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IT Channel News Briefs, May 23

Today's headlines: HP passes IBM in servers. BI spending rises. Networking and security attack DLP.

News for the week of May 19-23, 2008 -- in brief, updated daily, on topics important to the information technology (IT) channel.

Gartner: HP passes IBM in server share

Hewlett-Packard Co. has surpassed rival IBM as the tops in server shipments, according to Gartner. HP server sales for the first quarter hit the $4 billion mark, for a near 30% share of overall spending on server hardware. Gartner said HP's Proliant and Integrity lines surged, making up for slipping sales of other HP server lines. IBM fell to second place with revenue of $3.9 billion, or a 28.9% share of server spending. That is a slight dip from the year-ago figure.

Rounding out the top three, Dell's server shipments rose 15% for the first quarter of 2008 with revenue rising about 6% to $1.6 billion. In a report released yesterday, Gartner said total server shipments increased 7.6% from last year, with total revenue rising 4.3% to $13.6 billion. Part of that growth was attributed to the build-out of massive data centers.

BI spending on the upswing

Spending on business intelligence (BI) and performance management (PM) technologies and services will reach $57.1 billion worldwide in 2008, according to a new survey by AMR Research, reported Thursday.

In the U.S., BI and PM spending is expected to increase by 4.2% over last year, to $24.7 billion, thanks in part to increased demand for external consulting services. Expenditures on analytic infrastructure technologies -- including data warehouses and data marts -- will also enjoy significant growth in 2008.

The report, which surveyed 400 IT and business professionals across numerous industries in the U.S., China, France, Germany and the U.K., also showed that spending on external BI and PM consulting, including outsourced services, will exceed $20 billion in 2008. Consulting is expected to rebound from its relatively weak showing in 2007, when more companies hired internally to meet BI and PM needs.

Networking and security must team for DLP

Security and networking teams can't work separately anymore as enterprises focus more on data loss prevention (DLP), reported yesterday. The networking team must play a role in determining safety measures, including deep packet inspection (DPI). The three most likely points for data leakage are data in motion, data at rest and data in use, according to Rich Mogull, principal and founder of security consulting practice Securosis Inc.

Data in motion is the area most likely to affect networking folks, according to Mogull. Over the past few years, viruses and black hat hackers have taken a backseat to internal threats: 28% of surveyed networking decision makers recently responded that data leakage was the primary threat, compared with only 14% who marked external threats as their biggest concern, according to a recent survey.

Thursday, May 22 profits rise profits beat analyst expectations for its fiscal quarter ending April 30. Net income for the Software as a Service (SaaS) pioneer was $9.56 million, or 8 cents a share, compared with $730,000, or 1 cent a share, for the year-ago period. Analysts had expected earnings of 7 cents per share.

Revenue rose 52% to $247.6 million, and gross margins climbed to 79.3% from 75.9%. The customer base grew 6% to about 43,600. For the current quarter, the company expects to make 7 cents to 8 cents on revenue of $258 million to $259 million, and analysts expect earnings of 8 cents on revenue of $251 million.'s stock closed yesterday at $62.66 per share.

Red Hat, Novell update their enterprise Linux distros

Red Hat Inc. and Novell Inc. have released upgrades to their respective enterprise Linux operating systems. Red Hat Enterprise Linux 5.2 adds security features, better hardware support and enhanced virtualization support for servers with up to 64 CPUs. Not to be outdone, Novell released Service Pack 2 for SUSE Linux Enterprise 10 (SLE), which features improved support for virtualization based on Citrix Systems' Xen. In the spirit of Novell's special relationship with Microsoft, Novell says that SLE is fully compatible with Microsoft's Hyper-V hypervisor.

Meanwhile, the war between Red Hat and Novell in the enterprise Linux space is heating up again, with Novell announcing price cuts for SUSE Linux Enterprise for mainframes. Some analysts interpret Novell's move as an attempt to prevent Red Hat Enterprise Linux from further eroding Novell's share of the mainframe market.

Virtualization 'savings' go to hardware upgrades

There's a catch to virtualization's promised cost savings, according to our sister site Users often have to spend those savings on hardware upgrades. Analysts and admins say those upgrades include additional memory, virtualization-specific CPUs and even new servers. Spending that money can be "a hard pill to swallow" for businesses that had expected to save money, according to the story. The news means that IT solution providers should be up-front with customers about the true cost of a virtualization deployment.

Orange Business offers Cisco telepresence

Orange Business Services -- part of France Telecom -- will offer telepresence using Cisco platforms, according to

Orange, which has an extensive global network, will offer operational support, as well as professional services and complete room management, sometimes called concierge service. The company will also provide what it calls "optimized network service."

BT and AT&T have also partnered with Cisco on telepresence, offering vast network access that enables companies to communicate across borders. For a long time, telepresence was only used within companies. But these partnerships give Cisco's telepresence offering a huge leg up in the hotly competitive market, because network access is a big piece of the telepresence puzzle.

Wireless broadband company expands partner channel

Wireless IP broadband company Tropos Networks unveiled a new partner program at the company's first European partner summit held yesterday in conjunction with Wireless '08.

