tbr 2q11 end-of-quarter benchmark report

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

Technology Business ResearchAccelerating Customer Success Through Business Research

TBR


End-of-Quarter Benchmark Report

COMPUTER BUSINESS QUARTERLYSM

Publish Date: Oct. 4, 2011

Contributors: Ezra Gottheil, Senior AnalystGeoff Woollacott, Senior AnalystGreg Richardson, AnalystAngela Lambert, Research AnalystKrista Macomber, Research AnalystEmily Searles, Research AnalystBeau Skonieczny, Research Analyst

Content Editor: John Spooner ([email protected]), Computing Practice Director

Second Calendar Quarter 2011

mailto:[email protected]

TBR

TBR CBQ End-of-Quarter Benchmark Report | 2Q11 ©2011 Technology Business Research, Inc.3

Executive Summary3 Key Findings & Trends

4-5 Drill-Downs Segment Geographic

6 Market Overview7 Market Leaders

8-9 Quarterly FocusUltrabooks merge the key features and functionality that appeal to a variety of users to establish a unique value proposition.PC vendors will compete aggressively for share of the burgeoning Ultrabook market as a new growth avenue.

Segment Views10-12 PC 13-15 X86 Server16-18 Proprietary Server19-21 Storage22-24 Microelectronics

Geographic Views25-27 Americas28-30 EMEA31-33 Asia Pacific

Appendix34-44 CBQ Financial Metrics45-70 Additional Metrics71-75 CBQ Taxonomy

76 TBR Capabilities77 About TBR

Contents

TBR


Executive Summary

Client hardware vendors will jockey for position in China and the Ultrabook market, while capitalizing on HP uncertainty through 2H11

Hardware vendors will continue to invest in China to offset wavering demand in mature markets

• Hardware vendors are leveraging regional partnerships and strategic investments to gain further name-share and validate their positions in emerging regions of China.

• PC vendors, such as Lenovo and Dell, are leveraging China as a test bed for new tablet businesses. Vendors are capitalizing on demand for increased tablet functionality in China, which TBR’s 2011 Tablet Studies suggest is stronger than in mature markets in North America and EMEA, by releasing country-specific models and expanding their retail presence.

• Dell followed its early 2011 investments in Chengdu with a new partnership with Baidu, in which Dell will deliver tablets to the Chinese market that are based on the Baidu OS.

Vendors will target HP’s share in the face of the company’s uncertain strategic direction

• As evidenced by TBR's HP Customer Reaction Survey, customers overwhelmingly believed HP had lost its way when suggesting it would exit the PC business – opening doors for rivals to drive HP displacement by capitalizing on customer uncertainty.

• TBR believes HP will leverage the appointment of Meg Whitman as CEO to demonstrate near-term action, helping quell immediate customer concerns while buying the company time to more concretely formulate its strategic direction.

PC vendors target reaccelerated growth by combining tablet and PC functionality in Ultrabooks

• TBR believes PC vendors, such as Acer and Asus, are aiming to drive higher-margin revenue through Ultrabooks, justifying premium price points by solving key user needs, such as portability and connectivity.

• Ultrabooks will bridge current gap in the PC industry between full-feature notebooks and tablets, meeting demand for PC keyboard functionality with key tablet features, such as instant-on and longer battery life.

TBR


Hardware vendors are offsetting weakness in mature markets by aligning product strategies with growing countries and verticalsLOB Key Changes & Drivers Top

Rev.Top Growth Trends to Monitor

PCPC vendors are fostering growth by targeting BRIC countries with mobile form factors, such as tablets, and restructuring operations to reduce manufacturing costs.

HP$8.9 billion

Apple 16%

Ultrabooks and tablets are leading to demand for new form factors, emphasizing portability, performance and instant-on connectivity.

x86 ServerVendors drove revenue by leveraging a high-end solutions approach to win share from the proprietary server space.

HP$3.3 billion

IBM15%

Vendors will augment x86 offerings with storage and networking to gain enterprise market share.

Prop Server

Proprietary server vendors bundled hardware with software to capitalize on new growth opportunities in cloud-based and virtualized environments.

IBM$1.5 billion

IBM32%

Vendors will hone their solutions strategies by leveraging alliances to target their offerings at growing verticals.

StorageVendors leveraged alliances and acquisitions to develop adjacent technologies to round out solutions capabilities.

EMC$1.9 billion

NetApp30.9%

Storage vendors will leverage Big Data and analytics capabilities to tailor their systems to customers' specific needs.

Micro-electronics

Vendors leveraged partnerships to enhance core technologies and derive new applications for their chipsets. Japan-based vendors continued to restructure manufacturing capabilities to restore profitability.

Intel$13billion

Intel 21.1%

Microelectronics vendors will leverage R&D to continue improving manufacturing processes and capitalize on demand for mobile computing and low power consumption in Japan.

Executive Summary

TBR


Vendors will support infrastructure buildouts with end-to-end solutions, while expanding their mobile device portfolios to capitalize on demand

Geo Key Changes & Drivers Top Rev. Top Growth Trends to Monitor

United States/Americas

Demand for cloud-based infrastructures and services in growing countries is boosting Americas commercial growth, while consumer spending continues to be driven by demand for mobile, Internet-connected devices.

HP$14billion

Apple54.5%

TBR believes demand for mobile computing devices and datacenter buildouts, namely in growing countries such as Brazil, will fuel Americas growth.

EMEA

Vendors offset slowed spending in mature EMEA markets by leveraging channel expansion in the Middle East and Eastern Europe. In 2Q11, EMEA posted revenue growth in the x86 server and tablet markets.

HP$11.7 billion

Apple68.3%

Vendors will highlight reduced TCO with industry-specific, cloud-based solutions to offset slow enterprise growth.

Asia Pacific

APAC led geographic revenue growth, fueled by demand for virtualized and cloud-based environments. China was a key target for mobile and PC sales, with Apple mobile sales leading significantly over competitors.

Panasonic$18.3 billion

Apple179.7%

Vendors will leverage cloud-based solutions to capitalize on demand from SMB and government customers in growing APAC countries.

Emerging Markets

Emerging markets led revenue growth for IT hardware vendors as spending in mature markets remained slow. Companies leveraged mobile devices, as well as solutions supporting IT infrastructure buildouts to grow market share with an emphasis on BRIC countries.

CBQ vendors will continue targeting the Public Sector in growing countries to support rapid future growth.

Executive Summary

TBR


Demand, particularly in growing countries, for mobile form factor PCs and integrated datacenter solutions will support future hardware growth

NOTE: SPHERE SIZE DEPICTS SIZE OF REVENUE.

• Demand for mobile and Internet-connected devices and the resulting increased network traffic requirements are driving IT hardware growth across both mature and emerging regions.

• Vendors will derive new opportunities for revenue expansion by developing crossover business and personal tablets, while developing datacenter solutions to support cloud and virtualized infrastructure buildouts.

• TBR anticipates uncertain macroeconomic conditions in mature markets, such as Western Europe and the U.S., will further drive vendors to penetrate emerging markets.

Executive Summary

HP

Sony

Intel

IBM

Lenovo

Panasonic

EMC

Dell

ToshibaFujitsu

NetApp

AMD

HDS

Oracle/Sun

-10%

0%

10%

20%

30%

-10% 0% 10% 20% 30% 40%

Reve

nue

Gro

wth

Operating Margin

2Q11 REVENUE GROWTH VS. OPERATING MARGIN

SOURCE: TBR

TBR

Avg. Revenue Growth 12.8%

Avg. Operating Margin8.6%

Apple: (32.8, 82.0)

Acer: (-6.9, -24.1)

TBR


Hardware vendors are leveraging product development initiatives to capitalize on growth opportunities, such as cloud-based datacentersRevenue, Growth & Operating Margin LeadersCompany Size Key Strategy Drivers & Changes

HP $31.2 billion

Increase profitability by leveraging demand for higher-margin enterprise hardware.

HP’s revenue grew 1.5% year-to-year to $31.2 billion in 2Q11, driven by software and ESSN growth.

Apple $28.6 billion

Fuel strong revenue expansion through continual product and service introductions, such as the iPad 2 and iPhone 4.

Revenue growth was driven by strong sales of the iPhone and iPad, with unit sales growing 142.2% and 182.8% year-to-year, respectively.

IBM $26.7 billion

Accelerate revenue growth by integrating hardware, services and software.

Corporate revenue expansion was led by 17.5% YTY STG revenue growth, with IBM Software revenue up 16.9%.

Company Growth Key Strategy Drivers & Changes

Apple 82%Dominate public awareness with innovative products and astute marketing while maintaining a premium market position in all product lines.

Mac sales growth started to slow in 2Q11; however, Apple leveraged iPad success to outpace the market growth rate for PC sales.

HDS 26.7% Leverage acquisitions to provide comprehensive solutions that address a broad range of markets.

Strong sales of the HDS Virtual Storage Platform resulted in HDS external disk storage growth of 23.8% YTY.

NetApp 26.4% Leverage partners and product development to drive international expansion.

NetApp maintained double-digit software and services revenue growth, on the back of customer demand for end-to-end solutions.

Company OM % Key Strategy Drivers & Changes

Apple 32.8% Support margin improvement by focusing on sales of Apple’s most profitable product lines.

Apple improved margin performance in 2Q11, resulting from a stronger mix of iPhone sales, which are margin-accretive due to decreased manufacturing costs.

Intel 30.2%Intel is leveraging its broad customer presence and cyclical product improvements to drive above-average growth and margin performance.

Operating margin fell from 37% in 2Q10 to 30.2% in 2Q11, as Intel continued to record higher start-up costs related to 22-nm manufacturing technology.

IBM 19.1%Grow margins across the hardware portfolio by driving sales of integrated solutions to midsized enterprise customers (MSEs).

STG operating margin expanded 310 basis points to 8.4% in 2Q11, driven by an improving product mix.

Executive Summary

TBR


Ultrabooks merge the key features and functionality that appeal to a variety of users to establish a unique value proposition

Executive Summary: Quarterly Focus

Ultrabooks will strike a balance between portability, affordability and functionality to establish a new position in the PC market.• Ultrabooks will help fuel future PC demand by creating a more

enticing value proposition than traditional notebooks.• TBR believes both traditional notebook and tablet PCs stand to be

cannibalized by the entrance of Ultrabooks.

