CA buys 3Tera: Playing the Cloud Computing Field to find a Diamond in the Rough

CA has announced the acquisition of 3Tera for an undisclosed amount of money.  Like Cassatt, 3Tera is a pioneer in cloud computing and they will join CA’s ever expanding list of acquisitions within Cloud Computing Management.  3Tera is home to AppLogic which started off within Grid Computing and has now morphed into a Cloud Computing Platform.  Per 3Tera’s website, “AppLogic is a turn-key cloud computing platform for running and scaling distributed applications.”

It seems that CA is engaged in “a throw spaghetti at the wall and see what sticks” method of M&A.  Only two of CA’s last four acquisitions have sustainable/notable customer lists (per their respective websites), at least two of the acquisitions have technology overlap between themselves and/or other CA products, and one acquisition may have come with few customers yielding little revenue.  Of course, this may be indicative of the space itself as Microsoft has revealed that revenues are years away from Cloud Computing providers.

Perhaps CA is attempting to become the “arms dealer” of Cloud Computing Management, but that’s a tall order for any company.  HP has spent billions on notable software companies such as Opsware, Peregrine, and Mercury Interactive.  BMC has added BladeLogic, Tideway, and Phurnace to integrate within their Remedy/Atrium products.  Meanwhile, VMware/EMC, Microsoft, and Citrix continue to beef up their management portfolios along with a host of start-ups and disruptive virtualization management companies.   IBM has recently acquired Intelliden to plug a hole within their Tivoli management software and they are the fathers of autonomic computing.  Finally, Cisco lurks as an ever present threat within this space.

For CA to be successful, they must not only continue the development and integrate these products into a single solutions suite, but they must execute on a coherent marketing and sales strategy.  With BMC set to fill the management void left by the rift between Cisco and HP, CA may look to Juniper, Brocade, or perhaps Huawei as potential partners.  If not, CA will be forced to compete with Cisco, HP, and IBM on the back-end of these next generation datacenter build-outs with a management agenda that is often an after-thought.

While I wouldn’t count CA out, they have a lot on their collective plates.  Will CA be able to quickly expand 3Tera to support VMware?  Will CA figure out what to do with Cassatt?  Will CA open new markets to NetQoS?  What about security management?  What will CA do to counter IBM’s purchase of Intelliden?  Will CA’s properly package these new products?

How many acquisitions does it take to create a market within Cloud Computing Management?  One…NetQoS…Two…Cassatt….Three…Oblicore…Four….3Tera….Five…

It’s a great time to go shopping for companies that have money and CA is definitely playing the field in search of that diamond in the rough.

Defeating Wrap and Roll

Wrap and roll is a sales and marketing technique that involves a complicated set of maneuvers designed to placate your most feared competitors.  In most cases, wrap and roll is used by larger companies to attack smaller, disruptive, or fast growing start-ups within a particular niche market.  Whether wrap and roll slows, stops, or allows for M&A within a market, it definitely has an impact on innovation.

Wrap and roll needlessly confuses customers, prospects, analysts, and media.  It starts with an innocent phrase, “yes, we can do that and have done that for years” and ends with a new product launch, professional service bills, or an acquisition.  Basically, large companies cannot react quickly enough to smaller disruptive technology challenges.  However, these smaller companies typically lack the scale and market power of the larger companies.  Faced with the prospect of losing a key market, the larger company puts their machine into motion.

First marketing springs to action creating comparative charts, graphs, and FUD (Fear Uncertainty and Doubt) presentations that attempt to create an aura of superiority.   Second, technical marking tests the competitive gear to find weaknesses in the products and to share information with M&A teams.  Third, sales begin to circulate the marketing FUD and attempts to slow down the sales cycle to give them a chance to win.  Fourth, engineering teams attempt to create a new product while M&A teams look at potential acquisitions.  Fifth, engineering fails to create a product while the M&A teams decide that the top two competitors are too expensive and purchase a relatively unknown company.  (Note: This phase usually takes a long time as companies will get mired in the build vs. buy phase while trying to band-aid a solution together.)  Finally, the entire niche solution is renamed and put into a new suite of products that give customers increased functionality without additional licensing costs; maintenance is another issue.

