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IT Channel News Briefs, Aug. 1

Cisco VAR behind bars; IBM builds bigger cloud; Gartner: Blade growth hurt by standards gap.

News for the week of July 28-Aug. 1, 2008 -- in brief, updated daily, on topics important to the information technology (IT) channel.

Friday, Aug. 1

VAR behind bars: Cisco bootlegging yields prison time

A New York value-added reseller -- with a booming business -- was sentenced to 30 months in federal prison this week for selling millions of dollars of bootlegged Cisco Systems equipment, The Journal News of upstate New York reported.

Charles Lacy-Thompson, 52, who ran Coletronic Computer Inc. in Ossining, N.Y., was ordered to pay $2.2 million in restitution to Cisco. Coletronic had $3.9 million in sales in 2005 and $4.9 million in 2006. The ruling judge called the case one of "pure greed" and noted that Lacy-Thompson could have done strong business honestly. The indictment said that Lacy-Thompson imported generic equipment from China, and that his source abroad also provided him with Cisco serial numbers and packaging.

Apparently, this case is just a drop in the bucket when it comes to Cisco bootlegging in China. This spring, the FBI seized 400 counterfeit Cisco routers in China worth around $76 million, according to The Security Dialogue. It is expected that Cisco knockoffs are regularly sold on eBay and the fakes, originating in China, are often referred to in the industry as "Chisco," according to the Cisco Subnet blog on the Network World website.

IBM builds a bigger cloud

IBM is spending $360 million to build a state-of-the-art data center at its Research Triangle Park site in North Carolina. The New Enterprise Data Center, which will utilize green technologies for energy efficiency, and IBM promises it will provide "unparalleled access to immense pools of Internet-scale computing technology capable of supporting cloud environments." The goal is to renovate an existing building, reusing 95% of the original exterior, recycling 90% of its materials. IBM is also building a cloud computing center in Tokyo to provide enterprise customers, big companies and government agencies with access to experts who can help them deploy cloud computing environments.

Gartner: Blade server growth hurt by lack of standards

Although blade servers remain the fastest-growing segment of the server market, growth will be limited by a lack of standards and fast change over the next five years, according to a new Gartner report.

Modular blade servers will see a compound annual growth rate (CAGR) of 19% from 2007 through 2012. However, that growth will not necessarily mean market domination: Last year blades represented just 10% of shipments, and Gartner forecasts this will rise to 20% in 2012.

Blade servers rely on some proprietary technologies, and a lack of interoperability standards locks users into the technology, said John Enck, managing vice president at Gartner.

Avnet acquires Ontrack Solutions

Avnet Inc. said Thursday it has completed its buyout of Ontrack Solutions, a Mumbai-based security, networking, storage and virtualization provider. Ontrack will be part of Avnet Technology Solutions Asia Pacific. Ontrack's service revenue through March this year was nearly $13 million, bolstered by IBM, HP and Nokia as well as software vendors including VMware, Citrix and Websense.

Motorola's big surprise, earnings not so shabby

Motorola surprised shareholders and analysts this week by showing profitability instead of loss in the second quarter. The company was saved by solid performance in both its home and enterprise mobile network units, though its handset business didn't do as badly as expected.

Motorola reported a second-quarter profit of $4 million or less than 1 cent a share, compared to a loss of $28 million or 1 cent a share for the year-ago period. Motorola had forecast a loss of 2 to 4 cents a share and analysts had expected a loss of 3 cents.

Motorola said it shipped 28.1 million handsets and maintained its share of the global handset market, surprising analysts who expected the company to lose out to competitors like Nokia Corp. and Samsung Electronics. Still analysts predict Motorola will begin to lose market share unless it comes out with a new device.

Thursday, July 31

Apple to partners: Expect shortages

Apple has told some of its channel partners to expect iPod and Mac notebook shortages, according to AppleInsider -- an indicator that Apple's getting ready to roll out its holiday product line. In a recent bulletin to resellers, Apple said to expect shortages of its top-selling iPod models as well as its 13-inch MacBooks and 15- and 17-inch MacBook Pros. There are rumors that new models of the iPod Nano and iPod Touch are in the works.

Symantec sees strong earnings

Symantec posted strong growth for the first quarter of fiscal year 2009 on Wednesday, nearly doubling GAAP net income over the same quarter last year. Symantec posted GAAP net income of $187 million for the quarter, compared to $95 million for the same quarter last year. Non-GAAP net income for the quarter was up 30% at $342 million, compared to $263 million for the same quarter last year. Chairman and CEO John Thompson attributed the growth to the sales team's ability to cross-sell multiple products from the company's wide portfolio.

Gartner forecasts strong IT spending

Gartner Inc. predicts spending on IT services will reach $1 trillion in 2012, according to Despite disheartening economic times in the United States, Gartner anticipates 9.5% growth in the IT industry for 2008, discarding its 6.8% estimate from earlier this year. Spending on worldwide IT services in 2007 also exceeded Gartner expectations, jumping 10.5% to $748 billion. Strong first-quarter results this year have buoyed the IT industry, compared to businesses such as real estate and financial services. In contrast with the 2000-2001 dot-com crash, disciplined spending and cheap overseas labor now deter companies from targeting IT areas with cost cuts. Outsourcing and data center consolidation have also brought IT industry savings.

