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Intel Begins Shipping Itanium 2
By Charles King
Intel announced this week that it has begun initial
commercial shipments of its Itanium 2 processors, and that Itanium 2-based systems
and software are expected to be available beginning this quarter. Itanium 2
processors will feature 1.5MB and 3MB of integrated L3 cache, and will be
available at 900MHz and 1GHz frequency speeds at prices ranging from $1,338
to $4,226. The new processors also provide advanced reliability features
including an advanced Machine Check Architecture for intelligent error
management and recovery. Additionally, the Itanium 2 is socket compatible
with two future generations of Itanium family processors, allowing them to be
easily swapped into existing Itanium 2-based systems. The Itanium 2 will be
supported by the Intel E8870 chipset (due this fall) which will support two-
to sixteen-processor systems using OEM custom switches. Later this year Intel
will offer an Itanium 2-based four-way, 4U building block platform for
enterprise and high performance computing environments. Intel announced that
the Itanium 2 will support operating systems including Microsoft Windows
Advanced Server and Windows XP 64-Bit Edition, HP-UX, and Linux from Red Hat,
Caldera, MSC, SuSE, and TurboLinux. In addition, HP plans to port its OpenVMS
and Non Stop Kernel to Itanium 2, and Microsoft plans to introduce versions
of Windows .NET Datacenter and Enterprise Server for the platform. Enterprise
software makers including BEA, i2, IBM, Oracle, Microsoft, SAP, SAS, and
Reuters are supporting the Itanium 2. In separate announcements, hardware
vendors including HP, IBM, SGI, Fujitsu, Unisys, NEC, and Bull announced
plans to deliver Itanium 2-based products.
Depending on one’s point of view, Intel’s delivery
of the Itanium 2 is a very big deal or no big deal at all. Surely from
Intel’s and its partners’ standpoints, the arrival of the Itanium 2 qualifies
as proof of Intel’s long range plans to compete in (if not dominate) the
enterprise and high end computing sectors. Those plans went a bit awry with
the first generation Itanium products, which sported unexpected performance
glitches that had many in the industry wondering whether Intel’s high-end
hopes were mere pipe dreams. Intel has released Itanium 2 benchmarking data
that, if proven accurate in real world computing applications, suggests the
company has put its house in order and is back on track. Even if those
results are optimistic, the Itanium 2’s spacious L3 cache, new reliability
features, and next generation socket compatibility suggest that Intel has
been listening seriously to its critics. Overall, we expect that the Itanium
2 will be greeted most warmly by Intel’s myriad OEM and software partners,
who have nearly as much riding on the new platform as Intel does. In
particular, HP’s serious commitment to Itanium family is certified by its
aggressive rollout of new Itanium 2-based workstations and servers, and
solidified migration plans for its high-end OpenVMS and Non Stop products.
That said, will Intel’s Itanium-based ventures in
high-end computing be a mere stroll in the park? Not if Sun Microsystems has
anything to say (or do) about it. As the lone hardware vendor without an Itanium
strategy in place, Sun has as much to lose from the success of the Itanium 2
as Intel has to gain. In fact, the benchmarking data released in support of
the Itanium 2 focused almost exclusively on comparisons with UltraSPARC III
performance, making it obvious that Intel sees Sun in its crosshairs. Given
that and Sun’s reputation as a less-than-shrinking violet, the company’s
response to Itanium 2 is likely to be aggressive and forthright. We expect
Sun to cast aspersions on the Itanium 2 by highlighting disappointment around
the first generation Itanium processors, and to focus on its own lengthier
high-end computing experience and the performance of its high-end RISC-based
processors, ignoring the heritage in high end computing enjoyed by many of Intel’s
OEM partners. Is this fair? Not especially, but what is in life and business?
Overall, we see the Itanium 2 representing an incremental step in Intel’s
greater company and product plans, which at one level resembles a tortoise
and hare competition (with itself cast as the hard-shelled contestant). If
Intel succeeds at bringing business customers to the new and upcoming
generations of Itanium, it (and its partners) could eventually squeeze Sun at
the lower end of the enterprise market, gradually pressing the company into a
smaller, tighter, and ultimately less profitable corner of high end
computing. That is why the rhetoric around the Itanium 2 has been so heated,
and why we expect the coming battle to be a doozy.
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Not All Dotcoms Lose Money: McAfee.com
Announces Q2 2002 Earnings
By Clay Ryder
McAfee.com has announced its results for Q2 2002.