While wrap and roll won’t produce one hundred percent success rates, it can be effective in slowing down a hot market by forcing proof of concepts, competitive bake-offs, and request for proposals.  Wrap and roll also serves as a mechanism whereby the larger company attempts to commoditize a growing market while stymying disruptive start-up behavior by choking off vital revenue growth.  An additional consequence of these actions is increased consolidation within the niche as other large companies seek to fill product gaps.

How do you defeat wrap and roll?  Guts, determination, listen, disruption, and an incredible team.

  • Guts; to say no.  No to the naysayers, no to due diligence, no to the quick payout.
  • Determination; to win.  To find roads where there are roadblocks, to work harder and faster than the competition, to know that we are the best.
  • Listen; to your customers.  Build what they need, deliver what they want, and give them what they desire.
  • Disrupt; all areas.  Provide a revolutionary product, present the wow factor, and support the heck out of them.
  • Team; in perfect cadence.  There is nothing more wonderful than a company that marches in perfect cadence and executes across all areas (executives, engineering, marketing, sales, etc.) of the organization.

Here’s to the companies that have the guts to build teams that have the determination to listen to customers and disrupt markets.

Quick Alert: Cisco Ups the Ante, Buys Rohati

Cisco starts 2010 with a bang as they have acquired Rohati Systems for an undisclosed transaction.  Rohati will be a welcomed addition to the Nexus product line and adds considerable thought leadership to Cisco’s cloud computing initiative.  In fact, once Rohati’s TNS technology is incorporated into a Nexus blade, it has the potential to not only jump-start Nexus sales within the datacenter but also to impact Cisco’s UCS strategy. 

Interestingly enough, I have not seen a lot of hoopla regarding this acquisition; in fact most of the articles on the Internet simply mention that Rohati was acquired by Cisco.  However, when I learned of this acquisition, I could not help but to smile and applaud the M&A teams at Cisco.  Why?

Security remains one of the biggest challenges to cloud computing; public and private clouds.  The worries include; internal threats, external threats, data transmissions, user privileges, compliance, and more.  While firewalls and IDS/IDP systems are essential to securing the cloud, they don’t go far enough.  That’s where Rohati’s innovation of the Layer-7 Access Control List attempts to fill the void.

A layer-7 ACL?  The principal is quite ingenious as a Layer-7 ACL authorizes the entire transaction.  Taken from Rohati’s literature:

TNS Layer-7 ACLs are based on the XML Access Control Markup Language (XACML) that allows them to be written in plain English with the added benefit of being readable.  TNS is policy based, does not require agents, does not require reconfiguring applications (virtual or bare metal), does not require client changes, supports HA, and has centralized management capabilities including logging.

While I am unaware of Rohati’s success or failure as a stand-alone-company, Cisco has the market power to make their vision a reality.  Remember, cloud computing requires combining networking, servers, applications, storage, security, and management.  With this acquisition, Cisco is moving in the right direction and is signaling to their customers and competitors that they are serious about securing the cloud…your move HP.