Tablet

Ultrabook

Traditional Notebook

• Low Price Point• Highly Portable• Instant-On• Long Battery Life• Touch Screen

• Functionality• Interoperability• Business Apps• Connectivity• Security

• Low Price Point• Portability• Functionality• Instant-On (SSD)• Long Battery Life• Business Apps• Interoperability• Connectivity• Security• Touch (long-

term)

Key Opportunity for Business Customers:

Windows

KEY PC DEVICE RANKINGS

Tablets

Notebooks Ultrabooks

0

2

4

6

8

10

12

0 2 4 6 8 10 12

Func

tion

alit

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ighe

r is b

etter

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Portability Ranking (Higher is Better)

Battery Life:

Best

Average

Poor

Pricing Rated by Bubble Size (Larger is better)

$$$ $$

$

$

Smartphones

Sweet spot for value-to-performance

Windows 8 will influence sales of Ultrabooks over Macs with enhanced business functionality, a dedicated app store and broader device interoperability.

TBR


PC vendors will compete aggressively for share of the burgeoning Ultrabook market as a new avenue to future growth

Vendors are rushing to introduce Ultrabooks to market; success will depend on the ability to compete with Apple on price, performance and mobility• Vendors are rapidly introducing Ultrabooks, led by Asus and Acer in October, to

be followed by Toshiba and Lenovo later in the year.• In August, Apple launched new MacBook Airs beginning at $999, which it claims

offer a two-fold performance increase over the prior generation. Asus and Toshiba have announced plans to introduce models below the $1,000 price point, which we believe will offer performance competitive with Apple’s new offerings.

Executive Summary: Quarterly Focus

Ultrabook vendors will need to find the right balance of price, mobility and performance to capture sales opportunities – much like Apple did with the SSD-based MacBook Air in 4Q10.

SOURCE: TBR AND PC VENDORS

2011 ULTRABOOK LINEUP

16 12

1,585

1,210 1,230

0

400

800

1,200

1,600

2,000

2Q10 3Q10 4Q10 1Q11 2Q11

Uni

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MACBOOK AIR UNIT SHIPMENTS AND LAPTOP SALES GROWTH

Macbook Air UnitsSOURCE: TBR AND APPLE

TBR

SOURCE: TBR AND APPLE

TBR

Introduction of SSD-Based MacBook Air in October with

improved pricing options

MACBOOK AIR UNIT SHIPMENTS AND LAPTOP SALES GROWTH

• The Intel-architected Ultrabook PC form factor will follow in the footsteps of Apple’s MacBook Air, addressing customer demand for a high-performance, highly mobile, constantly connected device to perform a range of personal and business computing tasks.

• Ultrabooks meet the more demanding resource requirements of productivity applications addressed by full-feature notebooks, as well as the instant-on capabilities for day-to-day tasks, such as email.

• TBR believes the Ultrabook value proposition, combining the ease of use of tablets and functionality of full-feature notebooks in a single device, will resonate with SMB and enterprise customers.

• Ultrabooks allow for instant-on capabilities through SSD drives and the latest processors, and will evolve to deliver touch-screen functionality to create a more flexible interface across different uses and apps.

VENDOR MODEL ETA & Price

Asus UX31 Oct. <$1,000

Toshiba Portege Z830 Nov. <$1,000

Acer Aspire S3 Oct. ~$1,000

Lenovo U300s Late 2011 $1,195

TBR


PC vendors are penetrating emerging countries to offset weak consumer spending in mature markets


• Due to weak demand in mature markets and tablet cannibalization, average PC revenue growth fell from 30.5% YTY in 1Q11 to –4.5% YTY in 2Q11.

• Vendors are racing to penetrate growth markets, particularly in China, to offset the effects of lackluster demand in mature geographies.

• Lenovo and Dell are investing to gain share in smaller cities in China and close the PC revenue gap between Apple.

Segment View: PC

Apple

DellHP

Lenovo

Panasonic

Toshiba

Sony

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90%

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PC Revenue Growth

2Q11 YEAR-TO-YEAR PC REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average PC Revenue Growth = -4.5%

Average CorporateRevenue Growth for

Segment = 9.9%

TBR

Acer: (-28.6, -24.1)

TBR


PC Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $8.9 billion

Investigate strategic alternatives for the PSG group to drive long-term profit expansion, including the potential separation of its commodity PC business from its higher-margin enterprise operations.

Weak consumer demand for notebook and desktop PCs drove PSG revenue down 3.3% year-to-year to $9.6 billion.

Dell $7.9 billion

Cut costs and offset declining unit shipments by re-architecting PC designs and manufacturing operations.

Total cost of goods sold fell 590 basis points YTY as a result of stabilizing hardware component costs, a more efficient component supply chain and a product mix shifting toward solutions.

Lenovo $5.6 billion

Maintain leadership position in China’s PC market while expanding distribution in mature and global emerging markets.

Notebook revenue rose 13.7% year-to-year to $3.5 billion, accounting for 59.8% of total revenue.

PC Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 16%Simplify the consumer PC experience, including a simplified interface and cross-device interoperability while maintaining high quality.

Mac sales slowed due to iPad cannibalization. However, Apple achieved another record iPad sales quarter, with unit sales growth of 183% YTY.

Lenovo 15%Restructure PC production, including leveraging contracting manufacturers, to lower operating expenses and help improve PC profitability.

Laptops realized 13.7% year-to-year growth driven by emerging markets.

Dell –0.7%

Leverage growing brand presence and sales capabilities in China to foster Dell tablet adoption while awaiting Windows 8 or an Android-based productivity application to meet demand for the BlackBerry of the tablet space in mature markets.

Notebook PC revenue growth of 1.3% YTY and a 4% increase in unit shipments of portables partially offset a 3.8% decline in workstation unit shipments for Dell in 2Q11.

PC vendors are leveraging restructuring to boost profitability, while investing in R&D to support demand for mobile form factors, like tablets

Segment View: PC

TBR


PC vendors will overcome weak commercial demand in mature markets by leveraging Ultrabooks and new tablets

Key 2Q11 M&As, Alliance Changes & DealsCompany TBR Insights

Panasonic

In June, Panasonic announced a partnership with Oculis Labs to equip Toughbook mobile computers with the optional PrivateEye Enterprise data privacy software, which recognizes the user’s retina via webcam.

HP

In August, HP signed a PC equipment deal with the U.S. Air Force to provide HP Z800 and Z400 workstations, as well as two configurations of the HP Compaq 6005 Pro Business desktop PCs.

Portfolio/GTM & RM ChangesCompany TBR Insights

Apple

The 2Q11 release of OS X Lion and iCloud will make for a more integrated computing experience catering to both Windows and iOS users. Additionally, it will help promote Macbook Air sales with enhanced multi-touch capabilities.

Sony

Sony increased R&D expenses by 40 basis points to 6.4% of revenue, or $1.2 billion, which TBR attributes to Sony’s expanded investment in new products, such as tablets, Ultrabooks and new gaming systems.

ToshibaToshiba is introducing eco-friendly devices to grow PC revenue. In 2Q11, it rolled out PCs with “peak-shift function” to reduce grid power consumption, as well as eco-chips.

Trends & Outlook• PC vendors will race to develop Ultrabooks, positioning the devices as high-end tablet alternatives with superior

performance and instant-on capability.• Competitors , such as Dell, will leverage customer uncertainty around HP for commercial PC unit shipment growth.• Vendors are leveraging restructuring to support margins in the face of weak consumer demand. In coming quarters,

we believe they will develop tablet offerings with improved crossover business and leisure functionality to overcome headwinds and foster PC unit shipment growth.

Segment View: PC

TBR


x86 server vendors continue to close the performance gap between proprietary servers to win market and wallet share


• Average x86 revenue growth fell to –8.6% YTY in 2Q11 from 7% in 2Q10 – largely due to outliers Acer and Oracle/Sun.

• x86 server vendors continued to chip away at proprietary server market share, delivering high-end x86 offerings that are increasingly capable of supporting mission-critical workloads – supported in 2Q11 by the April release of Intel Xeon E7 processors.

Segment View: x86 Server

HPDell

IBM

Oracle/Sun

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x86 Revenue Growth

2Q11 x86 REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for Segment: -1.9%

Average x86Revenue Growth = -8.6%

TBR

Acer: (-30.8, -24.1)

TBR


x86 Server Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $3.3 billion

Leverage HP’s enterprise hardware business, including its x86 server lineup, to develop integrated solutions and drive corporate growth.

HP’s industry standard server revenue grew 8.5% YTY in 2Q11, led by demand for ProLiant and other x86-based blade servers.

Dell $2.1 billion

Augment Dell’s x86 server portfolio with storage and networking acquisitions to meet growing demand for datacenter infrastructure buildouts and boost corporate top-line growth.

Dell’s server business led its segments in growth, increasing 8.7% year-to-year, or 90 basis points to 13.1% of total revenue, driven by SMB infrastructure buildouts.

IBM $1.5 billion

Spur adoption of System x servers in cloud and virtualized datacenters to spur adoption of high-end offerings and drive revenue and profit growth.

High-end System x and growth markets revenues grew a reported 26% and 27%, respectively, through cross-portfolio growth initiatives.

x86 Server Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

IBM 15%Bundle System x into customer-centric solutions to expand its addressable customer base into the small enterprise and position for higher-value deals.

System x revenue grew 15% year-to-year to $1.5 billion, leading the systems and technology group.

Dell 8.7% Build solutions around x86 servers to increase share of small and midsized enterprise customers’ wallets.

Dell’s Large Enterprise revenue grew 0.8% annually, driven by demand for servers and services.

HP 8.5%Expand from the consumer space into the profitable enterprise space by integrating x86 servers into end-to-end solutions.

Competitive pricing and integration with storage and networking into solutions drove HP’s x86 server revenue growth.

