Canalys - Special Feature
SPECIAL FEATURE Security tops agenda for ‘Innovation & Technology’ channels Canalys Channel Partner’s Forum APAC, Bali Indonesia, Nov 2015
Canalys’ events have taken the Channel market by storm, quickly expanding to deliver countless opportunities for technology and certified channel professionals and senior Canalys analysts to participate in a variety of industry and vendor events. This includes trade shows, business strategy sessions, sales meetings and press conferences. I met with senior executives from AMD, Cisco, HP, Dell, Zebra and Delta to learn about the latest in technology developments, business activities and what 2016 holds for each of these tech giants. Canalys Market Review and Outlook Canalys CEO, Steve Brazier, opened the event with a broad market analysis, highlighting some
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of the big changes that are affecting the global workforce. In particular, Brazier explained that an increasingly younger workforce demographic is building over the next decade and changes are occurring in the workplace offering the capability for staff to work from anywhere and everywhere. These changes will pose their own issues and risks for tomorrow’s businesses, where the workforce doesn’t have the same level of collective experience it has today and is not collocated in one place, hence no face-toface communications. The titans of the commodity and consumer technology industry have war chests collectively totalling more than $500B in cash, with Apple holding about 40 percent, while Internet cloud services, Amazon and Salesforce, together lost over $3B. There were only 15 technology IPOs
throughout the entire year, which is the lowest number of new companies floating on the stock market since 2009. Software-as-a-service is the new reality for application provision and Infrastructure-as-a-service is forecast to reach an incredible $35B in 2016. The significant drop in the oil price in 2015 (and continuing through to January 2016) has contributed to destabilised currencies and caused disparities in price controls throughout the international technology market. Canalys’ Shanghai 2014 forum had a distinct focus on China, however, this year’s forum had shifted focus to India as the strongest performing technology market and strongest performing economy. As regulation remains a barrier, the market is expected to remain very unstable throughout 2016, with India or China (or both)
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IT security Worldwide, share of units (%) by category, 2019
understands what it means for the APAC region and the channel. Shifting to Datacentres The storage and servers market has shifted from on-premise computing to being provisioned out of mega datacentres. By the end of 2015, nearly half of the entire server and storage market had moved to datacentres, with reports of component shortages due to the speed of datacentre growth, appearing at the tail end of the year. The ‘Open compute’ project, run by Facebook, is a prime example of this shift to innovative new way of operating, with pressure
increasingly coming from end users rather than suppliers. Trends into 2016/2017 are for growth in hyper-scale datacentres and hyperconverged infrastructure. Though still relatively nascent, this market is growing quickly, offering datacentre scalability.
having the greatest influence in the APAC region. APAC is an extremely complex market and, as such, the channel network is critical to success. For example, in 2015, Lenovo invested $760M across all of its channels, including the distribution of 90 million units per quarter in China alone. As Lenovo’s CEO, Roderick Lappin, explained, “[it is] not uncommon for some individuals to be carrying up to four devices when mobile” and “with Cloud mobility analytics and big data, business is going to see more disruption in the next 5 years than it has in the last 50 years.” Valerie Beaulieu, Microsoft’s General Manager SMS&P APAC, outlined the company’s mission is getting back to their core values, allowing Microsoft to remain in a unique position to link individuals to organisations and organisations to organisations across the globe. Beaulieu suggested developing wearables, sensors, mobile devices and investing in the subsequent user experience is key to market success, with Microsoft’s own strategy of ‘mobile first, cloud first’, driving their own strategy. Attesting to their success, Beaulieu said that Microsoft’s own cloud computing platform, Microsoft Azure, is growing by 250% per year. Security Focus The forum’s primary theme was security. Across the channel network, security was a top issue for all businesses, with strong buying behaviour for security infrastructure reported for APAC across all sectors. There is a clear shortage of cyber security skills, especially in our “connect it - hack it” environment, and this trend is set to continue. Cyber warfare is also an issue that was mooted, however, this is such a nascent issue for business that it’s clear no one really yet
