InformationWeek

September 25, 2000

IT Confidential
By John Soat

John Soat Give credit where credit is due. Last week, Hewlett-Packard added the title of chairman of the board to president and CEO Carly Fiorina's business card, calling it "a strong vote of confidence in Carly's leadership and the direction she has set for the company over the past 14 months." Certainly, the feedback about the company at the recent rollout of HP's high-end server, Superdome, was very positive, both from HP's customers and from employees. For instance, Jim Jackson, a marketing manager in HP's workgroup information management division, has noticed a telling reversal in talent flow since the Lew Platt days. "People who left the company on their own are coming back," Jackson says.

Despite the recent fluctuations in the application service provider market, most analyst firms are still bullish on that sector's prospects. But some are more bullish than others. Most bullish is Dataquest, which predicts the ASP market will grow from $3.6 billion this year to more than $25 billion in 2004. InfoTech Trends last week released figures predicting the market will grow at about 74% annually during the next four years, from about $1 billion this year to $9.1 billion in 2004. IDC is the most conservative, predicting ASP revenue will reach $2 billion this year but grow to only about $7.8 billion in 2004.

Sun Microsystems' acquisition last week of low-end Linux server vendor Cobalt Networks for an overvalued $2 billion was a shot in the arm to sagging Linux securities, which had been sledding downward since the beginning of the year. It also raises the question of who might be in line for a takeover by the likes of Dell or IBM. An obvious candidate is VA Linux Systems, a server vendor whose stock has been trading around $45. A spokeswoman for the company wouldn't comment.

Speaking of Sun, whatever happened to the idea of its operating system, Solaris, as a free, open-source product--something Sun talked about when it introduced the most-recent version last winter? Simon Phipps, chief evangelist for Sun software products and platforms, says Sun is committed to making all its software open source, including Solaris. But Solaris won't be free until Sun untangles the 260 software licenses tied to the system. Over the years, Sun has licensed or acquired software for Solaris, but not with the idea of offering the product for free. Sun is negotiating with several vendors in an attempt to rewrite the licenses. When that's completed--and Phipps couldn't predict when that would be--Sun will be able to offer Solaris for free.

A element of Microsoft's Enterprise Day this week will be a joint project by Hitachi, McData, and Microsoft combining Exchange servers with Hitachi storage and McData network switches to create an Exchange-based storage area network. "Companies are disappointed with Exchange because it crashes a lot," says a source with knowledge of the deal. "Hitachi builds storage that doesn't break. McData builds switches that don't break." This kind of capability was supposed to be a future offering for Exchange, says the source, but "with this partnership, the system is available now."

Technology companies may be hurting, but you wouldn't know it from their advertising budgets. IBM this week will kick off a $25 million campaign highlighting its B-to-B systems and services. Last week, SAP introduced a $100-million-plus campaign promoting its E-business solutions. Also last week, Unisys tapped Grey Worldwide to handle its $20-million-plus advertising budget, having severed ties last spring with its longstanding ad firm, Bozell. And Monster.com has signed on for four 30-second advertising spots during January's Super Bowl, to the tune of almost $4 million.

All of it is money well spent, as far as I'm concerned. Commercials are the best thing on TV--especially during the Super Bowl. Hand off an industry tip to jsoat@cmp.com or phone 516-562-5326 or fax 516-562-5036.

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