PC-type
products (e.g., MIDs, webtop devices, netbooks, media servers/set-top boxes, etc.), especially in the important Far East
markets (Taiwan, Japan). TSMC gets to offer a high performance processor it did not have to design, but that it can
customize for the clients who will take volume products. It also adds the ability to merge the work TSMC is doing on
WiMax enabled devices and couple it with Atom processors.
Intel gets to have customized designs done by TSMC for a number of volume customers, a service which Intel does not
generally do all that well, and is not set up to do efficiently. What Intel gets is a large potential for embedding chips in
products they might not otherwise be able to reach, and generating revenues from the chip sales.
This is a very symbiotic relationship. Intel brings the core Intel Architecture-based Atom. TSMC brings knowledge of
SOC creation and customization for specific customers, high volume production at low cost, and a customer base of
many consumer oriented vendors. It’s a win-win. One thing to note is that this is not an outsource of the Atom per se.
Intel will continue to build standard Atom chips in its own fabs for its mainstream customers while TSMC will only build
customized silicon in high volume.
Extending Intel’s Chip Business While Saying in Control
Intel gets to own all of the customers that come out of this relationship, requiring that all chips sold come from Intel.
That means Intel gets to set price, choose who the clients are and what they can build with Atom, and make the
margins it wants and needs. TSMC brings customers to Intel from its vast installed base, while giving its customers
potential new and powerful chips for the increasingly complex consumer electronics devices coming to market.
However, there could be some potential conflict if TSMC brings a customer and Intel says no, or wants to charge too
much, since Intel has ultimate control. Further, there may be some conflict over ultimate ownership of the
customization components. And there is a small risk that Intel may not easily be able to combine what TSMC builds in
its fabs as the processes are not identical. Overall, however, these risks seem minimal and manageable.
Bottom Line:
This is a smart move by Intel, and a win for TSMC as well. Unless something is inherently flawed with the architecture
or Intel is too controlling of the relationship (or tries to charge too much for the finished goods), it is almost certain that
Atom will be successful and permeate a large swath of consumer devices territory – an area in which Intel has
previously not been a major player.