The emphasis of the program -- called the Troposphere Partner Network Program -- will be on the development and marketing of infrastructure for public safety, video security and automatic meter reading for municipal and industrial enterprises among other uses for mesh networks.

The program also seeks to combine value-added resellers (VARs) and solutions providers, which were previously under different umbrellas. The new approach is meant to make it easier for companies that offer just equipment and those that offer applications and services to more easily work together. Tropos is selling completely through the channel and is expanding its recruitment of systems integrators (SIs), VARs and distributors.

Avnet taps new president

Avnet Technology Solutions promoted Jeff Bawol to president. Bawol had headed the company's fast-growing enterprise software and storage solutions group. He has 30 years of experience in the industry, starting with Avnet in 1977 as a customer service rep. Bawol steps into a position held by Fred Cuen, who left the company last week.

Wednesday, May 21

SAP wants VARs with skills

SAP is spending $545 million as part of a new University Alliances program to train students at 4,000 colleges and universities in the skills needed to support SAP deployments, according to There's an acute shortage of service providers and corporate IT staff with SAP NetWeaver BI and XI skills, among others, and the 30th quarterly IT pay index by Foote Partners finds that companies still prefer skills and experience over certifications.

Those who have key SAP skills are commanding ever-higher prices, which is good news for those service providers but bad news for companies planning SAP deployments. SAP estimates that it will need at least 30,000 new SAP-savvy IT professionals in the coming years to avoid losing ground to rivals.

Survey: Telecom carriers profit more from channel sales

A new PHONE+/BLUEROADS survey of telecommunications vendors, mostly carriers, finds that half derive 80% of their sales through the channel, even though most of the vendors consider channel sales a lower priority than direct sales. Paradoxically, 75% of the vendors agreed that channel sales are at least as effective as direct sales. The survey results suggest that telecommunications vendors that use the channel wisely will optimize business opportunities and boost revenues.

Microsoft to pay customers who buy using Live Search

Microsoft is about to launch Live Search Cash Back, which, as the name implies, will pay users if they buy something found with Microsoft Live Search, according to This latest attempt to wrest Web search traffic from Google is based on Microsoft's buyout of Jellyfish last September. It also relies on a partnership with eBay's PayPal unit.

Cisco denies participating in Chinese censorship

During a Senate hearing yesterday, Cisco Systems denied allegations by human rights groups that it aided the Chinese government in censoring Internet content, according to reports. Yahoo and Google have been questioned in previous hearings, but Tuesday the heat fell mostly on Cisco, which was accused of helping China build a "great firewall" to prevent citizens from viewing antigovernment content and other Internet fare.

Cisco's general counsel Mark Chandler said that Cisco sells the same equipment worldwide and didn't customize anything to enable censorship. The company's routers and switches include basic security features that protect networks from viruses and service interruptions, Chandler said.

After the hearings, Chandler posted the following on his Cisco blog:

"As a company that supports open communication, Cisco is proud of the role it has played in bringing the benefits of Internet technology to people of all nations."

Arastra launches partner program for 10 Gigabit Ethernet equipment

Arastra, the networking startup that enables 10 Gigabit Ethernet in the data center, launched its A-List Partner Program Tuesday. The two-level program offers different degrees of certification and support, while also recognizing existing investments and industry certifications. Both levels require a face-to-face selling model and allow for no online retailing, which can set "street-price expectations." The Arastra Partner Program also includes on-line certification training, additional discounts off demo equipment and profitability protection.

Tuesday, May 20

Microsoft eyes Yahoo search, Asian assets

Microsoft's latest Yahoo plan is to buy the company's search business and Asian operations, Reuters reported early this morning. Citing an unnamed source, Reuters reported that Microsoft wants to acquire a minority stake in Yahoo, the number two in search and online advertising behind Google. Neither company commented for that story.

Yahoo's Asian assets -- including significant minority stakes in Yahoo Japan and China's Alibaba Group -- would be sold, and Microsoft would also take a share of what remained of the company. No dollar amount was given. Such a pitch clearly targets Yahoo's joint work with Google.

Microsoft reopened talks with Yahoo on Sunday.

Dell CFO resigns, successor named

Dell announced yesterday that chief financial officer Don Carty has resigned effective June 13. Brian Gladden, who joins Dell today as a senior vice president, will become CFO after Carty's departure. Gladden comes to Dell from SABIC Innovative Plastics Holding BV (formerly GE Plastics), where he was president and CEO.

VeriSign to reissue SSL certificates for free

Standing firmly on the side of the angels, VeriSign will reissue free SSL certificates to customers who believe those certificates have been compromised by an OpenSSL flaw in Debian-based Linux distributions. Earlier this month, a security expert discovered that the random number generator in certain Debian-packaged versions of OpenSSL is flawed, therefore making the cryptographic keys it issues predictable.