Open source databases grab market share

The open source database market is poised for enormous growth, according to a Forrester Research study, reported Wednesday. According to the report, the open source database market will grow more than 40% to $1.2 billion by 2010, up from the current $850 million. Though small in comparison to the $16 billion commercial database market, it's still a significant feat, considering most open source databases carry no licensing costs. According to Forrester, open source databases are capable of supporting 80% of business applications, making them a viable alternative to commercial databases. And open source databases are much cheaper than commercial offerings.

IBM spiffs up mainframe virtualization

IBM is beefing up its mainframe virtualization so that its z/VM hypervisor can use several specialty chips on a single logical partition, according to The company said the new functionality will let customers divvy up workloads among several different processor types running on one LPAR, saving memory resources. Different processors include general-purpose chips, the z integration information processor and z-application assist processors.

Wednesday, July 30

Alcatel-Lucent removes top execs

Alcatel-Lucent CEO Patricia Russo and chairman Serge Tchuruk will step down, the company announced Tuesday. Reuters reported that Russo's departure was an ouster stemming from the company's poor performance, financial and otherwise. The board will immediately begin the search for a new CEO and chairman. The company will also reorganize the board to be smaller and to include new members.

Tchuruk helped guide the 2006 cross-Atlantic merger of France's Alcatel and U.S.-based Lucent Technologies. Russo was appointed the first CEO of the combined company. Since the merger, analysts say the company has failed to create demand for new products or make necessary headway in the networking market.

Tuesday the company reported a loss of $1.73 billion, or 77 cents a share, in the second quarter. Revenue dropped by 5%. Analysts have hope that a new administration will give the company a fresh start, but they warn that investors shouldn't look for positive results any time in the near future. That's a real problem, considering Alcatel-Lucent battles the likes of Cisco Systems and Juniper Networks, which are both experiencing solid growth.

In a statement, Russo said, "I believe it is the right time for me to step down. The company will benefit from new leadership aligned with a newly composed board to bring a fresh and independent perspective that will take Alcatel-Lucent to its next level of growth and development in a rapidly changing global market." Russo will leave by the end of the year, and Tchuruk's departure is scheduled for Oct. 1.

HP, Intel and Yahoo team up on cloud computing

HP, Intel and Yahoo created a global, open source test bed for cloud computing research and education, reported yesterday. The multi-data center HP, Intel and Yahoo Cloud Computing Test Bed will feature research on data center management and the software and hardware issues of cloud computing through Web-based testing. Six centers at partner locations comprise the test bed and will be accessible to worldwide researchers selected later this year.

Each center will include HP and Intel hardware, a cloud computing infrastructure and 1,000 to 4,000 processor cores. Apache Hadoop, an open source, distributed computing software, will fuel the research along with other services such as Yahoo Research's programming language software, Pig. HP, Intel and Yahoo have already put researchers to work at the test bed, following on the heels of Google and IBM's October 2007 cloud computing initiative.

Avnet offers VARs internship in hospital IT

Avnet Technology Solutions has added an internship with specialized training for solution providers interested in healthcare IT. The first session ran in June at Scottsdale Healthcare, a three-hospital health system in Arizona. Courseware included lectures and workshops led by department heads, directors and nursing professionals and their respective staff. The internship covered the niceties of patient admitting, finance, health information management and supply chain management, along with the emergency, laboratory, radiology, nursing, pharmacy and surgical departments. The internship is part of Avnet's HealthPath University.

Oracle works on emergency WebLogic fix

Oracle is rushing to address a remotely exploitable vulnerability in WebLogic Server and WebLogic Express. An attacker could use the glitch -- in an Apache plug-in -- to compromise a vulnerable machine without going through any authentication. Oracle is working on an emergency fix, outside its usual quarterly patch release, according to

Symantec enhances Network Access Control

Symantec yesterday upgraded its Symantec Network Access Control product, improving guest user integration through a new on-demand client. reports that the upgrade will let users centralize policy for both managed and unmanaged users through the Symantec Endpoint Protection Manager. Other new features include Web login and authentication for guests, as well as MAC-based 802.1x authentication for printers and other devices.

SAP aids energy efficiency

SAP unveiled an application today to help companies better measure and report energy use, so they can be more power efficient. The application combines SAP Manufacturing Integration and Intelligence, OSIsoft's PI solution and the SAP Environmental Compliance tool. Together they enable companies to gather information on energy use, identify areas for reduction, monitor implementation of energy excellence projects and report the results. Developed by the Industry Value Network group for chemicals within the SAP environment, the application obviously helps chemical manufacturers, but can be applied to other industries as well. The solution is available as an enhanced function of the SAP Environmental Compliance application.