Top Ten Things the “real” press writes or reports about that make me cringe

  1. Cloud Computing
    I’m waiting for either MythBusters or Penn & Teller: BS to do an episode on Cloud Computing.  It’s not that I don’t believe in Cloud Computing or that I am not working towards making it a reality, but the fact is Cloud Computing is in its infancy and has a long way to go.  Unifying servers, storage, networking, security, management, and applications is not going to happen overnight.  I’ll shout from the mountain tops when the big boy application vendors are on-board and management is not an afterthought.
  2. Google
    Perhaps my days at Inktomi have jaded me, but “Google” is not worthy of sainthood.  If only Google made laptops, monitors, TVs, coffee makers, chairs, windows, doors, cars, laundry machines, and more, my life would be better.  After-all, anything Google does is better than you.  When will we read about their true motives; gathering as much information about you so that they can make as much money as they can from you via the advertisers.
  3. iPhone Killers
    How many iPhone vs. X stories will I have to review this year?   The iPhone has three things going for it:  Apple, AT&T, and iTunes.  Apple is on a roll that mirrors what Microsoft did in the 80s, AT&T’s network (GSM is global), although maligned, is the only network that has a chance to handle the iPhone’s incredible amounts of data traffic, and iTunes is an incredible marketplace of movies, TV shows, podcasts, applications, and more.  Perhaps “It’s the Applications Stupid” but Apple is definitely winning this battle; VHS vs. Beta anyone (experienced) or Blue Ray vs. HD DVD (still seasoning)?
  4. Microsoft
    It seems that impartiality is thrown out the window when you write about Microsoft.  Perhaps more polarizing than any politician, either you love ‘em or hate ‘em; Why?  Is it that Gates made too much money or Ballmer sweats too much or Ray is nuts or who do they think they are earning top margins on their software or is it something else?   Maybe Microsoft should take a lesson from Apple and rename their development efforts and code lines into cutesy animals like Zebra, Panda, and Kuala Bear; who can hate a Kuala Bear?  Like it or not, if the US is going to be a technology leader in the next century, Microsoft is going to be a big part of it.
  5. Top Companies to Watch Lists
    Does anyone bother to check these lists for accuracy?  Does anyone ever talk to the employees?  Free food equals the best place to work?  I remember a time when getting on the Red Herring list was the kiss of death.  Oh, the marketers love these lists and share them with the world, but do they really mean anything?  Of course, I’ve known a few people that will fire off their resumes to these companies, just in case.  I’ll admit that I read them too, but it’s more like reading celebrity gossip; mindless entertainment and/or here today gone tomorrow.

Hey, that’s only 5; stay tuned…

MySQL AB: You made your bed now lie in it with Oracle.

It is very frustrating to watch Oracle’s acquisition of SUN make its way through regulatory approval as a small band of MySQL users are attempting to use the “squeaky wheel gets the grease” principal to disrupt the process.  This has led to over 14,000 MySQL users signing a petition to the EU opposing Oracle’s acquisition of SUN.

The ring leader of this effort is none other than the founder and creator of MySQL, Michael “Monty” Widenius.  Monty, and others, are deathly afraid that Oracle will effectively do one or more of the following; freeze development/bug fixes, change the current MySQL licensing, attempt to migrate MySQL customers to Oracle’s proprietary database, or ignore the community wishes and limit developers ability to improve MySQL’s capabilities that would lead to more direct competition with Oracle’s proprietary database.

As with any acquisition, the employees or in this case the community have legitimate reasons for concern.  Oracle is a development/engineering/marketing/sales machine that dominates the database industry.  Additionally, until Oracle closes this acquisition they have and will remain relatively quiet or ambiguous about SUN‘s (MySQL) future. 

Some users point to Oracle’s acquisition of Innobase as the primary reason for concern of MySQL’s future.   However, this acquisition took place in 2005 and was Oracle’s “warning shot” to MySQL.  Why?  Innobase was the creator of InnoDB that provides the underlying code for the InnoDB storage engine in MySQL.  In 2005, Oracle and many ISVs were unsure of the competitive threats derived from open source software products such as MySQL.  Leave it to Larry Ellison to find a way to defend his turf while sending a definitive message to the open source community.  Today, ISVs like Oracle have come-to-terms with open source software and strive to be active in both the proprietary and open source domains.

In the end, it’s hard to feel sorry for Monty and the other Executives of MySQL AB.  Lost in all these discussions and protests is the fact that MySQL AB sold out to SUN for a cool $1 Billion. MySQL had a choice; sell out or continue as an independent company.   MySQL AB could have raised capital, purchased Innobase, and continued building a world-class open source database.  Instead, altruistic intentions gave way to dollar bills.

The saga of MySQL serves as a reminder to all Open Source Software Projects and Communities that there is no free lunch; ultimately the software code and rights are owned by an individual or an entity.  The decisions made by these individuals or entities effect community members, contributors, and users on many levels; emotionally, financially, etc.  Today, I worry about many Open Source Projects that reside within SUN and other groups. 

MySQL AB made their bed, now lie in it with Oracle.

Cisco Lays Their Trap

I must admit that I had a good chuckle when I read the reports of Cisco’s financial analyst conference on Tuesday.  After all these years at the helm, it’s amazing to watch Chambers discuss subjects ranging from Flip to Cisco’s projected long-term growth rate.  However, it is clear to me that Chambers’ relishes dominating the next chapter in communications.

