Giant Movers in the Cloud

A GE data center.

Last week three of the biggest companies in tech were busy positioning themselves for the future. Collectively, their actions tell you a lot about the turmoil now in tech, which is headed for the rest of the business world.

The three are IBM, EMC, and Hewlett-Packard, with a collective annual revenue of about $250 billion (EMC is by far the smallest, about one-fifth the others’ size.) All of them got very big by selling hardware. All of them have, at different times, sought ways to cope with the immense changes wrought by the Internet, cloud computing and mobile computing.

Disruptive as those three things were to the hardware business, the consequent changes in both business behavior and the amount of data in the world have affected things even more. IBM is thinking about very big projects to help cut down on the world’s largest expenses. EMC is positioning itself as an enabler of future disruption, by making cloud computing more pervasive. H.P. hopes to leverage its business relationships to provide the hardware for the new world.

On Tuesday, IBM announced new predictive analytics services and software in the fields of fraud spotting, managing financial risk, and consumer intelligence. IBM long ago moved from a mainframe-centric view of its business to one based on business consulting (often with software-laden computers as part of the deal.) Since 2006, it has spent $14 billion on companies that do analysis of one form or another. It has now put over 400 quantitative experts inside the consulting business with a promise to offer customers unprecedented insights into their world, and save them a bundle of money.

“I see no reason to stop spending” on analytics, said Steve Mills , the senior vice president of software at IBM. Analytic insight, he said, was a critical part of the need for cost savings in business, which is as important as growth.

While initial savings can come from financial and retail areas like fraud detection and customer acquisition, the company has its eye on areas like manufacturing and oil and gas production, as well.

“The replacement value of the world’s physical infrastructure is tens of trillions of dollars. It gets more and more expensive to replace it,” he said. “We have to maintain it, and we have to manage it more effectively.” This kind of analytics used to be known as monitoring, but when you have enough sensors to watch things in motion and interaction, it becomes a picture of behavior in a system. That is the stuff of analytics.

While IBM is focused on an almost recession-era view of efficiency, EMC is styling itself as a onetime data storage company that now sells disruption. In a surprising move, on Tuesday EMC agreed to buy, for an undisclosed sum, Pivotal Labs. Pivotal is a San Francisco-based company with 150 employees that specializes in helping companies quickly build software, particularly for online and mobile applications. EMC also released an open source software product designed to speed data analysis projects inside companies.

EMC, through its ownership of VMWare, already enables a lot of open source projects for cloud computing. Pat Gelsinger, the president of information infrastructure projects at EMC, said that all these initiatives would slowly come together. “We have 15,000 software engineers” at EMC, he said. “We are stitching together these assets.” The idea seems to be to create new working environments in which people need both advice, and storage devices to hold all the new data they are generating.

On Wednesday, H.P. announced a sweeping reorganization that centralized into four groups previously diffuse efforts in marketing, communications, printers and personal computers, and corporate sales. Chief executive Meg Whitman appears to be trying to get more control over the highly diversified company, so that she can deliver more per-share earnings to stockholders, and then invest in new products and research.

At an annual shareholders meeting Wednesday, Ms. Whitman said “the core of our company is infrastructure,” and both software and services were, for H.P., businesses that would help sell more computers, storage and networking, hopefully with higher profit margins.

While this might seem to make H.P. the company that changes least, Ms. Whitman also talked about focusing more on making and selling cloud computing data centers with better security and information management than anyone else. They would have to be, if she is to convince people to buy a largely single-vendor system. That may be an interesting and counterintuitive move, however, when the changes in the world are causing others to think they must move away from hardware.

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