Vendors will leverage implementation into end-to-end, cloud-enabling solutions to maintain x86 server sales growth in 2H11


TBR


x86 server vendors will close the performance gap to high-end servers, while focusing on energy efficiency and enterprise solutions


Dell

In August, Dell closed its acquisition of Force10 Networks, provider of Open Cloud Networking high-performance datacenter solutions, to complement its x86 server portfolio and further its solutions capabilities.

HP

In a deal with the California Dept. of Water Resources, HP will leverage its BladeSystem technology to migrate a majority of the DWR’s physical servers to a virtualized environment, consolidating the organization’s 600 physical servers to 160.


Fujitsu

Fujitsu announced upgrades to its Primergy x86 server lines centered on scalability and performance to enable customer migration of mission-critical workloads to virtualized and cloud environments.

TBR believes Fujitsu will drive server unit volume by leveraging an expanded sales organization in North America and a continued focus on entry-level offerings to accelerate x86 server adoption in underpenetrated markets.

IBMIBM is leveraging management tools and more efficient servers to expand its System x addressable customer base into growing geographies.

Trends & Outlook• Vendors are capitalizing on an industry shift toward consolidated IT environments by building solutions around their

x86 servers. These vendors will continue leveraging acquisitions, expanding their storage and networking capabilities, to augment their server portfolios and further this solutions approach.

• Green technology is increasingly important in markets with restricted power supplies such as Japan. TBR expects vendors will increasingly develop technologies and processes to reduce the overall power consumption of the server environment, such as IBM with its Systems Director Active Energy Manager.


TBR


HP and Oracle/Sun continued to struggle against x86 cannibalization, and, in HP’s case, widespread hardware customer uncertainty


• Average proprietary server revenue growth declined from 7.2% YTY in 1Q11 to 3.8% in 2Q11, as x86 server vendors continue closing the performance gap and integrate their systems as cornerstones of larger, customer-centric solutions.

• Despite its 1Q11 efforts to stifle HP’s hardware business and drive a single-stack, SPARC-centric approach by cutting support for Intel’s Itanium processor, Oracle posted –11.9% YTY growth.

• HP’s growth dipped into the red in 2Q11, and TBR believes the vendor will remain challenged in 3Q11 as it works to regain hardware customer trust following uncertainty regarding PSG.

Segment View: Proprietary Server

IBM

Oracle/Sun

HP

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Proprietary Server Revenue Growth

2Q11 PROPRIETARY SERVER REVENUE GROWTH VS CORPORATE REVENUE GROWTH

Average Corporate Revenue Growth for Segment = 4.6%

Average Proprietary Server Revenue Growth =

3.8%

TBR

SOURCE: TBR

TBR


Proprietary Server Revenue LeadersCompany Size Key Strategies Drivers & Changes

IBM $1.5billion

Support new workloads and position System z as part of larger solutions.

Strong performance in System z was a key driver of IBM’s double-digit revenue expansion across nearly 40 growth market countries.

HP $459 million

Bundle high-end servers with software, services and other enterprise hardware offerings to further its traction in the enterprise space.

In a deal with Desjardins General Insurance Group, HP leveraged its Integrity servers to develop a converged infrastructure catering to the growing financial industry.

Oracle/Sun

$439 million

Foster new growth opportunities by bundling its software with Sun hardware into industry-focused solutions, including alliances and acquisitions as necessary as a value-add.

Oracle rolled out its VM 3.0 solution in 2Q11 to simplify and accelerate server virtualization and management – touting reduced TCO to drive sales.

Proprietary Server Revenue Growth LeadersCompany Growth Key Strategies Drivers & Changes

IBM 32%Leverage workload optimization to drive adoption of its business-class System z and zEnterprise BladeCenter Extension offerings.

System z mainframe revenue grew 61% YTY to $758 million, while POWER systems revenue grew 12% to $764 million.

HP –8.7%Win more large enterprise deals by investing in R&D initiatives to better integrate HP’s servers with its networking, storage, software and services offerings.

Business-critical server revenue fell 8.7% YTY to $459 million due to increased competition and stricter budgets among enterprise and public customers.

Oracle/Sun –11.9%

Fuel server sales by delivering bundled hardware and software solutions that enable cloud-based and virtualized environments.

Oracle improved its hardware financial performance in 2Q11, as it shifted focus from x86 to servers to SPARC servers.

Vendors are painting a picture of reduced TCO by building end-to-end, virtualized and cloud-enabling solutions around their high-end servers


TBR


IBM will leverage workload optimization to maintain double-digit System z growth despite a landscape shifting toward x86-based systems

Trends & Outlook• Proprietary server vendors are combatting x86 server market cannibalization by leveraging an end-to-end

solutions approach to boost ROI and derive new use cases for their offerings. Vendors will leverage this solutions approach to deliver the value proposition of reduced TCO and fuel unit shipment growth.

• IBM will continue leveraging tools like zBladeCenter extension to piece together multi-architecture systems and drive sales across its server portfolio – including System x, POWER and System z. IBM is leveraging the mainframe as a tool to support new workloads, positioning System z as part of larger solutions and highlighting reduced cost per workload in data-intensive environments to drive adoption.

Key 2Q11 M&As, Alliance Changes & Deals

Company TBR Insights

IBM

For its POWER Systems, IBM maintained its strategy of gaining share through competitive takeovers, reporting more than 250 competitive displacements, primarily from Oracle and HP, during 2Q11 for more than $300 million in revenue.


Portfolio/GTM & RM Changes

Company TBR Insights

IBMIBM has made System z more accessible with zBx and its latest, lower-priced zEnterprise 114 mainframe to target customers in a wider range of verticals.

Fujitsu

TBR believes Fujitsu will drive new growth in its proprietary server business by penetrating the cloud market, developing hardware implementation platforms to fuel solutions sales and strengthening its technology capabilities to support recovery in Japan.

TBR


Storage vendors are driving revenue growth by developing cloud, virtualization and Big Data solutions while cultivating channel expansion


• TBR believes comparatively weaker demand for cloud, virtualization and Big Data solutions, coupled with challenging Public Sector conditions, drove down average storage revenue growth from 14.6% in 1Q11 to 9.7% YTY in 2Q11.

• The revenue growth gap within the storage market continued to widen. Dell fell further behind the growth leaders, as it struggled following the 1Q11 termination of its relationship with EMC.

Segment View: Storage

Dell

EMC HDS

HP

IBM

NetApp

Oracle/Sun

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30%

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Storage Revenue Growth

2Q11 STORAGE REVENUE GROWTH VS CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for segment = 12.6%

Average Storage Revenue Growth = 9.7%

TBR

TBR


Storage Revenue LeadersCompany Size Key Strategy Drivers & Changes

EMC $1.9 billion

Leverage high-end offerings to sustain core market momentum, while investing in acquisitions and R&D to capitalize on demand for cloud and Big Data solutions.

Mid-tier revenue grew 27% YTY, due to increased adoption of VMAX and EMC’s use of partners to deliver its portfolio to new industries.

HDS $1 billion

Integrate core storage, compute and networking portfolios with partner software to deliver Converged Datacenter solutions and capitalize on demand for cloud-based datacenters.

Demand for virtualization and cloud computing offerings drove HDS storage growth and led to double-digit revenue expansion.

HP $976 million

Leverage acquisitions to enhance HP’s storage portfolio and global presence, positioning the company for inorganic growth.

HP introduced HP Peer Motion software and P10000 3Par Storage Systems to enhance client flexibility in public and private cloud environments.

Storage Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

NetApp 30.9%Inorganically enhance proprietary technologies and increase channel presence to gain share of growing niches within the storage market.

Strong demand for FAS6000 products enabled the FAS line to climb 160 basis points to 47.4% of NetApp’s total revenue.

HDS 26.7%HDS is leveraging its partner channel, Hitachi TrueNorth, to deliver value-add services and create new growth opportunities for growth.

HDS leveraged TrueNorth to expand the breadth of its storage offerings, enhancing its Big Data and industry-specific solutions capabilities.

EMC 17%Integrate proprietary and acquired portfolios into cloud and Big Data solutions to penetrate new geographies and customer segments.

EMC’s Symmetrix revenue grew a reported 15% sequentially due to increased adoption of VMAX.

Storage vendors are augmenting R&D spend with acquisitions and partnerships to penetrate growth niches – namely cloud and Big Data


TBR


Trends & Outlook• Storage vendors are aggressively targeting alliances and acquisitions to enhance their adjacent technology

capabilities, such as networking, and create new growth opportunities via a solutions approach. Vendors are developing cloud and Big Data solutions to capitalize on demand in growing verticals such as healthcare and telco.

• We believe storage vendors will develop industry-specific cloud-based storage solutions to quell customer fears around security in verticals with sensitive data and foster migration to cloud.

• TBR anticipates market volatility and macroeconomic uncertainty will create headwinds to future growth for storage vendors – particularly pure-play vendors with strong Public Sector ties, such as NetApp.

Storage vendors will continue to leverage partners and acquisitions to round out their portfolios and derive new growth opportunities



EMC

EMC purchased some assets of Asankya Inc., a provider of application acceleration services and solutions utilized by providers of storage as a service, virtual desktops and enterprise applications, as well as by the U.S. Federal government.

IBMIBM will sustain momentum in storage and analytics by leaning on acquired portfolios, namely Netezza, to develop solutions that enable optimized datacenters.

HDS HDS acquired NAS vendor BlueArc to expand its Big Data analytics capabilities.


EMC

EMC rolled out the NYSE Technologies Capital Markets Community Cloud in conjunction with VMware and the NY Stock Exchange/Euronext to drive sales of its unified storage solutions through cloud and Big Data analytics.

FujitsuFujitsu integrated the SAP HANA in-memory appliance into its infrastructure, including storage, to enable real-time, large-scale analytics and expand its cloud business through bundled solutions.

IBMIBM is integrating storage as part of larger solutions, to capitalize on demand for Big Data warehousing and analytics solutions and position for an expanded storage business.

TBR


Microelectronics vendors are shifting focus away from PCs and toward new applications for chips to drive growth


• Average microelectronics revenue growth fell from 14.2% YTY in 1Q11 to 4.8% in 2Q11, hindered primarily by poor performance from Sony and demand for traditional PC form factors.