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DELL’S doing the heavy lifting Cheryl Cook, VP Global Channels & Alliances I attended the Canalys event hot on the heels of Dell’s fifth annual customer conference, Dell World, in Austin, Texas, where Dell executives made a number of important program and investment announcements. “Our Channel partner program, globally, continues to experience strong growth and geographically balanced across the market, so all regions and all lines of business. We measure our PC core appliance business, as well as our enterprise datacentre business, which includes our servers, storage and networking, as well as our software business. We are experiencing record levels of engagement, as measured by deal registration – which, for me, is a proxy to the market activity level. In our most recent quarter, we continued to set the bar on record levels of deal registration, with over 200,000. That feels very positive and, as a consequence, when growth rates are that positive, we are continuing to pay record level rebates and incentives to the channel partners. The global revenues for the channel business with Dell exceed well over 40% and just two years ago that was 30%. Channel partners are a major part of Dell’s growth strategy. Another area of expansion is Tier 2 distribution that allows greater stock and sell capabilities to partners around the region, opening access to new partners that otherwise may not have been within reach. The Future Ready Channel is aimed at delivering enablement and capabilities of our partners while keeping it relatively simple and straightforward. Our channel program is still young, only eight years old, and a lot of the feedback is about training, certification and competition around our products. For software, we have expanded and delivered more in the form of data protection, network security, and big data analytics. We also announced, for the first time, a solutions track for competencies. Everyone wants to have much higher, more relevant discussions around workloads and business outcomes than merely just integrating silos of information and infrastructure together. We worked jointly with our enterprise product team, who worked with partners, like Microsoft, VMware and took an approach for an endgame basis, encompassing blueprints and reference architectures. There are now over 1,300 engineered systems and appliances with over 21 reference architectures and whitepapers that can be activated for their market or client. We set up labs to test and certify
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configurations against known use cases and user levels so that, with confidence, we can deliver to our partners configurations and reference architectures that are inclusive of software management, and deployment services, in addition to the infrastructure and the software, so that time to revenue can be shortened for them to focus on working with the customers. So, the OEM (Original Equipment Manufacturer) between Dell and Microsoft or Dell and VMware has already done a lot of the heavy lifting in meeting performance levels, whether it be to a small population of 50 or less, or up to into the hundreds and thousands, certifying the channel partners against those user cases. Whether it is unified communications and collaboration, virtual desktop, virtualisation or big data analytics, we are driving to a ‘solutions’ conversation. Like with cloud certifications, our partners are able to drive private, on-premise and hybrid deployments in Microsoft Cloud and cloud platform systems that are tailored for very highend enterprise workloads, as well as smaller enterprise workloads. We have also announced new incentives and rebates, as of February 2016, and to be supported by new branding for our partners. We have enjoyed 11 consecutive quarters of shared gains, globally, in the PC market, and we see the market consolidating between Dell, Lenovo and HP and we want to maintain our dominant position. However, we recognise this growth is going to have to come from our customers and we want to reward our partners more handsomely because we know it is expensive to operate in this business, but reward them when aligned to our own strategy for growth. We are doing the same in our datacentre offerings and approaching number one in the server business in Asia, and already number one in North and
Latin America. It is about maintaining momentum and keeping the incentives driving growth. We have had, for many years, a financing capability with Dell Financial Services, which assists with end-customer leasing options. In the last 12 months, we have introduced Dell Global Financial Solutions, aimed at partners and smaller companies to give them access to capital and increased credit and extended payment terms that reduce the burden of cash flow to allow growth. It has been phenomenally successful and in the first year of operation we financed over US$5 billion, with over 2,000 partners. We will be continuing this program as it seems to be meeting a solid business need. Included are flexible payment alternatives, such that you can pay as you grow, or a utility billing model offering other flexible options. Many partners are feeling the pressure of business model changes, with this flexibility suiting these changing needs to resource cash flow. As well as enablement around our solutions, we are providing the servicing and financing which are key pillars. Finally, we have introduced a ‘services competency before deployment’ model for partners who want to deliver some of our services, which traditionally have only been delivered by Dell. So, we have opened up a certification program, launched in over 120 countries, which creates the opportunity to manage an entire end-to-end solution for customers and co-deliver and compliment our services. There is a lot of energy and excitement in the business and despite the pressures and fluctuation in the market, we are all feeling it is creating its own set of opportunities for our partners too, by adapting and modifying their business model continue to meet customer needs across multiple facets.
