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Lew Platt, Former HP Chairman and CEO, Dies

Lew Platt, who died last week at the age of 64, grew up in Johnson City, N.Y., one of the oldest towns in America, located in the rural northern tier of that state, northwest of Albany on the outskirts of the Adirondaks, and he learned mechanical engineering at nearby Cornell University before taking a job in 1966 at Hewlett Packard--a company that he would eventually run for more than seven years.

Platt's first job was as an engineer in HP's medical products division, but it is no accident of timing that the same year Platt came on board, HP launched its first computer, the HP 2116A, an air-cooled behemoth that was installed on a research ship used by the Woods Hole Oceanographic Institute. This was also the same year that HP Laboratories was founded, an organization that would do fundamental and important research on solid state electronics that would culminate in its PA-RISC processors and its Unix server products more than three decades later. Platt had a hand in making HP a powerhouse of the server business and one of the two pillars, in the 1980s and 1990s, of the RISC/Unix business that made it a credible enterprise IT supplier long before HP acquired Compaq just a little more than a year after Platt retired in July 1999. In many ways, the years that Platt was at HP were its golden ones, where profits were easier to come by because of general growth in the IT business, but also because new markets were being created and HP was good at getting in on the action. HP was an innovator in test equipment, calculators, Laser and Inkjet printers, and then proprietary and Unix minicomputers.

Lew Platt was an HP lifer who remained as chairman until Carly Fiorina took over that position a year after Platt retired. Platt was a smart executive, and not just because he had an MBA from the Wharton School. In fact, his true smarts may have developed despite it, if you don't put much stock in MBA thinking. He made big bets. One of his biggest came after he had risen through the ranks in HP's Computer Systems Organization in the 1980s, eventually becoming executive vice president overseeing HP's Computer Products Sector in 1988 and named head of the CSO in 1990. This was when HP made its big bet on RISC/Unix, a bet that brought the company many tens of billions of dollars in revenues and probably tens of billions in profits. As company founder David Packard was moving to retirement, Platt was elected president and CEO in 1992 and became chairman in September 1993 as Packard retired. (Bill Hewlett, the company's other founder, had retired in 1987.) It was Platt who steered HP through the roaring 1990s, and luckily or cannily he decided to step down from his leadership positions at HP in 1999 and picked Fiorina, a smart, young outsider, to be HP's CEO and to succeed him as chairman within a year. He remained chairman until the summer of 2000, which was when HP must have started working on the Compaq acquisition.

When Platt left HP, the company's stock price was puttering along with modest growth after growing very fast--more than 20 percent a year of growth for both sales and profits through the 1990s, which is just stunning. This is Microsoft performance. This is Intel performance. This is Dell performance. This is IBM in the late 1960s and early 1970s performance. And it is one of the legacies that Lew Platt leaves behind. Mark Hurd, HP's current president and CEO, has three pairs of shoes to fill: Bill's, Dave's and Lew's. It's a tough job, but each leader in turn has done it, and even the controversial Fiorina did exactly what Platt wanted her to do: shake up HP and get it to find a strategy for growth for the next 10 years in a rapidly maturing IT market.

Oracle to Buy Siebel for $5.85 Billion

Oracle launched itself into the number one spot for CRM software in the world when it agreed this week to buy Siebel Systems for $10.66 per share, or $5.85 billion.. While Siebel has struggled over the past few years, the Bay Area firm still commanded respect in the CRM sector, an area of the enterprise application market that the company and its founder, Thomas Siebel, largely defined. Oracle, which has its own line of CRM software (as well as two other lines of CRM software acquired from PeopleSoft and J.D. Edwards), gains Siebel's 4,000 customers and 3.4 million end users--a sizable installed base by any measure. The acquisition promises to be relatively quick and painless, especially compared to Oracle's 18-month hostile takeover bid of PeopleSoft, which eventually succeeded late last year. The Siebel board of directors has approved the acquisition, and Thomas Siebel, the chairman, has promised to vote his shares in support of the transaction. The acquisition does not require a vote by Oracle shareholders, and barring any unforeseen actions by government regulators, the acquisition should close in early 2006.

Tech Workers in the U.S. Are Getting Pessimistic about the IT Biz

The Washington Alliance of Technology Workers is probably the closest thing to a trade union that the IT industry has for workers, and in April of this year, WashTech commissioned survey firm Evans/McDonough and Harris Interactive to get a statistically sound sampling of the IT workforce in the United States and poll them on important issues. They got 369 respondents to the survey, and the levels of pessimism out there in IT land seems to be growing according to the survey.

In 2003, when the economy was appearing to get back on its feet and the echoes of the various IT booms from the late 1990s were still in memory, 65 percent of the full-time IT workers polled said that they believed that the demand for IT workers would increase. In the early 2005 survey, only 54 percent of respondents thought demand would increase. The interesting bit is that contract workers are (understandably) more pessimistic now as well as then. Only 57 percent of contract workers contacted two years ago by WashTech's surveyors believed jobs would pick up, and this year, that has dropped to 41 percent. The other interesting aspect of the survey is that 48 percent of respondents have seen a pay increase in the past year, but 37 percent say their pay has remained the same and 15 percent saw a decline. Some 56 percent of workers say that they put in more than 40 hours a week, and 37 percent say they put in more than 50 hours a week.

