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The Volatile Economy Panel
Dr. Tom Campbell • Moderator
Cyrus Lam Managing Director
KPMG Corporate Finance LLC
The Volatile Economy Panel
Dr. Tom Campbell Dean and Donald P. Kennedy Chair in
Law and Professor of Economics
Chapman University School of Law
Rob Townsend Partner
Morrison & Foerster
Anthony Armstrong Managing Director in the Investment
Banking Division of Credit Suisse
Paul Deninger Senior Managing Director
Evercore Partners
“Stacks” T While multiple competing stacks remain, the picture has not changed significantly by recent M&A activity today
Competitive Position: Limited / Niche Product Offerings Competitive Market Share Leadership Position Missing & Desired?
APPLICATION
CONSULTINGEMC Consulting Services MCS IBM Global Services HP Services / EDS Oracle Consulting Services Cisco Services SAP Custom Development Perot Systems
BPO IBM Global Services HP Services / EDS Perot Systems
IT OUTSOURCING EMC Managed Services IBM Global Services HP Services / EDS Perot Systems
SYSTEMS INTEGRATION EMC Impl. & Int. Services MCS IBM Global Services HP Services / EDS Oracle Consulting Services Cisco Services SAP Consulting Perot Systems
VERTICAL FOCUS Broad Vertical Coverage Partners Broad Vertical Coverage Broad Vertical Coverage Broad Vertical Coverage Broad / Carriers Broad Vertical CoverageBroad, Incl.
Public Sector
ENTERPRISE
APPLICATIONDuet
Algorithmics, i2, Partners
(SAP, others)
Partners
(SAP, others)
Oracle 11 / PeopleSoft
/Siebel / Right Now / ArtMySAP Suite, R/3
MID-MARKET
APPLICATIONDynamics
Partners
(SAP, others)
Partners
(SAP, others)Small Business Suite
All-in-One Business One
BBD
DESKTOP APPLICATIONS Office Lotus StarOffice WebEx
MIDDLEWARE, TOOLS &
BI
Windows Server / BizTalk
/ Visual Studio
WebSphere / Cognos /
RationalAutonomy, Mercury
Fusion / BEA / Hyperion
/ JAVA / Glass Fish /
Endeca
NetWeaver / Business
ObjectsSarvega / Havok / NMS
DATABASE Greenplum SQL Server DB2/Informix Neoview, Vertica11g/MySQL/
EndecaSybase
OPERATING SYSTEMS VMwareWindows /
Hyper-V
UNIX AIX / Linux /
Mainframe OSHP-UX/Linux Solaris / OpenSolaris Wind River
SYSTEM MANAGEMENT Smarts System Center Tivoli OpenView / Opsware
KACE / SilverBack
everdream /
ASAP Software
SECURITY RSAConsumer: OneCare /
Defender SMB: ForefrontTivoli / ISS / Q1 Labs ArcSight ASA / IOS / IronPort SecureWorks McAfee
STORAGE/CONTENT
MANAGEMENT
EMC / Documentum /
Legato / IsilonTivoli / Filenet / Netezza StorageApps ZFS / Lustre/Endeca
SERVERS Windows ServerI/P/Z/X Series / Platform
ComputingProLiant / Integrity Sun Fire / Blade
Project California /
CrescendoPowerEdge
NETWORKING ProCurve/3ComCisco Series / Catalyst /
NexusForce10 Networks Wifi / WiMAX
STORAGESymmetrix / CLARiiON /
CelerraVSS DATAllegro
IBM / NTAP & LSI
(OEM)
HP (CPQ, 3PAR,
LeftHand) / Hitachi
(OEM)
StorageTekStorage Ntwking /
Partners (EMC)
EqualLogic/
Compellent
INF
RA
.
MG
MT
S
OF
TW
AR
E S
TA
CK
S
ER
VIC
ES
S
YS
TE
MS
The Consolidation of Profit Pools and Adjacent Growth Bets As IT growth slows, the leading incumbents are consolidating positions in existing core profit
pools and using this leverage to move into adjacencies for growth
MSFT: $221B
SAP: $73B
ORCL: $160B
CA: $11B
BMC: $6B
SYMC: $12B
ACN: $37B
IBM: $216B
EMC: $49B
NTAP: $15B
CSCO: $100B
JNPR: $13B
DELL: $27B
HP: $53B Market Capitalization (1):
(1) As of 11/10/11
Applications
„11E Revenue Mix
Infrastructure
Management/
Security
Consulting
IT/ITO Services
Storage
Networking
Servers
> $1.2 trillion
Incumbent Vendor Strategies
Erode Services Profit
Pool with
SAAS/SOA?
Convergence of
storage, network
and security
management
VMware server
virtualization
Illustrative „11E
EBITDA Margin
> $300 billion
Aggressive
acquisition
strategy to
move upstack
Virtualized
Services
Acadia
Storage
networking
Application
aware
networking
Security
appliances
Customer wallet share
capture by leveraging
breadth of portfolio
“Own”
middleware
fabric
$160bn
$205bn
$616bn
$42bn
$168bn
$88bn
~ $67bn / 42%
~ $72bn / 35%
~ $92bn / 15%
~ $8bn / 19%
~ $50bn / 30%
~ $14bn / 16%
Build end-to-end
stack from
“application to
disk”
“Own” BI/Analytics
The Volatile Economy
Emerging Growth Markets • Robert Townsend, Morrison & Foerster • November 2011
Global Equity Capital Markets Review*
Source: *Thomson Reuters Equity Capital Markets Review first nine months 2011
Global IPOs and Emerging Markets
Emerging Markets M&A Activity Trend
Source: Press release mergermarket League Tables of Legal Advisers to M&A Q1-Q3 2011
BRIC Capital Markets/M+A Volume
Source: Dealogic, DB BRIC Capital Markets Feb. 2011
IPOs
China Dominates M&A Volumes
More Balanced
Asia-Pacific M&A Sector Breakdown Q3’11
*Source: mergermarket Monthly M+A Insider Q3 Edition October 2011
Communicate. Collaborate. Innovate.