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Hewlett Packard’s customers have become sensitive to security Chris Ogburn, Vice President Worldwide Channel Marketing Chris has channel marketing responsibilities for Hewlett Packard Enterprise (HPE). “Part of the portfolio we are focused on is around the infrastructure side of the business, servers, storage, networking, converging systems and devices and services in supporting cloud and hybrid cloud. We have also picked up responsibility with the restructure for software. So, we’re fresh in building competencies in our team for IT management, big data and security. With so many elements, it is a multipronged approach. For example, with a data centre build out, it isn’t new but has become more pronounced over time and this is reflected in changes in product sets. There is an entire organisation within HP that is solely focused on developing and building scale-out server architectures, specifically for the increasingly high demand data centres, which is a change from a few years ago. Alongside, we have had a need to build the capacity of our service providers through our channel programs. We are not only selling them the infrastructure they’re using to host and support and drive workloads, but also, at a country level, we’re partnering and working with customers to look at opportunities where they want public cloud capability using a local service provider – especially so, with growing data concerns in country and not wanting to have data moving outside of the jurisdiction. Looking at HPE, over 70 percent of our revenues come from our channel partners and in Asia Pacific it is well over 80 percent. So, the vast majority of what we do is going through our channel partners, with the remainder being typically large-scale global service providers, or large footprints within government, financial services or telecommunications, who prefer to deal with us directly. In 2015, HPE signed a definitive agreement to divest the network security business, TippingPoint, to Trend Micro. TippingPoint was an important component of HPE’s security offering, however, they announced they had decided to partner in network security as opposed to own it, so they can invest in other areas of their security portfolio. The final deal is expected in early 2016. “From our discussions and round tables with customers, security has become the topmost priority they have in business today, managing the data security element from the device to the datacentre. Customers have
become sensitive to security-by-design in our innovations, because they recognise its importance. We have also improved, as a result, with major strides in device-level security and the way we think about managing security from a datacentre perspective. Security is so broad and extends right across our portfolio, so it’s an excellent tie-in when we think about the way our teams do product design and engineering, tying back to the investments made in security – it is now much better integrated. For our big data analytics portfolio, the focus is on enabling decision making using the information you already have available, pulling it together and driving insight and action out of that insight. The theory is to have the ability to make very fast business decisions based not only on your internal information, but what else may be happening in real-time, such as social media. There are incredible tools that allow governments and companies to understand what is happening from a social perspective across myriad platforms, searching words and expressions and taking into account neutral, negative and positive sentiment. This analysis is used in conjunction with internal data to evaluate and surface business insight. Other aspects of the analytics portfolio include Vertica and Autonomy, so the source can be internal, supplier, or customer, as well as a wide range of private and social media databases. HP Vertica is a next-generation high-performance SQL analytics engine, available on-premise, in
“Looking at HPE, over 70 percent of our revenues come from our channel partners and in Asia Pacific it is well over 80 percent.” the cloud, or running on Hadoop. Queries will reportedly run 50-1,000 x faster than any data warehouse or database technology, running at petabyte-scale, with openness to using any BI or ETL tool, run as SQL on Hadoop, while leveraging scalable predictive analytics and a comprehensive library of built-in analytical functions.