• Sony fell from double-digit YTY growth in 1Q11 to a decline of nearly 10% in 2Q11, as it continues working toward recovery in the wake of Japan’s March earthquake.

• AMD accelerated growth by leveraging its new Fusion APUs to support demand for increased performance and battery life in mobile devices.

Segment View: Microelectronics

AMDIBM

Intel

Sony

Toshiba

-5%

0%

5%

10%

15%

20%

25%

-10% -5% 0% 5% 10% 15% 20% 25%

Corp

orat

e Re

venu

e G

row

th

Microelectronics Revenue Growth

2Q11 MICROELECTRONICS REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

TBR


AverageMicroelectronics Revenue

Growth = 4.8%

TBR


Chip manufacturers are leveraging restructuring to support margins, and a solutions approach to derive new use cases for their offerings


Microelectronics Revenue LeadersCompany Size Key Strategy Drivers & Changes

Intel $13billion

Build presence in consumer and enterprise computing devices through advancements in PC and server architectures.

Atom Processor unit shipments increased 76% YTY, due to demand for medical imaging, print imaging, communications and industrial embedded applications.

Toshiba $3.4 billion

Consolidate and restructure its semiconductor operations to maximize profitability and market responsiveness while increasing sales in emerging geographies.

Toshiba combined its Semiconductor Company and Storage Products Company into a new in-house company that will leverage synergies for improved operations.

AMD $1.6 billion

Leverage partnerships and R&D to deliver improved multimedia and video capabilities as well as client device battery life.

Unit shipment growth was fueled primarily by demand for Fusion APUs and mobile microprocessor units.

Microelectronics Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Intel 21.1%Deliver new products to market by strategically alternating upgrades to existing architectures and comprehensive architecture refreshes.

TBR estimates notebook sales achieved 10.9% YTY growth, driven by the success of the Core i3, i5 and i7 processor lines.

Toshiba 13%Leverage microelectronics partnerships and acquisitions to capitalize on demand for more efficient power generation.

Toshiba is piggybacking semiconductor sales on Social Infrastructure growth, driven by Toshiba’s investment in energy system growth as part of its green initiative.

IBM 4%Accelerate revenue growth by delivering purpose-built solutions, which integrate its chips and other hardware with software and services.

IBM’s microelectronics revenue grew 4.0% YTY to $567 million in 2Q11.

TBR


Trends & Outlook• Vendors are leveraging R&D and partnerships to derive new applications for their chipsets, including in mobile and

entertainment devices, to capitalize on demand and create new avenues for growth. • Microelectronics vendors will target growing verticals for revenue expansion by penetrating industries, including

healthcare and bioanalytics, through supporting research with smart, energy-efficient chips and computer systems. • Intel introduced plans for Ultrabooks, a new thin-and-light PC form factor that will allow the company to embed its

latest processor technology and establish an early market position in a niche product area.


Intel

Intel purchased Fulcrum Microsystems to enhance its enterprise market capabilities with more efficient switching and processor technology that allows for enhanced speed and performance in cloud computing.

AMDAMD is leveraging joint development initiatives to derive new applications for its chipsets, evidenced in its June partnership with desktop videoconferencing solutions provider ViVu.


IBM

In May, IBM expanded upon its 10-year partnership with ETH Zurich, a European science and engineering university, investing $90 million to open the Binnig and Rohrer Nanotechnology Center in Switzerland with ET Zurich.

Intel

The Intel Science and Technology Center represents the next $15 million installment of Intel’s freshly announced five-year, $100 million program to accelerate university research and innovation across the nation.

Microelectronics vendors will continue investing in R&D, acquisitions and partnerships to spur adoption of their chips in new hardware systems


TBR


Vendors are leveraging solutions to target SMBs in growing countries in the Americas, offsetting weak consumer demand in mature markets

• In 2Q11, average Americas revenue increased 8.3% as companies leveraged cloud-based solutions to address the needs of governments, universities and SMBs in growing countries, such as Brazil.

• Weak consumer spending hindered overall growth. TBR believes this will be compounded in coming quarters by a challenging Public Sector environment.

• NetApp’s Americas revenue grew 28.8% YTY to $817 million, driven by demand from its Telco and Service Provider group, as well as from its State, Local and the Higher Education group early in 2Q11.


Geographic View: Americas

HPDell

Panasonic

NetApp

Oracle/Sun

Sony

Fujitsu

AMDIBM

Intel

EMC

Toshiba

Lenovo

HDS

-10%

0%

10%

20%

30%

-20% -10% 0% 10% 20% 30% 40%Corp

orat

e Re

venu

e G

row

th

Americas Revenue Growth

2Q11 AMERICAS REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for segment = 12.8%

Average Americas Revenue Growth = 8.3%

TBR

Apple: (84.8, 82.7)

Acer: (-18.5, -24.1)

TBR


Vendors are growing Americas revenue by leveraging solutions to capitalize on demand for infrastructure buildouts in growing countries


Americas Revenue LeadersCompany Size Key Strategies Drivers & Changes

HP $14billion

Invest in emerging markets, such as Brazil, to diversify HP’s revenue stream in the Americas while leveraging advanced infrastructure solutions to address mature markets, such as the U.S.

Revenue in the Americas dipped 0.7% year-to-year, driven by increased competition in the consumer market and weaker demand for enterprise networking, software and services.

Apple $12.6 billion

Leverage carrier expansion and cyclical product refreshes, while driving sales of high-margin product lines such as the iPhone to sustain Americas growth.

Expansion of Apple products to the Verizon network and the introduction of the iPad 2 helped spur growth in the Americas.

IBM $11.2 billion

Increase penetration of emerging countries in the Americas, such as Brazil, via IBM’s Growth Markets and Smarter Planets initiatives.

Americas revenue increased 9.8% year-to-year, driven by momentum in IBM’s Server and Software businesses.

Americas Revenue Growth LeadersCompany Growth Key Strategies Drivers & Changes

Apple 54.5%Leverage carrier expansion and the introduction of new devices, such as the iPad 2 and iPhone 4, to foster growth in the Americas.

The Americas comprised 35.4% of Apple’s revenue, down from 39.7% in 2Q10 as international expansion led the region to comprise a smaller share of total revenue.

Intel 33.9%Invest in Brazilian software developers to write local code to strengthen HP’s position in South American markets.

Demand for cloud infrastructure and high-end servers offset weak consumer PC demand in the U.S. to fuel Intel’s 2Q11 Americas growth.

NetApp 28.2%Lean on midmarket penetration and expansion in growth verticals to offset U.S. Federal sector uncertainty and grow Americas revenue 15.8% YTY in 3Q11.

Americas revenue grew 28.8% YTY, driven by demand from NetApp’s Telco and Service Provider group, as well as from its State, Local and the Higher Education group.

TBR


Vendors are capitalizing on demand for mobile PC form factors in the enterprise and SMB IT buildouts in growing countries in the Americas


PanasonicPanasonic will target SMBs in the U.S. with its new Cloud Business Phone System, rolled out in 2Q11.

HP Stephen DiFranco replaced DeWitt as head of HP’s PSG business in the Americas in 2Q11.

EMC

EMC will invest $100 million over five years in its R&D, manufacturing and sales and marketing capabilities in Brazil, including a center in Rio de Janeiro supporting the Big Data solution development initiatives of customers in the oil and gas industries.


Panasonic

In June, Panasonic and the Branded Cities Network (BCN), a subsidiary of EL Media, partnered to deliver consumer-based media. Panasonic will be the exclusive provider of all digital signage in North America, while BCN will serve as a sales agent for Panasonic’s third-party advertising in North America.

Fujitsu

In June, Fujitsu partnered with software vendor ABBYY to gain share in the U.S. by targeting SMBs with jointly-developed content management solutions delivered through distributor Ingram Micro.

Trends & Outlook• PC vendors will leverage portable form factors, such as tablets and Ultrabooks, to target mobile professionals in the

U.S. and offset the effects of weak consumer demand.o In tandem, TBR anticipates PC vendors will expand their services offerings, such as mobile device

management, to deliver an additional value-add.• Vendors will target expansion in growing countries, such as Brazil, by expanding their R&D and sales and marketing

reach. They will also drive penetration of growth verticals in mature markets, like the U.S., with SMB-focused end-to-end solutions to combat headwinds created by constrained Federal budgets in 2H11.


TBR


Vendors are leveraging the channel and a solutions approach to overcome the effects of economic uncertainty in EMEA


.

• The EMEA region posted the smallest revenue growth of the geographic segments, largely due to decreased spending in mature markets.

• Vendors targeted emerging countries, such as those in the Middle East and Eastern Europe, primarily by leveraging an expanded channel.

• Apple leveraged carrier and retail footprint expansion to maintain the strongest revenue growth, while HDS drove sales of its virtualization and cloud-enabling capabilities to place second.

Geographic View: EMEA

HP

IBM

Sony

AMD

EMC

Lenovo

Panasonic

NetApp

Oracle/Sun

Toshiba

Fujitsu

Intel

HDS

Dell

-10%

0%

10%

20%

30%

-30% -20% -10% 0% 10% 20% 30%

Corp

orat

e Re

venu

e G

row

th

EMEA Revenue Growth

2Q11 EMEA REVENUE GROWTH VS. CORPORATE REVENUE GROWTH


Average EMEA Revenue Growth = 6.0%

TBR

SOURCE: TBR

Apple:(68.3, 82.0)

TBR

SOURCE: TBR

Acer:(-50.0, -24.1)

TBR


Hardware vendors are targeting emerging markets in EMEA through new product offerings, alliances and acquisitions


EMEA Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $11.7 billion

Target growing countries, such as those in the Middle East and Eastern Europe, and growing verticals with HP’s solutions approach to offset weak spending.

EMEA revenues declined 1.7% year-to-year, resulting from more stringent spending levels from enterprise and government organizations for enterprise solutions.

IBM $7.8 billion

Leverage software and storage partnerships throughout emerging markets in EMEA to capitalize on growing demand for Big Data analysis and tools.

EMEA revenue rose 16.2% year-to-year, driven by continued growth in the U.K., France and Spain, and a return to growth in Germany and Italy.