Revenue for the quarter was $20.7 million, up 10% over first quarter revenues
of $18.8 million, and up 44% from the same period a year ago. Pro-forma net income
for the quarter, excluding the amortization of intangibles and charges
related to the tender offer from NAI, was $4.7 million or $6.4 million
including such charges. The company indicated that total unique paid
subscribers and total active paid subscriptions through McAfee.com and its
Global Affiliates have surpassed 1.73 million and 2 million respectively and
that it gained 155,000 net new subscribers during the quarter. The average
sale per subscriber increased to $33 and the ratio of total subscription
services to total subscribers increased to approximately 1.21. McAfee also
stated that its McAfee.com Security Center, launched in April, was very
successful in converting trials to paid subscribers and that its managed
security services for the SME market, McAfee.com for Business, showed a 25%
increase in the number of customers. Additionally, the company highlighted a
new marketing and services agreement with AOL, an OEM agreement with
e-Machines to pre-load trial versions of anti-virus and firewall protection
on consumer PCs, and its plans for the next generation of Web-based security
services (dubbed Grid Security Services) as significant achievements during
the quarter.
During the last few months, more than a few drops of
ink have been spilled about McAfee.com, some of it good, some of it bad, and
some of it sideways. While the on-again/off-again offer from NAI to buy out
the remainder of McAfee.com undoubtedly continues to be a distraction, it is
clear that some good fortune has been bestowed upon the company’s revenues,
margins, and customer base. The second quarter represents a significant
turnaround in McAfee.com’s profitability, but it also illustrates that this
profitability was achieved through growth in the customer base as well as
growth in revenue per customer. In these dizzying times where cost cutting
(as opposed to the unrealistic growth mantra of a few years back) is too
often seen as the path to financial salvation, it is encouraging to see a
dotcom business grow profitability.
So why is McAfee.com facing success now? Perhaps it
has to do with achieving the critical mass necessary to offset the fixed cost
of doing business, or more directly, having more customers who buy more
products while also spending more each time. Additionally, the market appears
to be responding positively to the company’s vision. Virus, spam, content
filtering, correct firewall, and application configuration are all dynamic
issues that require continuous updating to be effective. Gone are the times
where updating prophylactic software every six months or updating virus
definitions every two weeks is sufficient for protecting computing resources.
Today’s online environment demands a proactive, continuously updated solution
that provides dynamic monitoring and protection of a computer’s
configuration, security software, and network connectivity. This cannot be
achieved through the shrink-wrapped-only approach, but requires leveraging
Internet connectivity to notify and update desktop security. Perhaps most
interesting of McAfee.com’s efforts is the company’s Grid Security Services,
a reflection on the potential future composition of network computing
morphing into commercial, non-commercial, and ad hoc GRIDs. Such an enormous
many-to-many network relationship is sharply different from today’s Internet,
and could provide numerous services and capabilities to end users and
businesses alike, while at the same time demanding integrated safety,
security, and monitoring. The need for neighborhood watch programs for these GRIDs
will be paramount, and perhaps this is exactly what Grid Security Services
will target. No matter what the future might hold, McAfee.com has
demonstrated a working, profitable dotcom business — something to be proud of
at any time, but especially today.
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Nokia and IBM: Music to Whose Ears?
By Jim Balderston
IBM and Nokia have announced an agreement to offer
digital content delivery to mobile devices, including cell phones. Under the
planned agreement, the two companies will work to provide wireless service
providers with the ability to offer content management and delivery to cell
phones, including, initially, polyphonic ring tones and Java games for
wireless devices. The two companies will combine the features of the Nokia
Delivery Server with IBM’s Digital Media Factory framework. IBM will license
Nokia’s Delivery Server which will become part of the Digital Media Factory
offering. As part of the agreement, the two companies will work together
within the Open Mobile Alliance to create standards for Digital Rights
Management (DRM) to protect what the two companies called “higher value
content.” The goal of the agreement, according to the briefing provided by
the companies, is to provide a “trusted media delivery platform” so that
content owners will “release higher value content.” The announcement and
briefing set no timetable for delivery of this new offering.
While details of an actual rollout plan were
non-existent in this announcement, we can’t help but see some intriguing
possibilities and challenges to the idea of providing “high value content” to
cell phones. IBM and Nokia did present some market forecasts for the growth
of new mobile services — but for Europe only. And that makes sense when one
considers that European wireless networks have adopted G3 technology for
their phone systems, offering a uniform and largely standard environment
through which to deliver more and richer content to wireless devices. Such is
not the case in the U.S. We believe that wireless content delivery services
will be well-established in Europe before they make real headway in the
United States. And what would these services consist of? While not coming out
and saying exactly so, Nokia and IBM clearly have their sights set on
offering the entertainment industry a means to delivery content securely to
handheld wireless devices including cell phones now and future, yet to be
announced wireless devices, using their networks.
In this we hear IBM and Nokia saying to the content
owners: we will do the heavy lifting in building out this infrastructure that
you will require before letting your copyrighted content out the door. And
the entertainment industry should be taking note, and perhaps at some point
even saying “thank-you.” When such capabilities are available the music and
movie industries have a unique opportunity to offer their content to a market
of consumption-specific devices. In other words, a song delivered to a cell
phone is much more analogous to delivering to a phonograph. It cannot be
copied, burned, or transferred. While the entertainment industry has a broad
range of challenges in dealing with the issues surrounding digital content
and computers (due in large part to the incumbent technologies), this market
offers a glimpse of the past where content was delivered — and stayed with
individual consumers. That should be
music to the industry’s ears indeed.