Hester Leaves Newisys, Joins AMD as Weber Leaves

Chip maker Advanced Micro Devices has completed a hat trick of hirings of former IBM chip and systems gurus as it has convinced Phil Hester, the CEO of Opteron server maker Newisys and formerly the lead designer of Big Blue's RS/6000 Unix workstations and its chief technology officer for its former PC line, to become the chief technology officer at AMD. Hester's appointment as CTO at AMD comes as Fred Weber, the CTO who brought the X86-64 instruction set and the HyperTransport Direct Connect Architecture (DCA) from the drawing board to the market over the past six year, has decided to leave AMD to go put money and effort into technology startups. He was not more precise about his plans. Before founding Newisys several years ago as the first Opteron server vendor, Hester spent 23 years at IBM; his Newisys team eventually sold the company to electronics maker Sanmina-SCI in 2003, before any of the tier one server makers backed Opteron or agreed to resell the Newisys machines.

Hester's appointment as CTO at AMD follows fast on the heels of another former IBMer's appointment to a top development position. Only three weeks ago, Jeff Verhuel, a 25-year IBM veteran who had established IBM Microelectronics' engineering and technology outsourcing business, was tapped to be AMD's vice president of silicon design. Back in the late 1990s, when IBM was working on the "Regatta" pSeries Unix server platform and the Power4 chip, the first dual-core processor brought to market, VerHeul was vice president of server and workstation development at IBM's Server Group. VerHeul and Hester are apparently tag teaming to replace Weber. And that have some help from another IBM colleague. In April of this year, AMD had already hired away Rich Oehler, the creator of the Newisys "Horus" chipset for high-end Opteron machines scaling up to 32 processors, to work on future Opteron system designs. Oehler was the lead designer for IBM's Power family of chips for many years and was also one of the key designers of the "Summit" family of chipsets Big Blue created to make scalable, SMP-NUMA hybrid servers based on Intel's Xeon and Itanium processors.

Professional Services Industry to Bypass Discrete Manufacturing as Dominant IT Buyer

It's a sign of the times, and not necessarily a good one. According to the analysts at IDC, the professional services industry in the United States is to become the dominant buyer of server and storage technology by 2009, overtaking the discrete manufacturing sector. IDC reckons that server sales in the U.S. will grow by a compound annual growth rate of 4.8 percent from 2005 through 2009 to reach $23.9 billion and storage for those servers will grow by 6.8 percent (compounded annually) to hit $7.6 billion. IDC didn't want to give away the specific data about how much money discrete manufacturers and professional services companies, the latter of which mean accountants, consultants, lawyers, PR firms, and the like. While IDC didn't say this, I will: When we offshore our manufacturing, it is no surprise that services will take over. The decline in manufacturing would seem to be the real story here, and that is nothing to brag about. It is something to be concerned about, and something that needs to be fixed. There's a word for a country that doesn't make things: colony.

AMR Says Hosted CRM Market More than Doubled in 2004

In what could be a wave of the future, the analysts at AMR Research say that in 2004, companies ponied up over $400 million to buy hosted customer relationship management (CRM) software, representing a 105 percent growth rate compared to 2003. In 2001, 2002, and 2003, sales of hosted CRM software was steady at about $200 million a year. CRM was one of the few hot areas of software growth in the late 1990s, but sales of licensed versions of CRM software declined from $4.4 billion in 2001 to $3.8 billion in 2003. While sales rose by a little more than 5 percent in 2004 to reach $4 billion--and utterly dwarfing the sales of hosted CRM solutions--the question now is whether hosted CRM (as best exemplified by Salesforce.com will become the dominant way for companies to do CRM. Considering how companies have been traditionally wary of using hosted ERP solutions, it seems unlikely that hosted CRM will ever be preferred.

The total CRM software market (including license and hosted software as well as services and support) tallied up to $10.9 billion in sales in 2004, according to AMR, up 10 percent from 2003's $9.93 billion in sales. AMR is projecting a more modest 5 percent growth rate for the CRM market in 2005, with sales of $11.44 billion.

ABN AMRO Outsources IT Operations and Development

Dutch bank ABM AMRO Holdings last week threw up its hands and dumped its whole IT infrastructure into the laps of five IT consultancies. The company is shelling out $2.2 billion over five years to IBM, Accenture, Infosys, Tata Consultancy Services, and Patni Computer Systems. Patni, which is based in Mumbai, India, is providing application development outsourcing services, and it did not say how much it got out of the deal. But Tata, which is the consulting arm of the dominant Tata conglomerate in India, is getting a $240 million piece of the deal for providing support for the bank's current applications and has the right to bid on future application development projects. (Watch out, Patni.) Infosys, which is one of the big names in outsourcing, got a $140 million piece of the ABN action and has the ability to bid on future applications as it provides support for current applications. These are the first of what will probably be big scores in Europe for Tata and Infosys. IBM is the main IT hardware infrastructure outsourcing provider, but about $1.5 billion of the five-year budget is for future application development dollars, and it is up for grabs among the five vendors. Accenture was chosen as an application development provider as well, as was IBM. That outsourcing involves iSeries, mainframe, Unix, and countless other platforms, since big banks tend to have a little of everything when it comes to IT.

ABN says that the outsourcing of IT operations will result in approximately $315 million in IT expense savings a year as the company moves from having the equivalent of 5,000 full-time IT employees (which is a mix of full-time, part-time, and contractual works) down to 1,800 full-time equivalents (FTEs) at ABN and the transfer of 2,000 FTEs to the consultancies (mostly going to IBM). ABN expects to shed 1,500 FTEs over the next 18 months.