Cisco understands that fighting a two flank war against powerful advisories like HP and IBM is fraught with danger, could lead to slower adoption of their vision, and may yield lower than projected growth rates.  So what’s a company to do?  Divide and Conquer.  How?  You lay the trap.  HP had their chance and chose to go in a different direction; lost cause.  IBM had their chance and turned Cisco down but maybe they should reconsider; Venus Flytrap,

Lost Cause:  HP is determined and ready to take on Cisco head-to-head.  They have spent billions of dollars creating a software and services powerhouse while quietly making inroads within enterprise networking.  Additionally, HP has consumer brand recognition and acceptance which Cisco craves.  Finally, HP has Michael Hurd; a driven CEO who is ready and willing to lead this industry.  There is little Cisco can do here to sway HP’s momentum and vision.  Therefore, the best Cisco can hope for is to continue collecting purchase orders from the HP channel.

Venus Flytrap:  IBM has almost everything they need to take on Cisco but they have taken a more cautious approach than HP.  After-all, IBM has dominant research and development capabilities and are the fathers of autonomic computing.  IBM has always concentrated on high margin / high value products while tying everything together with their vaunted services division.  Perhaps IBM is in a quandary; while services, storage, virtualization, software, servers, mainframes, etc yield high margins, enterprise networking computing has become commoditized while datacenter networking equipment remains a question mark.  Cisco aims to help IBM with their quandary by offering a truce of sorts; work with us and we won’t go into storage or services! 

If you believe that, then I have some Ocean Front Property in Arizona to sell you.  Cisco has already chosen sides on the storage and virtualization fronts by aligning themselves with EMC and VMware.  A combination of Cisco and EMC would give them a foothold within those areas as well as security and management software; all of which would threaten IBM. 

Also, Chambers claims Cisco won’t be going the route of HP’s acquisition of EDS to buy their way into services.  In the short term this is a great strategy, in the long term they are going to buy someone like CSC, ACS, Unisys, or even McKesson (I’ll leave that to a future post).  Again, Cisco offered IBM an olive-branch of sorts in exchange for a tighter partnership that Cisco craved in beginning.

The million dollar question is; what will IBM do?  Does IBM continue to throw jabs at Cisco through their partnerships while Cisco throws power punches?  Does IBM acquire Juniper or Brocade to battle Cisco and HP?  Or, does IBM take a wait-and-see approach?

Personally, I’d like to know what the heck is going on at Dell and Oracle.  I’ll give Oracle a bit of a break as they battle the EU for control of Sun but Dell has got to wake up and fast.  They have a chance to crash this party by innovating and commoditizing the industry faster than everyone else can recoup their costs.  This sounds like when Michael Dell revolutionized the PC industry by introducing direct purchasing and just-in-time assembling. 

For now, Cisco has laid the trap and they await the fruits of their labor.  Once again, Chambers continues to impress as this is better than any reality TV series; brilliant.

Why Cisco needs Liquid Computing

It must feel a bit like being in the movie Groundhog Day over at Cisco as they continue to face increasing competition from both large and small challengers.  However, unlike the past, consolidation and the rise of the next generation datacenter (Cloud Computing) has dramatically raised the stakes.  Cisco cannot simply use their superior channel, army of certified engineers and sales people, partnerships, and market power to eliminate or marginalize the competition.  Further complicating matters is the delicate balance between companies that both cooperate and compete within the same market.

As Cisco marches forward with their Unified Computing strategy, they’ll need more than organic development and growth to unseat the likes of HP, IBM, Dell, and Sun.  I was highly disappointed with Cisco’s UCS B-Series Blade Servers as they weren’t as innovative or as tied into the Nexus products as I had hoped.  To that end, it is time for Cisco to shake up the server market with an acquisition (or two) of their own.

One such acquisition target is Liquid Computing headquartered in Ottawa, Ontario, Canada.  Liquid Computing has built a unified computing system called LiquidIQ that is made up of both hardware and software.  From a hardware perspective, Liquid Computing is innovative, dense, and creates a “datacenter in a rack”.  From a software perspective, Liquid Computing has created a central point for management with their LiquidView software including server, storage, and network configuration and management. 