Apple $6.6 billion

Expand iPhone market share by leveraging deals with foreign carriers while targeting lower-end smartphone markets in emerging regions in the Middle East via discounted iPhone 3GS pricing.

iPhone sales bolstered Apple’s performance in emerging markets throughout the Middle East, leading revenue growth in EMEA.

EMEA Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 68.3% Expand retail footprint in EMEA to sustain robust growth in the region.

EMEA sales grew 70.6% year-to-year in 2Q11, supported by carrier expansion and the introduction of the iPad 2.

HDS 26.7%Leverage virtualization and cloud capabilities to increase EMEA revenue by supporting SMB datacenter buildouts.

TBR attributes HDS’ double-digit EMEA growth to increased sales of converged datacenter solutions.

Lenovo 21.4%Leverage acquisitions to increase production and development activities in Western Europe while expanding its sales channels and access to R&D facilities.

EMEA revenue grew 21.4% year-to-year to $1 billion as a result of Lenovo’s “protect and attack” growth strategy.

TBR


Vendors will expand EMEA revenue by delivering solutions while expanding their R&D and sales and marketing arms in growing countries


DellIn June, Dell opened its first Cloud Research and Development Center in Dublin, following its plans announced in April to spend $1 billion on cloud computing R&D.

PanasonicPanasonic opened the eco Customer Care Centre in Dubai to support its initiative of becoming the No. 1 green innovation company in the electronics industry.

EMCEMC is gaining traction in growing geographies, including the Middle East and Africa, by expanding its Velocity Partner Program into key countries.

Trends & Outlook• Growth in EMEA is mainly attributable to growing countries throughout the Middle East and Africa. Companies

including Fujitsu and NetApp have been investing to develop solutions supporting IT infrastructure buildouts, primarily among SMB customers in these countries.

• To foster demand in mature, western European markets, vendors are leveraging alliances and acquisitions to develop cloud-based, industry-specific solutions, targeting growing verticals such as healthcare.

• Vendors will leverage expanded R&D and channel sales footprints to further their traction in key countries within the region, such as BRIC countries.


NetApp

Through its new partnership with Desktone, announced in August, NetApp will deliver virtualized, Desktop as a Service solutions to cloud service providers, which TBR expects will increase EMEA revenue as companies across EMEA adopt cloud infrastructures.

Lenovo

Adding to its growth in acquisitions, Lenovo announced the purchase of Medion AG in July, which will increase Lenovo’s reach in Western Europe by growing its sales channels and R&D specific to the region.


TBR


APAC vendors will leverage restructuring, a bolstered channel in growing countries and new products to offset weakness in Japan


• The APAC region again led the geographies in growth, despite continued challenges in Japan resulting from the natural disaster during 1Q11.

• PC and mobile device vendors such as Apple leveraged strong demand in China.

• Japan-based vendors leveraged outsourcing to reduce their operating expenses, freeing up capital to develop products in growing business areas.

• Vendors based externally worked to expand their channel presence in growing countries.

Geographic View: APAC

Fujitsu ToshibaIBM

Intel

SonyPanasonic

Acer

HDSEMC

Lenovo

Oracle/SunDell

AMD

NetApp

HP

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

-20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

Corp

orat

eRev

enue

Gro

wth

APAC Revenue Growth

2Q11 APAC REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

TBR

Average Corporate Revenue Growth for Segment =12.8%

Average APAC Revenue Growth = 21.2%

Apple:(179.7, 82.0)

TBR


Hardware vendors are investing in R&D and the channel to capitalize on demand in growing countries within APAC


APAC Revenue LeadersCompany Size Key Strategy Drivers & Changes

Panasonic $18.3 billion

Restructure, eliminating country-specific sales teams and creating regional sales and marketing headquarters to foster growth in APAC.

Revenue in Asia Pacific fell to $15.04 billion in 2Q11 from $17.92 billion in 2Q10 as a result of decreased consumer spending following the disaster in Japan.

Toshiba $11 billion

Prioritize investments in new and growing business areas, such as transmission & distribution, to promote expansion in Asia.

Revenue in Japan rose 7.6% YTY in 2Q11, representing 43.6% of revenue, driven by PC sales and Home Appliances.

Sony $10.1 billion

Leverage higher-value product differentiation and target efficient resource planning to maximize cost savings and increase APAC growth and revenue.

Continued efforts to repair damage from the earthquake resulted in an 18.6% increase in Japan sales, offsetting the 6.3% decline in APAC.

Asia Pacific Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 179.7%Leverage alliances to foster growth, particularly in Greater China, through stronger carrier presence and an expanded base of retail outlets.

Asia Pacific revenue grew 179.7% year-to-year in 2Q11 driven by demand for smartphones and tablets in emerging markets, such as China.

NetApp 37.7%Seek expanded channel and direct sales footprint to increase APAC revenue while leveraging partners to create new applications for its storage solutions in cloud and virtualization markets.

APAC revenue grew 36.9% from 2Q10 to $190 million, as NetApp leveraged Engenio’s OEM channel, as well as prior restructuring initiatives for strengthened execution.

HDS 26.6%Leverage a solutions approach to capitalize on an industry shift toward cloud-based and sustainable datacenters in APAC countries, particularly Japan.

TBR attributes HDS’ double-digit APAC revenue growth to demand for data protection, virtualization and cloud-enabling solutions.

TBR


Trends & Outlook• Vendors leveraged demand in growing countries, namely China and India, to offset challenges in Japan following

natural disaster in March. Demand for PCs and smartphones was particularly strong in China, and India will be a key focus for vendors looking to capture emerging market share throughout east Asia via channel partnerships.

• In light of power supply issues throughout Japan, PC makers such as Panasonic and Toshiba are delivering eco-centric product lines and unveiling “green” micro-technology to reduce grid power consumption and appeal to customers in the world’s third-largest PC market. TBR believes enterprise hardware vendors will also adopt a similar strategy, working to develop technology that will enable more efficient datacenter environments.

Vendors will capitalize on the growing IT markets of China and India in 2H11, as demand in Japan following the natural disaster remains weak


Panasonic

Panasonic will rebuild and recover revenue growth in Japan by emphasizing a green technology strategy with energy solutions to drive sales, as energy conservation remains a top priority in the country.

IBMIBM opened offices in Coimbatore, India, as well as Senegal and Tanzania, to address the needs of SMBs and governments in smaller cities and rural areas.

ToshibaToshiba announced a 75% equity stake in TopRank Corporation that will allow Toshiba to promote the expansion of its transmission and distribution sector in Asian markets.


Apple

TBR believes Apple and China Mobile’s planned partnership to bring the iPhone to China Mobile's network will drive APAC growth as China Mobile is the largest cell phone carrier in China.

LenovoLenovo partnered with NEC to leverage NEC’s established customer base, brand recognition and cultural affiliation to drive expanded sales opportunities in Japan.

Fujitsu

In July, Fujitsu allied with Siemens to capitalize on demand from telcos in India by developing scalable unified communications platforms and VoIP networks, wrapped with Fujitsu services.


TBR


HP customer uncertainty may lead to Apple surpassing HP in total revenue in 2H11

Financial Metrics: Revenue

RANKING TBR SCORE COMPANY TOP 3 COMPANIES

1 8.55 HP

2 8.04 APPLE

3 7.66 IBM

4 7.07 PANASONIC

5 5.97 SONY

6 5.62 TOSHIBA

7 5.50 DELL

8 4.98 INTEL

9 4.80 FUJITSU

10 3.59 LENOVO

11 3.37 EMC

12 3.12 ACER

13 2.78 ORACLE/SUN

14 2.73 AMD

15 2.71 NETAPP

16 2.62 HDS

TBR

$31,189

$28,571

$26,666

$23,654

$18,047

$16,256

$15,658

$13,032

$12,088

$5,920

$4,845

$3,533

$1,829

$1,574

$1,458

$1,017

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000

SOU

RCE: TBR AND

COM

PANY D

ATA

REVENUE (IN $ MILLIONS)

2Q11

1Q11

AVERAGE

Top Ranking AnalysisHP posted the highest total revenue

among hardware vendor peers for the third consecutive quarter, up 1.5%

year-to-year to $31.2 billion in 2Q11. TBR believes the company's

transformation of its product strategy will foster customer uncertainty in

2H11, creating opportunities for Apple to win wallet share in the consumer PC

space and IBM to win wallet sharein the enterprise space.

2Q11 Average = $12,834 2Q11 Standard Deviation = $10,506

TBR


Continued demand for iPad 2 and global iPhone sales will keep Apple ahead of peers in year-to-year revenue growth

Peaches1012


1 10.00 APPLE

2 6.24 HDS

3 6.22 NETAPP

4 5.73 INTEL

5 5.67 EMC

6 5.17 LENOVO

7 4.97 AMD

8 4.93 IBM

9 4.38 FUJITSU

10 4.09 TOSHIBA

11 3.93 HP

12 3.87 PANASONIC

13 3.86 DELL

14 3.80 SONY

15 3.78 ORACLE/SUN

16 1.56 ACER

TBR

82.0%

26.7%

26.4%

21.1%

20.4%

15.0%

12.8%

12.4%

6.4%

3.2%

1.5%

0.9%

0.8%

0.1%

-0.1%

-24.1%

-50.0% -30.0% -10.0% 10.0% 30.0% 50.0% 70.0% 90.0%

SOU

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COM

PANY D

ATA

REVENUE YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE

Top Ranking AnalysisApple posted the strongest year-to-year corporate

revenue growth among peers, up 82.0% YTY to $28.6 billion, for a fifth consecutive quarter in

2Q11. Though Mac sales growth started to slow during 2Q11, iPad revenue increased from 11.5%

of Apple's total revenue in 1Q11 to comprise 21.2% of Apple’s 2Q11 revenue, driven by strong

demand in mature markets and accelerated restocking cycles for iPad 2 inventory. TBR expects

Apple to maintain future growth by leveraging product refresh cycles to sustain iPhone and iPad

sales momentum.