The flaw affects all versions of Debian's OpenSSL package issued since September 2006. Debian is urging all its users to update their OpenSSL package immediately and then re-create all cryptographic keys from scratch. Security experts don't have a firm grasp on the extent of the problems caused by the OpenSSL package vulnerability, though Debian notes that the flaw only affects users of Debian-based Linux distributions unless keys generated by Debian's OpenSSL package are used in those other distributions.

Cisco floats 8 Gbps blades

Cisco Systems will demonstrate 8 Gbps blades for its Fibre Channel directors at EMC World next week and will likely make them available in the fourth quarter, reported today.

Cisco will offer cards that support 8 Gbps for its MDS 9513, MDS 9509 and MDS 9506 chassis, with Fibre Channel over Ethernet (FCoE) blades to follow. Although Cisco has been at the FCoE forefront, it trails rival Brocade Communications in 8 Gbps products. Brocade began shipping DCX Backbone and 4800 directors with 8 Gbps in January.

Deepak Munjal, Cisco's manager of data center marketing, said he expects Cisco's OEM storage system partners to begin shipping the 8 Gbps cards by year's end, although some OEMs probably won't qualify the cards until 2009. That means that Brocade would have an advantage of more than a year selling 8 Gbps directors through some of the major storage vendors.

Oracle plans massive data center in Utah

Oracle is stoking the data center arms race with plans for a new Global Information Technology facility in West Jordan, Utah.

Construction on a 200,000-square-foot, $285 million facility will start this summer and is expected to be done by early 2010. Microsoft, Google, Yahoo and other tech giants have been on a building binge lately, constructing massive computing facilities, usually near low-cost power sources. The work has been spurred by the anticipated growth in "cloud computing," in which tech vendors offload computing and storage loads from customers.

Blue Coat pours on the partner perks

Wide area network (WAN) application delivery vendor Blue Coat Systems unveiled a beefed-up channel program meant to strengthen sales and improve margins for partners. Enhancements include the BlueBox Evaluation Program, which will support partners in evaluating customers' existing technology to determine opportunities for sale of Blue Coat products, as well as the ability to re-create specific customer environments to test prospective designs.

Partners will also be able to offer technical support services for customers through the BlueTouch Support Partner Program, and they will receive price reductions and rebates on Blue Coat services. The company has also changed its pricing to offer discounts to facilitate global deployments.

Blue Coat is also initiating a Virtual Marketing Agency that will provide partners with marketing advice and solutions at no cost for implementing partner-branded Blue Coat campaigns. The company is offering educational and marketing tools to train partners as well.

Monday, May 19

iPhone reaps major profits for AT&T

Nearly half of all iPhone users left their carriers to join AT&T for access to the device -- and these users represent almost complete profit to the telecom giant, according to a Rubicon Consulting survey reported in The New York Times today. Rubicon surveyed 460 iPhone users and found that the average user was paying $19 more in phone bills than before.

Rubicon principal Michael Mace concluded that those users represented mostly profit for AT&T, because the company did not have to build new infrastructure to take on the throngs of new iPhone users. The survey also found that 36% of iPhone users regularly carry another mobile phone as well -- typically a BlackBerry from Research in Motion.

IBM upgrades partners' software, adds Web syndication

IBM is offering an upgraded version of Grow Your Business with IBM Software, as well as a new Web syndication service that continually provides partners with technology marketing material and new information. The software tool will automatically recommend cross-brand technology sales opportunities, based on existing sales and the partner's expertise and available skills. Product recommendations come from IBM Express Advantage and the midmarket portfolio.

The Web syndication service is free and is meant to act as an "automated pipeline" between and the partners' websites. Partners can automatically tap into IBM's Web marketing content this way.

Microsoft puts its head in the cloud

Microsoft says it's beefing up its server farms and getting ready for the day when more and more companies will embrace centrally hosted and Web-delivered software, a trend known as cloud computing. In an interview with Reuters, Microsoft's Office products manager Chris Capossela says more and more companies will opt for Internet-based software applications, rather than buying and licensing software for use on local machines. Such a software delivery model is new for Microsoft, Capossela acknowledged, but the company has been testing the Software as a Service (SaaS) model with Microsoft-hosted Exchange Online email and SharePoint accounts.

Microsoft partners will be interested to know that Microsoft isn't abandoning its traditional software-in-a-box model. Capossela says Microsoft is all about offering customers choice. Some analysts say it's also about taking on Google and developing SaaS street cred before Redmond's tried-and-true revenue model goes the way of the dinosaurs.

Mozilla Firefox 3: Almost done

Mozilla posted release candidate 1 (RC1) of the Firefox 3 browser Friday for testing.

Firefox 3 RC1 (available in 45 languages) can be downloaded from the Firefox Release Candidates page. Among the new security features are "One-click site info," obtained from an icon in the location bar, which shows who owns the site and if the connection is secure from eavesdropping. New malware protection warns users when they arrive at sites known to install viruses, Trojans or other malware.

Microsoft posts new Windows cluster beta

Microsoft has completed beta 2 of Windows 2008 HPC Server as of Friday, and the company says it's getting the code out to Technology Adoption Partners. The build is posted on the Microsoft Connect website.

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