With one brush of Cisco’s checkbook, they would instantly change the game and rock the IT industry.  An acquisition of Liquid Computing could be as important to Cisco as it was when they purchased Kalpana in 1994.  While Liquid Computing has been branded a “Visionary” in Gartner’s 2009 Magic Quadrant, an acquisition by Cisco would certainly elevate them into the Magic Quadrant (Upper Right-Hand Corner).

Imagine re-branding and integrating Liquid Computing with Cisco’s Nexus and Unified Computing product lines.  Virtually overnight, this new solution based on Liquid Computing would be injected into the Cisco machine and made available to customers worldwide.  Over time, Cisco would strengthen Liquid Computing’s ties to EMC and VMware, while injecting more and more core Nexus technology into the solution.

Cisco is on the cusp of not only redefining themselves but also an entire industry.  To complete this transformation, Cisco must bold and move out of their comfort zone.  The game has definitely changed as Cisco’s greatest competitive threats do not necessarily come from classic networking providers or start-ups such as Juniper, Brocade, or Riverbed; instead, it comes from the likes of HP, IBM, Dell, Huawei, and more. 

Instead of simply watching HP buy 3Com, Dell and IBM OEM Juniper equipment, Oracle buying Sun, and awaiting Huawei’s entrance into the U.S Market (possibly with the purchase of Motorola), Cisco must launch an offensive on the server vendors via a visionary acquisition. 

Could this visionary acquisition be Liquid Computing?  Perhaps Groundhog Day may be coming to an end.

Quick Alert: Score one for HP as they grab 3Com!

A tip of the cap to the management and M&A teams at HP, as they continue to acquire the necessary pieces to challenge Cisco’s core business.  With HP’s acquisition of 3Com for $2.7 billion, HP has gained a portfolio of modern architected networking products that span switching, routing, and network security.  Additionally, HP expanded access to overseas markets, including the ever expanding market in China, through 3Com’s H3C unit. 

While some will laugh at the reach and capabilities of 3Com, HP understands that 3Com’s products are solid, modern, and good-enough when put under the HP ProCurve brand and backed by the power of HP and their Services Division.  Furthermore, while Cisco continues to date the likes of EMC and VMware, HP is in full control of their destiny.  They have built a strong portfolio that spans storage, servers, virtualization, networking, security, applications, and management.

While Cisco isn’t going to be losing any sleep over this acquisition, they will take note of how aggressive HP is going to be to not only defend their own turf but also to expand into Cisco’s bread and butter.  However, IBM, Juniper, Brocade, and Dell may be tossing and turning tonight as they contemplate the future.  If IBM continues to wait to purchase the necessary pieces to compete with HP and Cisco, their choices will be limited.  If Dell does not shore up their portfolio, then they face the reality of falling further behind and severely limiting their growth potential.  Finally, both Juniper and Brocade must weigh the possibility that organic growth may not be possible as we are nearing a major inflection point for all of IT.

One quick note, don’t underestimate Huawei or ZTE as they are both hungry and flush with cash.  Additionally, Oracle remains a wildcard as they may jump into this race.

Cisco: Ask EMC to Marry You Already!

Cisco has unveiled their latest Unified Communications/Cloud Computing move by strengthening their relationship with VMware to develop new products and forming a new Joint Venture, Arcadia, with EMC, VMware, and Intel. In-other-words, Cisco is on a giant group date.

 Cisco has been dating EMC for many years as they resell EMC’s storage gear. In fact, Cisco purchased EMC some nice lake front property when they invested, and bet, heavily on VMware. Yesterday, Cisco and EMC decided to move-in-together by forming Arcadia. Meanwhile, Intel has decided to play chaperone for a while and make sure these two giants play nice.

Let’s face it; for Cisco to match/defend against rival HP’s one-stop-shop strategy they need to unravel the delicate cooperation/competition agreements with the likes of HP, IBM, and more. While HP has a formidable portfolio of hardware and software, Dell and IBM have beefed up agreements with the likes of Brocade and Juniper. Juniper may be in the enviable position of being courted by multiple companies but eventually they’ll have to tie-the-knot.