2Q11 Average = 12.8% 2Q11 Standard Deviation = 22.4%

Financial Metrics: Revenue Growth

TBR


NetApp’s gross margin will be muted by slowing growth, potentially causing the vendor to lose its leadership in gross margin in 3Q11

Financial Metrics: Gross Margin


1 7.79 NETAPP

2 7.69 INTEL

3 7.55 EMC

4 7.08 ORACLE/SUN

5 6.24 HDS

6 6.06 IBM

7 5.98 AMD

8 5.52 APPLE

9 4.73 SONY

10 3.81 FUJITSU

11 3.55 PANASONIC

12 3.42 TOSHIBA

13 3.40 HP

14 3.31 DELL

15 2.17 LENOVO

16 1.09 ACER

TBR

61.5%

60.6%

59.4%

55.3%

48.0%

46.4%

45.7%

41.7%

34.9%

26.8%

24.6%

23.4%

23.3%

22.5%

12.5%

3.1%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

SOU

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COM

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ATA

GROSS MARGIN

2Q11

1Q11

AVERAGE

Top Ranking AnalysisNetApp maintained the top

position amoung industry peers in terms of gross margin.

However, TBR anticipates the vendor will face headwinds in

future quarters. Its gross margin declined 250 basis points YTY in 2Q11 as a result of rising COGS

and lower margin Engenio ‐products. TBR anticipates

continued margin declines for NetApp in 3Q11, due to

heightened investment in sales and marketing and R&D for

growth and contributions of less profitable Engenio offerings.


TBR



1 9.18 APPLE

2 8.70 INTEL

3 6.63 IBM

4 5.95 EMC

5 5.34 NETAPP

6 5.05 HDS

7 4.59 HP

8 4.45 DELL

9 4.34 AMD

10 3.50 SONY

11 3.48 LENOVO

12 3.15 TOSHIBA

13 3.15 PANASONIC

14 3.04 ORACLE/SUN

15 2.77 FUJITSU

16 1.80 ACER

TBR

32.8%

30.2%

19.1%

15.4%

12.1%

10.5%

8.1%

7.3%

6.7%

2.2%

2.1%

0.3%

0.3%

-0.3%

-1.7%

-6.9%

-20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0%

SOU

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COM

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ATA

OPERATING MARGIN

2Q11

1Q11

AVERAGE

Top Ranking AnalysisApple ousted Intel from the top spot in terms of operating margin as compared

to hardware vendor peers. Apple's operating margin increased from 31.9%

in 1Q11 to 32.8% in 2Q11, as Apple’s revenue growth continued to outpace

cost increases. As Apple introduces new product updates and continues to

penetrate new markets with iPhone, TBR believes the company will be able

to sustain its growth trend and maintain an operating margin above

35% into 2012.


The combination of strong revenue growth with a stable cost structure will render Apple a strong competitor in operating margin in 2H11

Financial Metrics: Operating Margin

TBR


Apple’s strong revenue growth will keep its SG&A as a percentage of revenue low, enabling the vendor to lead industry peers going forward

Financial Metrics: SG&A Expense


1 7.54 APPLE

2 7.09 LENOVO

3 6.89 ACER

4 6.63 HP

5 5.99 DELL

6 5.83 INTEL

7 5.75 SONY

8 5.70 AMD

9 5.22 PANASONIC

10 5.13 TOSHIBA

11 4.10 IBM

12 4.07 FUJITSU

13 3.49 ORACLE/SUN

14 1.97 EMC

15 1.85 HDS

16 1.28 NETAPP

TBR

6.7%

8.8%

9.7%

10.9%

13.9%

14.6%

15.0%

15.2%

17.4%

17.9%

22.6%

22.8%

25.5%

32.5%

33.0%

35.7%

0.0% 10.0% 20.0% 30.0% 40.0%

SOU

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COM

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ATA

SG&A AS A % OF REVENUE

2Q11

1Q11

AVERAGE

Top Ranking AnalysisThough Apple's SG&A expense rose 33.2% year-to-year to $1.91 billion, the company

maintained the smallest level of SG&A expense as a percentage of total revenue compared to peers. TBR believes Apple

continued to grow G&A headcount in 2Q11 to support expansion into new regions. We

anticipate Apple will invest in advertising and marketing expenditures around the iPad in 2H11, but expect resulting growth to offset

these investments.

2Q11 Average = 18.9% 2Q11 Standard Deviation = 9%

TBR



1 7.32 ACER

2 6.99 LENOVO

3 6.99 DELL

4 6.70 APPLE

5 6.56 HP

6 5.97 HDS

7 5.69 TOSHIBA

8 5.52 FUJITSU

9 5.49 IBM

10 5.31 SONY

11 5.17 PANASONIC

12 3.78 EMC

13 2.96 NETAPP

14 2.58 ORACLE/SUN

15 2.42 INTEL

16 0.00 AMD

TBR

0.3%

1.3%

1.3%

2.2%

2.6%

4.4%

5.3%

5.8%

5.9%

6.4%

6.9%

11.1%

13.6%

14.8%

15.2%

23.3%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

SOU

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COM

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ATA

R&D EXPENSE AS A % OF REVENUE

2Q11

1Q11

AVERAGE

Top Ranking AnalysisAcer reported the lowest R&D expense as a percentage of total revenue compared to hardware vendor peers for the third consecutive quarter. TBR believes Acer wi l l work to balance investment in the

development of smartphones and tablets to capi talize on demand with revenue growth to maintain this competitive

metric going forward.


Acer’s continued efforts to strategically hone R&D spend will keep the metric low as a percentage of revenue in future quarters

Financial Metrics: R&D Expense

TBR



1 10.00 INTEL

2 6.85 ACER

3 5.91 AMD

4 4.99 LENOVO

5 4.79 APPLE

6 4.42 DELL

7 4.33 HP

8 4.16 SONY

9 4.11 HDS

10 4.11 EMC

11 4.09 PANASONIC

12 4.07 FUJITSU

13 4.00 NETAPP

14 4.00 TOSHIBA

15 3.92 ORACLE/SUN

16 3.91 IBM

TBR

$34,021

$14,145

$10,026

$6,013

$5,128

$3,529

$3,137

$2,375

$2,163

$2,158

$2,098

$1,972

$1,697

$1,689

$1,335

$1,304

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000

SOU

RCE: TBR AND

COM

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ATAANNUAL REVENUE PER SALESPERSON (IN $ MILLIONS)

2Q11

1Q11

AVERAGE

Top Ranking AnalysisIntel posted an annual revenue per

sa lesperson metric of $34.0 mi llion in 2Q11, acheiving the top position among its industry

peers. TBR estimates sales and marketing headcount grew 35.7% year-to-year, as Intel

continued to ramp channel sales efforts across the globe and promote new products,

which was largely offset by 21.1% YTY growth. Intel will continue to Ieverage a

broad channel program to cost-effectively increase its sales reach and foster revenue

growth.


Intel’s extensive use of the channel will enable the vendor to continue to outperform industry peers in revenue per salesperson in 2H11

Financial Metrics: Revenue Per Salesperson

TBR



1 10.00 ACER

2 8.71 APPLE

3 5.43 HDS

4 5.36 LENOVO

5 4.68 DELL

6 4.61 AMD

7 4.50 INTEL

8 4.42 NETAPP

9 4.35 SONY

10 4.09 ORACLE/SUN

11 4.07 HP

12 3.99 TOSHIBA

13 3.97 EMC

14 3.81 FUJITSU

15 3.70 PANASONIC

16 3.64 IBM

TBR

$2,699

$1,985

$865

$839

$609

$583

$547

$521

$494

$407

$401

$371

$364

$312

$273

$253

$0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200

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ANNUAL REVENUE PER EMPLOYEE (IN $ THOUSANDS)

2Q11

1Q11

AVERAGE

Top Ranking AnalysisAcer's annual revenue per employee dropped a s ignificant 10.9% year-to year to $2.7 mi llion, as corporate revenue fell due primarily to increased

competition in the PC market. Acer’s headcount grew 0.4% on a year-to-year basis to 6,625 employees in

2Q11; however, the company plans to reduce headcount in EMEA in coming quarters to foster margin

protection by lowering operating expenses.

2Q11 Average = $720 2Q11 Standard Deviation = $670

Acer will be challenged to maintain industry-leading revenue per employee metrics due to weak corporate revenue growth

Financial Metrics: Revenue Per Employee

TBR



1 6.75 PANASONIC

2 6.14 TOSHIBA

3 6.12 FUJITSU

4 6.07 ORACLE/SUN

5 6.05 SONY

6 6.02 ACER

7 5.46 AMD

8 5.43 IBM

9 5.18 LENOVO

10 5.18 HP

11 5.03 DELL

12 3.79 HDS

13 3.23 INTEL

14 2.83 NETAPP

15 2.54 EMC

16 2.27 APPLE

TBR

-4.9%

-0.5%

-0.3%

0.0%

0.2%

0.4%

4.5%

4.7%

6.5%

6.6%

7.6%

16.7%

20.8%

23.7%

25.8%

27.8%

-10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

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HEADCOUNT GROWTH YEAR-TO-YEAR

2Q11

1Q11

AVERAGE

Top Ranking AnalysisPanasonic's headcount fell 4.9% year-to-year in

2Q11 in an effort to cut costs after losses in revenue due to natural disaster in Japan, difficulties in i ts television business, and

appreciation of the Japanese yen. TBR does not expect headcount to increase substantially in 3Q11, as the company continues reacting to

losses sustained in 1H11.


Japan-based companies will continue to post industry-leading headcount growth, as they restructure to offset the effects of the natural disaster

Financial Metrics: Headcount Growth

TBR



1 10.00 APPLE

2 8.20 INTEL

3 7.85 AMD

4 6.76 IBM

5 6.42 ORACLE/SUN

6 5.38 DELL

7 5.07 NETAPP

8 4.95 HP

9 4.78 EMC

10 3.62 LENOVO

11 3.52 TOSHIBA

12 3.26 HDS

13 3.15 FUJITSU

14 2.83 ACER

15 2.10 SONY

16 1.31 PANASONIC

TBR

26.0%

19.0%

17.8%

14.0%

12.7%

9.1%

8.0%

7.6%

7.0%

2.9%

2.6%

1.7%

1.3%

0.1%

-2.4%

-5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

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RETURN ON ASSETS

2Q11 1Q11 AVERAGE


Top Ranking AnalysisApple's ROA grew 170 basis points

year-to-year to 26.0%, maintaining its lead over hardware vendor peers for

the thi rd consecutive quarter. Apple's net income grew 124.7% year-to-year and i ts total asset base grew by 64.9%, driven by sales of high-margin mobile

devices, such as the iPhone 4. TBR expects the next i teration of the

iPhone will help sustain the trend of a s trong ROA in 2H11.