Tuesday, July 29

Oracle adds new charges to SAP suit

TomorrowNow may be gone soon, but Oracle lawsuits over the SAP subsidiary continue. Oracle on Monday filed an amended complaint against the SAP service subsidiary, charging that it not only illegally accessed Oracle support information but also tried to steal and store Oracle application code, according

SAP bought TomorrowNow, a company formed by PeopleSoft executives to offer less pricey support alternatives to PeopleSoft and JDEdwards applications, in 2005 -- soon after Oracle announced plans to acquire PeopleSoft. Oracle subsequently sued, alleging that TomorrowNow illegally used customers' accounts to access Oracle support and service data. This latest complaint goes beyond that, alleging outright theft of Oracle application code. The original lawsuit is slated for a trial in February 2010. SAP has said it will shut down TomorrowNow by the end of October.

Motorola acquires WLAN security vendor

Motorola has agreed to acquire privately held WLAN security technology provider AirDefense. Terms of the transaction haven't been disclosed yet.

AirDefense develops intrusion prevention and compliance software that protects wireless enterprise networks. AirDefense developed a technology that uses wireless access points as sensors in the detection process, as well as other modules that can make the system address specific customer needs. This year Motorola has stepped up its efforts in the enterprise WLAN market.

This announcement comes just days before Motorola is to deliver its quarterly earnings report Thursday, and right after news was leaked that the company would break its home and networks mobility unit into three separate businesses. The company has also said it would spin off its troubled handset business into a separate company.

Blogger wants VMware source code

VMware's giving away its ESXi hypervisor for free, but that's not enough for some open source advocates. Our sister site,, reports on blogger Jason Perlow, who is calling on VMware to also give away its source code. Perlow said the move would let developers and integrators help VMware fend off Microsoft, which is challenging VMware in the server virtualization market with its Hyper-V hypervisor. But outside observers said VMware would lose more than it would gain by releasing its source code now.

LinuxWorld features hosted services and virtualization

The 11th annual LinuxWorld Conference and Expo will include a one-day executive summit focused on hosted services and virtualization, according to LinuxWorld 2008, a three-day compilation of events at San Francisco's Moscone Center, begins Monday, Aug. 4 and runs concurrently with the second annual Next Generation Data Center (NGDC) conference.

LinuxWorld's summit, slated for Tuesday, will allow IT professionals to network and discuss case studies on disruptive technologies. The LinuxWorld and NGDC conferences offer more than 200 workshops combined and seven keynote addresses by industry leaders. Both will address power and efficiency topics, though LinuxWorld workshops will target developers and smaller companies as NGDC reaches large data centers with a broader technology focus.

Cisco firewall replaced

Monday was the end of the run for the Cisco PIX 500 Series Security Appliances. A click on the website for the appliance now leads to a page that says the product is no longer being made. The site says customers are encouraged to migrate to Cisco ASA 5500 Series Adaptive Security Appliances. The ASA 5500 appliances were launched in 2006 and are meant to have better performance than the PIX appliances. The company touts the upgraded technology as being able to integrate world-class firewall, unified communications security, SSL VPN and content security. The PIX appliance was an extremely popular firewall.

Monday, July 28

Another search engine sets sights on Google

A new search engine, Cuil, which claims to have greater reach than Google, launches today, according to the Associated Press.

Cuil Inc., which was created by a handful of engineers from Google and other heavy hitters, is set up to reach three times as many Web pages as Google and study them more accurately, according to its founders. The company has raised $33 million in venture funding and was founded by Anna Patterson, one of the engineers who helped build Google's search index, and her husband Tom Costello, who built search technology for IBM. Still, Cuil is the latest in a long line of companies that have tried to take on Google and failed.

Sophos snaps up data loss prevention player

Sophos has launched a bid to acquire Ultimaco Safeware AG, an Oberursel, Germany-based specialist in endpoint encryption and data loss prevention (DLP), for more than $340 million. Sophos, which is privately held, is tendering cash for outstanding Ultimaco shares and has agreed to buy Investcorp Technology Partners' 25% share in Ultimaco for cash and stock. Upon completion of the deal, which is expected in October, Ultimaco will become a business unit within Sophos and retain its SafeGuard brand.

Motorola shuffle continues

This year is one of heavy reorganization for Motorola. A memo sent to employees last week outlined the company's plans to break its second largest business unit, home and networks mobility, into three separate businesses, The Wall Street Journal reported today. The three units will consist of a cable set-top box and Internet video modem business, another for cellular network equipment, and a third for broadband access solution technologies.

The news leaked just days before Motorola's quarterly earnings call on Thursday. In April, the company announced it would eventually spin off its mobile devices unit from its profitable broadband and mobility solutions business, making it a distinct company. Defined plans for splitting Motorola into two companies are expected soon.

Microsoft vs. VMware battle heats up

The release of Microsoft Hyper-V, combined with VMware's decision to give away its ESXi hypervisor, will make server virtualization available to more customers, according to But that doesn't mean the hypervisor has become a commodity, because switching from one vendor's to another's is not an easy task. Still, as the hypervisor becomes less of a differentiator, vendors and their channel partners will have to come up with new ways to stand out in the virtualization market.

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