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EMC/Accenture Introduce Information
Solutions Consulting
By Charles King
EMC and Accenture have announced the formation of the
Information Solutions Consulting group, a new EMC business unit that will
offer enterprises platform-independent storage management services. According
to EMC, the new group will provide strategic consulting services that will
help customers streamline business processes, gain efficiencies, and better
leverage all their heterogeneous storage resources. The new services which
include storage infrastructure strategy, storage management optimization, and
business continuity planning, will be developed through an exclusive, five
year “business transformation outsourcing” agreement between EMC and
Accenture. The Information Solutions Consulting group will be under the
direction of EMC’s Global Services organization, with Accenture providing
consulting delivery and management expertise. Both companies will assign
skilled resources to the new group, whose services will be offered separately
from EMC’s professional services organizations which focuses on EMC-specific
solutions.
The key to understanding what the new Information
Solutions Consulting group is up to is to understand what it apparently is
not. The unspoken purpose of most IT vendors’ global services organizations
is to provide support for the company’s sales efforts. This is not
necessarily a bad thing (though a few pontifical vendors suggest otherwise).
Global service professionals’ expertise regarding their companies’ products
can be a valuable resource for customers, especially those who have deployed
complex enterprise systems. It is also natural that when new products are
needed that service professionals will recommend the solutions they know
best. But that approach can shortchange customers by shoehorning specific
business needs into often not especially well-fitting solutions.
Additionally, the data storage business has lately grown to be a highly
complicated place. Due to a plethora of vendor solutions and ongoing customer
consolidation, a homogenous enterprise data storage environment is a largely
fictional exception rather than the heterogeneous rule. As a result, most
every storage vendor on the planet has (at least tacitly) embraced the notion
of heterogeneous storage. But with industry standardization efforts moving
glacially, and both vendors and their customers squeezed by tough economic times,
actual support for heterogeneous storage is spotty, at best.
That is precisely why the new EMC/Accenture effort
is so provocative. First, by formally separating the Information Solutions
Consulting group from its regular Global Services organization, EMC is
constructing a philosophical barrier between the group and more EMC-centric
sales efforts. Teaming with a trusted, agnostic business consultant like
Accenture should add credence to that separation, and could also offer EMC
new focus and methodologies for the way it pursues consulting efforts. The
exclusivity of the agreement allows both companies to pursue conventional
efforts with other partners while testing and perhaps mastering these newer
waters. What is most interesting about the new venture is its focus on
business processes rather than storage hardware and software. By taking a
higher view of business requirements, EMC and Accenture can also claim to
take a higher road in the way they satisfy their customers’ needs. Overall,
we believe the new Information Consulting Services group could provide new
opportunities to both EMC and Accenture, and should offer their clients some
relief from business as usual consulting practices.
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Making Money on the Internet? UMG Says
“Yes!”
By Jim Balderston
Universal Music announced it would begin offering
for download tracks and albums from its catalogue of older music. Much of the
nearly 1,000 albums to be placed on UMG’s online subsidiary EMusic.com date
back to the 1950s, ’60s, and ’70s. UMG has termed the proposal a “consumer
trial program,” and claims that its EMusic service now has more than 225,000
tracks available for download. Not only will subscribers be able to download
the music, they will be able to burn the MP3 files on to CDs or play them on
MP3 players. EMusic charges between $10 and $15 per month in subscription
fees, and claims 50,000 plus members. UMG said it had no plans to offer more
current music on the site and reserved the right to cancel this trial
program.
Most of the news surrounding the music industry and
the Internet has been fairly depressing, in the sense that industry behavior
seemed to be rear guard actions borne of denial and designed to impede the
inevitable. While the music industry hasn’t completely dropped many of its
ideas on policing the Internet, it is good to see signs that major players in
the entertainment industry are at least starting to experiment with new
business models.
We don’t expect to see UMG or any of the other big
media companies pushing out new releases onto the Internet anytime soon. But
we do think the idea of offering older items from their catalogues makes a
great deal of sense, especially for the music industry itself. While these
selections have passed their peak, providing virtually no new revenue to the
record label, they are still desired for nostalgic reasons by a whole
generation of geezers who associate them with fond memories and the
exuberance of youth. For many, this will be an opportunity to reacquire their
favorite tunes in a new contemporary format and avoid the duplication
expenses they incurred with the advent of the CD. In other words, there is a
market for this stuff. What we see as being most hopeful here for the music
industry is the recognition that old catalogue items need not be locked up in
a vault — or in a plastic CD — to be of value. Here, with a
minimum of incremental cost, UMG may actually be creating new revenues
through the Internet. How cool is that?
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