 The combination of Cisco and EMC would send shockwaves across the IT industry. Cisco would gain instant access and credibility to the storage, virtualization, and management worlds. However, the aftershocks would be just as powerful as HP, Dell, and IBM would surely take forceful and definitive actions.

What would you pay to be a fly-in-the-wall of a conference room with Chambers and Tucci? Or, better yet, to be in Ellison’s office when he read the news of the merger? Clearly, Oracle is becoming a wild card within the IT industry and they could really mess things up by acquiring BMC, Brocade, or even Juniper.

While JV’s, partnerships, and investments are cute, it’s time for a more serious relationship. Cisco needs to take advantage of this moment, pull out that ring in the safe, get down one knee, and ask EMC for its hand in marriage. In that moment the world would be holding its breath…yes or no.

IBM: It’s Gut Check Time

Whether large, medium, small, or start-up, there comes a time in the life of every company that shapes both the future of the company itself and the industry at large.  Today, the battle for the datacenter has sent shockwaves throughout the silos of networking, server, storage, and security.  As Cisco and HP have gone “all-in”, it is time for IBM to place its bet.

The stakes are incredibly high and there is little margin for error.  IBM can either purchase the necessary pieces to “unify” the datacenter and compete head-to-head with HP and Cisco, or they can continue to partner with the likes of Cisco, Juniper, etc. to provide a best-of-breed solution fueled by their own services business.  However, consolidation may prove to make the latter unsustainable and doing nothing may lead IBM on a precarious path.

Cisco understands the importance of IBM, HP, and others to their bottom line as both of these giants resell Cisco equipment to their customers.  However, Cisco continues to take steps to diversify their business model and they are one acquisition away from changing the equation.  What acquisition?  How about engineering a purchase of CSC, ACS, or the coup de grace Accenture?  Don’t laugh; ever envision a world without Lehman Brothers or Meryl Lynch?

HP is clearly positioning itself as the answer to Cisco’s dominance.  HP has or is prepared to acquire the missing pieces to reshape IT.  With their aggressive purchases of Mercury Interactive, Opsware, and EDS, HP has shown a keen sense of urgency, vision, and market awareness.  It is no wonder that HP is pondering additional networking acquisitions to strengthen their position within Ethernet switching and storage networking.

IBM too has taken steps to answer the unified computing challenge, but their approach has been through partnerships, research and development efforts, and OEM agreements.  With a fragmented industry, this approach made perfect sense.  However, as the industry continues to consolidate, IBM may find their most important OEMs or partners in the hands of their rivals.  One such example of this danger, is with the rumored “for sale” sign that now hangs above Brocade.  IBM recently signed an OEM agreement with Brocade for their network switches.  Would this agreement continue if Brocade is purchased by HP?

It is gut check time for IBM.  IBM has strong plays in services, applications, storage, servers, virtualization, and security with a glaring hole within networking.  Do they continue to fill this hole with Juniper, Brocade, Cisco, and more while accepting the risks associated with this strategy or do they fill it by making a strategic acquisition or two?

Perhaps an alternative strategy would be an even tighter relationship with Cisco.  However, as Cisco aggressively moves into IBM’s home turf (servers, virtualization, storage), this may be untenable.  After all, Cisco’s Chambers realizes the money is in services and eventually he will want a bigger piece of the services pie.

Does IBM want to lead, follow, or get out of the way?  Do they let their vision of autonomic computing slip through their fingertips?  Do they allow Oracle to become a one-stop-shop?  Do they watch while Cisco enters into the services business?  Do they allow HP to continue to grow and extend their reach and capabilities?  Or do they fight?  Do they purchase Brocade and Juniper?  Do they finally unify, via technology not marketing, networking, storage, servers, security?

In-the-end, these decisions will be made deep within IBM’s boardroom and are conditional on Samuel J. Palmisano’s, CEO and Chairman of the Board of IBM, vision for the company.  He’s already reshaped IBM’s software business with the purchase of Cognos and SPSS (pending), why not take a shot at redefining networking, datacenter, and cloud computing?

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