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Cisco has security everywhere Pramodh Menon, Managing Director, Sales, Cisco Systems, India “We have two types of partners: we have our system integration partners, such as IBM, who buy directly from Cisco; and we have the distribution and reseller business, in which I look after the distribution side of the business. We have two kinds of channels, the SI channel and the reseller channels. We have taken an architectural approach to security, where we have launched the ‘security everywhere’ theme, building on what Cisco has always believed: the network is a centre point of coordination for all security, as opposed to the conventional way we used to build and look at security, which was to build an endpoint product and fortify the perimeter. Those concepts are not valid anymore since, especially due to cloud, mobility and virtualisation, the definition of the perimeter has become void because you don’t know where the device is connected to the network. So, we have the concept of the network as a sensor, with some of that capability enabled in our products, such as TrustSec and NetFlow. We also look at the network as a security enforcer, so once you see a breach, you can
shut down the ports, offer segmentation, confining malware to one segment so that it can’t traverse the rest of the network. You can then determine who has been compromised and institute management so we can know how to deal with it. This was the initial role of TrustSec, however, we now have a lot more added to it to ensure we have a very robust end-to-end architectural solution. It’s not just antivirus, malware protection or firewalls; it’s more of an overall architectural approach. This plays to our strengths as most customers have a Cisco network, along with those other capabilities, therefore we can turn them on with most of our existing installations. Overall, we are seeing a significant amount of customer spend, related to their security position being strengthened, which is a very important conversation to have with every enterprise customer. With the recent acquisition of Sourcefire we now have advanced malware detection, threat defence and the recently announced Lancope acquisition. The Lancope team will join the Cisco Security Business
Group, led by David Goeckeler, senior vice president and general manager. Under the terms of this agreement, Cisco pays $452.5 million in cash and assumed equity awards, plus additional retention-based incentives, for Lancope employees who join Cisco. The acquisition is expected to close in mid-2016, subject to customary closing conditions including regulatory review. Anthony Stitt, Cisco Systems’ General Manager Security in Australia, highlights that Cisco offers the breadth and depth of a “security everywhere” approach, be it the endpoint or in the cloud. “Cisco changed its attitude to security a number of years ago and, seeing the way technology will be used by digital transformation, security could no longer be an add-on or afterthought. It needs to be far more central. What you’ve seen Cisco do over the years, is acquiring a number of organisations to fill or improve and develop the integrated products across the broader spectrum, such as the Cisco data centre and data collaboration strategy.”
The new AMD has more Commercial focus Vinay Sinha, Regional Director Enterprise Business, Asia Pacific Japan (APJ) “The new AMD, as we like to call it, has a more commercial focus and over the last year, we achieved some key milestones. With a dedicated commercial organisation, AMD Pro is only for commercial enterprises, due to its longevity and increased warranty. We are now only certifying OEMs for AMD Pro. In terms of security, we have ARM Trust Zone, which is hard wired into the system at the CPU level.” “In contrast to fixed-function TPMs (Trusted Platform Module), TrustZone is a vastly more versatile mechanism and are freely programmable using a powerful generalpurpose CPU architecture.” (Source: An Exploration of ARM TrustZone Technology) “Overall, you are seeing the market not as repeat as we’d want it to be, even, it is said, India is doing well but we are finding it is holding steady. There is some consolidation happening, so that means the pie is about 500,000 units (devices) a quarter and it has remained at that number, without deceleration, a trend that seems consistent across the APJ. However, the number of players has decreased, so there is more available from the same sized pie. With the currency markets as unstable as they have been, there has definitely been
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“...over 500 customers over the last year across the APJ and 90-95 percent have welcomed us and stated they needed us back.” challenges, with some markets slumping and others spiking. Overall though, I would say it has been rather static. In the short term, that means we just need to be smart enough to grab the opportunities we are seeing in Thailand, the Philippines, India, Australia and New Zealand. The other aspect that has changed for AMD is that we now have OEM backing and the commercial skillset to take these opportunities – the market has always welcomed competition and choice. The support and endorsement from customers has been overwhelming for us and I met over 500 customers over the last year across the APJ and 90-95 percent have
welcomed us and stated they needed us back. There have been huge margins and little price pressure for competitors. The fact we have been so welcomed back also includes our performance, therefore the days of perceiving you have to pay for performance is being challenged. We can match the performance of leading brands at a lower price. When there is a monopolistic market, you will naturally see higher profit margins and we are near a third of some of our competitor’s margins. For example, HP A10 or A12 system and Dell or Lenovo i5 or i7, so you can compare the price and there is a saving of about $400 with zero compromise on performance, allowing customers to use that saving on other aspects of the system.”