-5.2%

Apple will leverage continued iPhone and iPad success to maintain its significant lead over peers in ROA

Financial Metrics: Return on Assets

TBR



1 7.17 AMD

2 6.92 IBM

3 5.92 DELL

4 5.68 APPLE

5 5.10 TOSHIBA

6 4.99 INTEL

7 4.96 ORACLE/SUN

8 4.90 HP

9 4.69 LENOVO

10 4.67 NETAPP

11 4.40 EMC

12 4.35 HDS

13 4.06 FUJITSU

14 3.88 ACER

15 3.36 SONY

16 3.22 PANASONIC

TBR

73.7%

68.2%

45.8%

40.5%

27.6%

25.1%

24.3%

23.0%

18.4%

17.9%

11.8%

10.7%

4.3%

0.4%

-11.4%

-14.4%

-15.0% -5.0% 5.0% 15.0% 25.0% 35.0% 45.0% 55.0% 65.0% 75.0%

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RETURN ON EQUITY

2Q11

1Q11

AVERAGE

Top Ranking AnalysisAMD remained the leader among CBQ peers in terms of ROE. The

company increased R&D expense in 2Q11, caus ing a slight ROE decline

from the previous quarter. TBR anticipates AMD's trend of declining ROE, as i t invests to spur growth, in

2H11 wi l l open doors for IBM to surpass AMD and lead hardware vendor peers in the ROE metric.


IBM may capitalize on AMD’s declining ROE metric, resulting from the loss of favorable year-to-year compares and investment for growth

Financial Metrics: Return on Equity

TBR


Appendix: Total OPEX


1 7.75 APPLE

2 7.58 ACER

3 7.53 LENOVO

4 6.81 HP

5 6.81 DELL

6 5.62 TOSHIBA

7 5.44 PANASONIC

8 4.81 IBM

9 4.80 FUJITSU

10 4.52 INTEL

11 4.15 SONY

12 3.47 HDS

13 3.31 AMD

14 2.47 EMC

15 1.67 NETAPP

16 0.74 ORACLE/SUN

TBR

8.9%

10.0%

10.4%

15.2%

15.2%

23.1%

24.3%

28.5%

28.6%

30.4%

32.9%

37.5%

38.5%

44.1%

49.4%

55.6%

0.0% 20.0% 40.0% 60.0%

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TOTAL OPERATING EXPENSE AS A % OF REVENUE

2Q11

1Q11

AVERAGE


TBR


Appendix: Net Margin


1 8.53 APPLE

2 7.97 INTEL

3 6.26 IBM

4 5.79 EMC

5 5.46 NETAPP

6 5.28 HDS

7 5.12 AMD

8 4.81 HP

9 4.71 DELL

10 3.97 LENOVO

11 3.63 TOSHIBA

12 3.42 SONY

13 3.32 PANASONIC

14 3.22 FUJITSU

15 2.35 ACER

16 2.21 ORACLE/SUN

TBR

25.6%

22.7%

13.7%

11.3%

9.6%

8.7%

7.8%

6.2%

5.7%

1.8%

0.0%

-1.0%

-1.6%

-2.1%

-6.6%

-7.4%

-25.0% -15.0% -5.0% 5.0% 15.0% 25.0% 35.0%

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NET MARGIN

2Q11

1Q11

AVERAGE


TBR


Appendix: Gross Profit YTY


1 10.00 APPLE

2 8.68 INTEL

3 6.96 LENOVO

4 6.53 DELL

5 5.36 AMD

6 5.27 EMC

7 5.25 HDS

8 5.23 NETAPP

9 5.00 ORACLE/SUN

10 4.61 IBM

11 3.89 TOSHIBA

12 3.77 SONY

13 3.65 FUJITSU

14 3.19 HP

15 2.50 PANASONIC

16 0.00 ACER

TBR

94.3%

60.6%

41.2%

36.3%

23.1%

22.1%

21.9%

21.6%

19.1%

14.6%

6.4%

5.1%

3.8%

-1.4%

-9.3%

-76.5%

-80.0% -60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

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ATAGROSS PROFIT YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE


TBR


Appendix: SG&A YTY


1 6.68 SONY

2 6.11 PANASONIC

3 5.89 ACER

4 5.89 AMD

5 5.69 HP

6 5.18 ORACLE/SUN

7 5.01 FUJITSU

8 4.59 TOSHIBA

9 4.55 IBM

10 4.45 INTEL

11 4.22 EMC

12 4.02 HDS

13 3.86 NETAPP

14 3.61 DELL

15 3.27 APPLE

16 2.70 LENOVO

TBR

-4.4%

1.9%

4.4%

4.4%

6.6%

12.2%

14.0%

18.7%

19.1%

20.3%

22.8%

24.9%

26.7%

29.5%

33.2%

39.5%

-50.0% -25.0% 0.0% 25.0% 50.0% 75.0% 100.0% 125.0%

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SG&A YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE


TBR


Appendix: R&D YTY

RANKING TBR SCORE COMPANY

TOP 3 COMPANIES

1 6.51 AMD

2 6.39 HDS

3 6.30 LENOVO

4 5.70 IBM

5 5.53 SONY

6 5.53 ORACLE/SUN

7 5.37 HP

8 5.16 TOSHIBA

9 5.12 PANASONIC

10 5.01 EMC

11 4.63 FUJITSU

12 4.31 INTEL

13 3.62 ACER

14 3.52 DELL

15 2.84 NETAPP

16 2.57 APPLE

TBR

-1.1%

0.0%

0.9%

6.4%

8.0%

8.0%

9.4%

11.4%

11.7%

12.8%

16.2%

19.2%

25.7%

26.5%

32.8%

35.3%

-20.0% 0.0% 20.0% 40.0%

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R&D EXPENSE YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE

2Q11 Average = 14% 2Q11 Standard Deviation = 11.2%

TBR


Appendix: OPEX YTY


1 7.08 HP

2 6.28 AMD

3 5.87 PANASONIC

4 5.82 ACER

5 5.20 SONY

6 5.17 APPLE

7 4.73 FUJITSU

8 4.52 IBM

9 4.44 TOSHIBA

10 4.02 EMC

11 3.94 HDS

12 3.87 INTEL

13 3.49 ORACLE/SUN

14 3.09 NETAPP

15 3.03 DELL

16 1.87 LENOVO

TBR

-6.0%

1.0%

4.5%

4.9%

10.4%

10.6%

14.5%

16.3%

17.0%

20.6%

21.3%

21.9%

25.3%

28.7%

29.2%

39.3%

-30.0% 0.0% 30.0% 60.0% 90.0%

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ATATOTAL OPERATING EXPENSE YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE


TBR


Appendix: Operating Income YTY


1 5.12 APPLE

2 5.08 HDS

3 5.03 DELL

4 5.02 LENOVO

5 4.99 EMC

6 4.97 IBM

7 4.96 HP

8 4.95 NETAPP

9 4.95 INTEL

10 4.93 AMD

11 4.89 SONY

12 4.83 TOSHIBA

13 4.82 PANASONIC

14 4.79 ORACLE/SUN

15 4.55 ACER

16 4.54 FUJITSU

TBR

121.5%

94.5%

53.8%

51.4%

26.6%

11.2%

8.5%

-0.8%

-1.2%

-16.0%

-40.4%

-86.2%

-92.5%

-113.2%

-291.3%

-293.6%

-400.0% -300.0% -200.0% -100.0% 0.0% 100.0% 200.0%

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OPERATING INCOME YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE

2Q11 Average = -35.5% 2Q11 Standard Deviation = 118.8%

-754.4%

-800%

TBR


Appendix: Net Income YTY


1 4.93 AMD

2 4.80 APPLE

3 4.80 HDS

4 4.79 LENOVO

5 4.77 DELL

6 4.75 EMC

7 4.74 TOSHIBA

8 4.74 HP

9 4.74 IBM

10 4.74 INTEL

11 4.73 NETAPP

12 4.66 ORACLE/SUN

13 4.65 PANASONIC

14 4.65 SONY

15 4.58 ACER

16 3.97 FUJITSU

TBR

383.7%

124.7%

120.0%

98.3%

63.3%

28.2%

14.0%

8.6%

8.3%

2.3%

-7.4%

-144.0%

-178.5%

-180.7%

-309.1%

-600.0% -500.0% -400.0% -300.0% -200.0% -100.0% 0.0% 100.0% 200.0% 300.0% 400.0%SO

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NET INCOME YEAR-TO-YEAR CHANGE

2Q11

1Q11

AVERAGE



-1,600%

-1,505.0%

TBR


Appendix: Cost per Revenue Dollar


1 6.79 ORACLE/SUN

2 6.68 INTEL

3 6.63 APPLE

4 6.63 LENOVO

5 6.36 ACER

6 6.33 AMD

7 6.16 HP

8 5.90 SONY

9 5.58 TOSHIBA

10 5.47 PANASONIC

11 5.14 DELL

12 4.07 FUJITSU

13 3.98 IBM

14 2.03 HDS

15 0.95 EMC

16 0.95 NETAPP

TBR

$0.02

$0.03

$0.03

$0.03

$0.04

$0.04

$0.05

$0.05

$0.07

$0.07

$0.08

$0.12

$0.12

$0.18

$0.22

$0.22

$0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 $0.18 $0.20 $0.22 $0.24

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COST PER REVENUE DOLLAR

2Q11

1Q11

AVERAGE

2Q11 Average = $0.09 2Q11 Standard Deviation = $0.07

TBR


Appendix: Cost per Margin Dollar


1 8.23 ORACLE/SUN

2 8.20 INTEL

3 7.84 APPLE

4 7.69 AMD

5 6.52 SONY

6 5.89 HP

7 4.97 IBM

8 4.91 LENOVO

9 4.64 TOSHIBA

10 4.60 PANASONIC

11 3.37 NETAPP

12 3.21 DELL

13 3.21 EMC

14 3.01 HDS

15 2.26 FUJITSU

16 0.00 ACER

TBR

$0.04

$0.05

$0.07

$0.08

$0.16

$0.20

$0.26

$0.26

$0.28

$0.28

$0.36

$0.37

$0.37

$0.38

$0.43

$1.26

$0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90 $1.00 $1.10 $1.20 $1.30

