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TBR Weekly Preview: March 18-22

In addition to this week’s vendor analysis, TBR Senior Analyst John Caucis will host a webinar Wednesday, March 20, sharing his insights on the state of the healthcare IT services market and the 2019 HIMSS mega-event. 

Furthermore, TBR analysts will be attending several events this week, so be on the lookout for special reports on Accenture, SAP and Oracle as early as next week.

Monday

  • Despite its top-tier innovation and optimistic messaging, Oracle struggles to find incremental growth outside its cloud ERP portfolio. While traction around autonomous database builds, these ERP inroads present an opportunity for Oracle to more effectively craft a story across its integrated cloud applications and platform capabilities. TBR’s initial findings can be accessed today, but read more on the subject in our 1Q19 Oracle Cloud full report publishing in April. (Meaghan McGrath leads TBR’s analysis of Oracle.)

Wednesday

  • HP Inc. delivered corporate growth of 1.3% year-to-year, a significant slowdown after five quarters of double-digit growth. During the company’s 4Q18 earnings call, executives discussed challenges within HP Inc.’s profitable print supplies business, but slowed growth in its commercial printing and overall PC businesses indicates the problem is broader. Slowing consolidation opportunities and rising opposition from its peers in the PC market will increasingly challenge HP Inc., whose PC business composes most of its top line. In addition, the CPU shortage has been more impactful to HP Inc.’s wider portfolio. Read our full report to find how HP Inc. will navigate these challenges throughout 2019, including growing its Device as a Service portfolio and supporting its sales channels to build a bulwark for upcoming PC share wars. (See Dan Callahan for more analysis.)

Thursday

  • According to TBR estimates, Dell Technologies achieved $23.8 billion in revenue, up 8.6% year-to-year in 4Q18. Gross profit increased 20.7% year-to-year, highlighting Dell Technologies’ successful improvement in overall profitability. In TBR’s 4Q18 full report on the company, we will dive into the performance of key business units. Within Infrastructure Solutions Group (ISG), TBR believes aggressive market share expansion in both servers and storage will be a key focus for at least the first half of 2019, which will result in investments in direct sales, ISG’s channel partner program and portfolio enhancements. In Client Solutions Group, Dell Technologies will continue to benefit from shrinking memory prices as well as the CPU shortages, which will drive profitability up during 2019. From a corporate perspective, 2019 will see tightened integration between the vendor’s strategically aligned companies. (See Stephanie Long for more analysis.)
  • In this quarter’s analysis of Dell EMC Services, TBR will highlight how Dell Technologies integrating preconfigured services solutions around core infrastructure technology competencies enables Dell EMC Services to attach profitable and recurring services revenue streams. (Kevin Collupy leads TBR’s analysis of Dell EMC Services.)
  • In 4Q18 Hewlett Packard Enterprise (HPE) reported corporate revenue of $7.6 billion, down 1.6% year-to-year. TBR estimates total cloud revenue reached $1.9 billion, up 3.1% year-to-year, as HPE continued to invest in its cloud portfolio and capitalize on customer demand for hybrid IT solutions. HPE’s leaner business and ongoing restructuring efforts through HPE Next allow HPE Cloud to focus on and invest further in its core areas of strength, namely hybrid infrastructure and edge computing for IoT and telecommunications use cases. (Cassandra Mooshian leads TBR’s coverage of HPE Cloud.)
  • VMware’s top-line growth continues to outpace that of its software peers in TBR’s Infrastructure Management Software Vendor Benchmark. In 4Q18 VMware experienced its strongest quarter since 3Q14, with revenue growth of 16.4% year-to-year to $2.6. Revenue growth was buoyed by strong adoption across VMware’s emerging product lines, with vSAN revenue growing 60% year-to-year and Hybrid Cloud and SaaS revenue growing 35% in the same time period. Further, the company is successfully packaging solutions around hybrid management to increase deal sizes and reported a company-record 23 deals in excess of $10 million during the quarter. (Cassandra Mooshian leads TBR’s coverage of VMware.)
  • Huawei is taking a prominent role in setting standards for 5G and launching solutions to help operators implement 5G services, which has led to key early commercial 5G-related contracts in EMEA and APAC. While security concerns around 5G will persist, Huawei will continue to grow revenue in 2019 largely due to its Consumer and Enterprise business units, which are taking share from incumbents.(Michael Soper leads TBR’s coverage of Huawei.)

Friday

  • According to TBR’s 1Q19 Telecom IoT Market Landscape, TBR estimates global communication service provider (CSP) IoT revenue rose 25.6% year-to-year to $22.3 billion in 2018. Despite sustaining strong revenue growth, TBR estimates global CSP IoT revenue accounted for only 1% of consolidated global CSP revenue in 2018, which is insufficient for most service providers to offset erosion within challenged segments such as legacy network services. To maximize IoT revenue opportunities long term, CSPs are focusing on attracting customers by implementing more cost-efficient network technologies such as NB-IoT and LTE-M, targeting high-value contracts in areas such as smart cities and healthcare, and by positioning to support next-generation IoT solutions integrating technologies such as 5G and edge computing. (Steve Vachon is TBR’s lead analyst covering the Telecom IoT space.)

Dell EMC Services enables clients’ transformation to modern IT infrastructure environments

Dell Technologies’ core competencies remain rooted in products and infrastructure

The keynote sessions began with a Dell Technologies Capital update by Scott Darling, president of the venture arm. This group manages investments for all of Dell Technologies’ strategic business units, including Boomi, VMware, RSA, Secureworks, Virtustream, Dell EMC and Dell. Dell Technologies Capital has spent over $100 million in investments to broaden the company’s innovation ecosystem, taking various levels of financial positions in over 90 companies over the past six years. We believe Dell Technologies’ strategy of using this venture capital structure to spur innovation and gain access to creative new technologies across the startup community will play a critical role in the expansion of its strong market position as a key infrastructure provider enabling IT modernization.

Chairman and CEO Michael Dell also spoke at the event, discussing the topic of unlocking the power of data. He talked about how the company stores and protects more data than any competitor, and has the market opportunities to enable clients to extract value from data, from the edge to the core to the cloud. The presentation transitioned into a keynote by CTO John Roese that outlined six key areas of innovation that Dell Technologies will focus on to capture market share: powerful accelerated compute, high-performance data storage and protection, software-defined infrastructure, multicloud operating models, compute and analytics at the edge, and data mobility. The company will continue to invest in these six areas to make data and applications agile and adaptable to the large advances made in data generation through modern technology, and we believe this aligns nicely with the company’s overall goal of being the supplier of essential infrastructure across the globe.

 

The two-day summit began with a full day of keynotes spanning Dell Technologies’ (NYSE: DVMT) various lines of businesses and capabilities. The second day consisted of track sessions on infrastructure, client solutions, Internet of Things (IoT) and business innovations, including one-on-one discussions and small group meetings.