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Digitalisation and supply chain intelligence Ryan Goh, Vice President of Sales and General Manager, Zebra Technologies APAC “Zebra was established in 1965, starting as a barcode printing company and manufacturer of specialised barcode printers. In 2014, we acquired the enterprise business from Motorola (valued at $2B) and that part of the business consists of mobile computer handheld products, wireless LAN infrastructure and RFID computer and scanning devices. So, it has been a year since we completed the transaction and it complimented our strategy in building a business model of enterprise asset intelligence or EAI. EAI is about reclassifying the three categories of sensing, analysing and action. It is what we call ‘giving a digital voice to the physical world’. We provide the ability for assets to be tracked, converting them to a digital voice. In terms of parcel delivery, it allows the entire supply chain process to be optimised and the fastest route(s) to be selected, allowing an operational director to make decisions on the best way to get products to the consumer or customer. We don’t use random serialisation, instead using barcodes to achieve the same thing, such as in tracking animal products. From the time an animal is born to the time when the meat is delivered and displayed in the supermarket, it is tracked using a barcode. This barcode is tagged on the animal’s ear and its history is tracked, logged and analysed at every stage of delivery. The key objective is food security, so we know and can immediately trace any food product back to its source. This provides intelligence into the entire supply chain and avoids a costly review if something goes wrong, allowing for an immediate response. Increasingly, there are more and more customers using this technology. Using a cloud-based ring scanner, you can track assets in real time from anywhere. One major aspect
is security and how 60% of enterprises are yet to step up into using cloud services: this is the major limitation perceived around security. What we do at Zebra is offer a mobility extension on our mobile devices, using Android as an operating platform. The last two quarters in 2015 saw doubledigit growth and we think EAI is now at the point of crossing the chasm. If you can create meaning from the data and show an impact, such as in a shopping mall, we can start to afford meaning to foot traffic, buying behaviour and effectiveness of promotions, signage and product displays. Another example is our real-time location system, as used with the NFL in tracking players throughout the game with an RFID inserted in the back of the player’s jumpers. We can track where each player is, the speed they are running, including acceleration rates and total distance, offering quarter-to-quarter comparisons while making this all available for display on a tablet in real time. As the player moves, you see the outcome on screen, and can determine how each of the players is competing and working together. We are now tracking all of the NRL players, allowing far more insight into game assessments, review and team analysis. Naturally, this technology is not limited only to sport science, as it has applications across all sectors. When our customers come to us, they ask how canwe help them transform their business, often most interested in how they can apply technology for better business outcomes. Retail is our leading market and, in terms of countries, I would say Singapore is our leading country in deployments. We are quite bullish for 2016. Zebra is listed on the US stock exchange.”
“Delta was founded in 1971 and has grown to revenues of $7.5 billion in 2014 with R&D centres in Taiwan, China, Thailand, Japan, USA and Europe, with over 30,000 staff.” InfraSuite, consisting of power systems, racks and accessories, as well as environmental management systems. The R&D focus is on building energy efficient solutions for datacentres and we’re seeing gradual growth with operations in Australia over the last two years, having established a strong distribution channel partner with Avnet, one our largest channel partners. Our key target markets also include education and the security industry, such as CCTV systems. About Canalys Canalys is an independent analyst company that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. Our customer-driven analysis and consulting services empower businesses to make informed decisions and generate sales. We stake our reputation on the quality of our data, our innovative use of technology and our high level of customer service.
R&D focus is on efficiencies: Max Perez, Delta Energy Systems “Delta was founded in 1971 and has grown to revenues of $7.5 billion in 2014 with R&D centres in Taiwan, China, Thailand, Japan, USA and Europe, with over 30,000 staff. Delta is the world’s largest vendor of power supplies and has three main pillars of business: power and electronics, energy management and smart green life. The Mission Critical Infrastructure Solutions (MCIS) provides highly-reliable and efficient power management products and datacentre infrastructure solutions for continuity of mission critical operations. One solution is called
SPECIAL MENTIONS Canalys Channel Partner Awards • Revenue growth partner 2015 - BIT Group, Malaysia • Innovation and Transformation Partner 2015 ACPL Systems, India • Cloud Software Partner 2015 Data3, Australia • Cloud: Managed Services Partner 2015, Microwear Hong Kong • Infrastructure Growth Partner 2015 ProNet, Philippines • Channel Partner of the Year 2015, Accel Frontline, India
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