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COST PER MARGIN DOLLAR

2Q11

1Q11

AVERAGE

2Q11 Average = $0.3 2Q11 Standard Deviation = $0.29

TBR


Appendix: Channel Expense


1 7.28 EMC

2 7.17 INTEL

3 6.87 DELL

4 6.79 AMD

5 6.46 NETAPP

6 5.86 PANASONIC

7 5.36 SONY

8 5.29 IBM

9 5.24 FUJITSU

10 5.05 HP

11 4.35 TOSHIBA

12 4.08 HDS

13 4.07 LENOVO

14 3.38 ACER

15 3.07 APPLE

16 0.00 ORACLE/SUN

TBR

1.8%

2.8%

5.4%

6.1%

9.0%

14.3%

18.7%

19.3%

19.8%

21.4%

27.5%

29.9%

30.0%

36.1%

38.8%

83.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%

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CHANNEL EXPENSE AS A % OF SALES & MARKETING EXPENSE

2Q11

1Q11

AVERAGE


TBR


Appendix: Marketing Expense


1 7.76 EMC

2 7.27 ORACLE/SUN

3 6.87 HDS

4 6.07 ACER

5 6.02 FUJITSU

6 5.81 IBM

7 5.76 DELL

8 5.60 NETAPP

9 5.52 HP

10 5.08 TOSHIBA

11 5.03 SONY

12 4.61 PANASONIC

13 2.89 APPLE

14 2.73 LENOVO

15 2.35 AMD

16 0.00 INTEL

TBR

2.3%

6.5%

10.0%

16.8%

17.3%

19.1%

19.5%

20.9%

21.6%

25.4%

25.8%

29.4%

44.3%

45.6%

48.9%

70.0%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

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MARKETING EXPENSE AS A % OF SALES & MARKETING EXPENSE

2Q11

1Q11

AVERAGE


TBR


Appendix: Marketing Expense per Employee


1 7.26 PANASONIC

2 7.00 ORACLE/SUN

3 7.00 APPLE

4 6.58 TOSHIBA

5 6.31 SONY

6 5.87 FUJITSU

7 5.49 EMC

8 5.40 HDS

9 4.96 DELL

10 4.25 AMD

11 4.16 HP

12 4.00 ACER

13 2.71 LENOVO

14 2.39 IBM

15 1.73 NETAPP

16 0.77 INTEL

TBR

$124

$144

$144

$175

$194

$227

$255

$262

$295

$347

$354

$366

$462

$486

$534

$605

$0 $100 $200 $300 $400 $500 $600 $700

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ANNUAL MKTG. EXPENSE PER MKTG. EMPLOYEE (IN $ THOUSANDS)

2Q11

1Q11

AVERAGE


TBR


Appendix: Days Sales Outstanding


1 8.56 APPLE

2 8.06 INTEL

3 7.79 LENOVO

4 6.35 NETAPP

5 6.04 IBM

6 5.53 AMD

7 5.05 SONY

8 4.96 PANASONIC

9 4.87 EMC

10 4.42 HP

11 4.03 ORACLE/SUN

12 3.67 DELL

13 2.67 FUJITSU

14 2.52 TOSHIBA

15 1.42 HDS

16 1.26 ACER

TBR

19.22

23.20

25.36

36.85

39.37

43.40

47.23

47.94

48.67

52.29

55.40

58.27

66.25

67.48

76.29

77.56

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00

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DAYS SALES OUTSTANDING

2Q11

1Q11

AVERAGE

2Q11 Average = 49.05 2Q11 Standard Deviation = 17.75

TBR


Appendix: Turns on Inventory


1 10.00 APPLE

2 8.05 IBM

3 7.32 DELL

4 6.26 ORACLE/SUN

5 5.73 LENOVO

6 5.35 NETAPP

7 4.38 HP

8 4.04 FUJITSU

9 3.90 ACER

10 3.69 EMC

11 3.40 PANASONIC

12 3.37 TOSHIBA

13 3.31 AMD

14 3.29 SONY

15 3.28 INTEL

16 3.21 HDS

TBR

73.22

41.65

36.06

27.87

23.83

20.95

13.48

10.90

9.80

8.16

5.96

5.73

5.30

5.13

5.05

4.54

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00

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ATATURNS ON INVENTORY

2Q11

1Q11

AVERAGE


TBR


Appendix: Days Inventory Outstanding


1 7.72 APPLE

2 7.40 IBM

3 7.28 DELL

4 7.03 ORACLE/SUN

5 6.84 LENOVO

6 6.66 NETAPP

7 5.85 HP

8 5.30 FUJITSU

9 4.77 ACER

10 4.35 EMC

11 3.19 PANASONIC

12 2.75 TOSHIBA

13 2.30 AMD

14 2.12 SONY

15 2.02 INTEL

16 1.33 HDS

TBR

4.98

8.76

10.12

13.10

15.32

17.42

27.08

33.48

39.84

44.73

58.47

63.66

68.92

71.11

72.30

80.43

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00

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DAYS INVENTORY OUTSTANDING

2Q11

1Q11

AVERAGE


TBR


Appendix: Fixed Asset Turnover


1 10.00 LENOVO

2 8.22 ACER

3 5.93 DELL

4 4.93 APPLE

5 4.72 ORACLE/SUN

6 4.37 HP

7 4.27 AMD

8 4.12 EMC

9 4.12 IBM

9 4.04 SONY

11 4.01 TOSHIBA

12 3.87 PANASONIC

13 3.86 HDS

14 3.79 FUJITSU

15 3.74 INTEL

16 3.73 NETAPP

TBR

112.64

59.36

30.34

17.60

14.99

10.46

9.25

7.36

7.35

6.29

5.94

4.20

4.08

3.10

2.58

2.36

0.00 20.00 40.00 60.00 80.00 100.00 120.00SO

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FIXED ASSET TURNOVER

2Q11

1Q11

AVERAGE

2Q10 Average


TBR


Appendix: Days Cash Outstanding


1 6.82 TOSHIBA

2 6.41 HDS

3 6.28 HP

4 6.18 PANASONIC

5 6.10 ACER

6 6.03 FUJITSU

7 5.89 INTEL

8 5.75 LENOVO

9 5.43 EMC

10 5.40 IBM

11 5.09 SONY

12 5.08 DELL

13 5.02 APPLE

14 4.60 AMD

15 1.33 ORACLE/SUN

16 0.11 NETAPP

TBR

15.22

31.95

37.38

41.75

44.90

47.55

53.46

59.28

72.37

73.82

86.28

86.98

89.45

106.41

241.00

290.95

0 50 100 150 200 250 300 350

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ATA

DAYS CASH OUTSTANDING

2Q11

1Q11

AVERAGE


TBR


Appendix: Total Asset Turnover


1 8.87 LENOVO

2 6.91 ACER

3 6.62 DELL

4 5.85 FUJITSU

5 5.38 AMD

6 5.04 APPLE

7 4.53 PANASONIC

8 4.49 HP

9 4.45 TOSHIBA

10 4.26 IBM

11 4.20 HDS

12 3.64 INTEL

13 3.21 NETAPP

14 2.88 ORACLE/SUN

15 2.88 EMC

16 2.26 SONY

TBR

2.05

1.58

1.51

1.32

1.21

1.13

1.01

1.00

0.99

0.94

0.93

0.79

0.69

0.61

0.61

0.46

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20

SOU

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TOTAL ASSET TURNOVER

2Q11

1Q11

AVERAGE


TBR


Appendix: Debt/Asset Ratio


1 9.12 INTEL

2 8.80 APPLE

3 7.19 EMC

4 6.73 ORACLE/SUN

5 5.80 NETAPP

6 5.13 HDS

7 4.88 PANASONIC

8 4.73 DELL

9 4.23 HP

10 4.19 AMD

11 4.11 ACER

12 3.75 FUJITSU

13 3.16 TOSHIBA

14 3.06 IBM

15 2.98 SONY

16 2.59 LENOVO

TBR

0.23

0.26

0.41

0.45

0.54

0.60

0.63

0.64

0.69

0.69

0.70

0.73

0.79

0.80

0.80

0.84

0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

SOU

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ATA

DEBT/ASSET RATIO

2Q11

1Q11

AVERAGE


TBR


Appendix: Current Ratio


1 8.62 ORACLE/SUN

2 8.20 AMD

3 7.03 INTEL

4 5.85 NETAPP

5 5.58 APPLE

6 4.73 DELL

7 4.08 ACER

8 4.00 PANASONIC

9 3.86 IBM

10 3.83 FUJITSU

11 3.83 HDS

12 3.77 HP

13 3.59 TOSHIBA

14 3.47 EMC

15 3.32 LENOVO

16 3.01 SONY

TBR

2.76

2.62

2.23

1.84

1.75

1.47

1.25

1.23

1.18

1.17

1.17

1.15

1.09

1.05

1.00

0.90

0.00 0.50 1.00 1.50 2.00 2.50 3.00

SOU

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CURRENT RATIO

2Q11

1Q11

AVERAGE


TBR


RANKING REVENUE COMPANY TOP 3 COMPANIES

1 $8,885 HP

2 $7,947 DELL

3 $5,559 LENOVO

4 $5,105 APPLE

5 $2,804 ACER

6 $2,337 TOSHIBA

7 $1,618 SONY

8 $209 PANASONIC

TBR

$8,885

$7,947

$5,559

$5,105

$2,804

$2,337

$1,618

$209

$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000

SOU

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ATA

PC REVENUE (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


RANKINGOPERATING

INCOME COMPANY

TOP 3 COMPANIES

1 $629 APPLE

2 $479 HP

3 $243 DELL

4 $128 LENOVO

5 $111 SONY

6 $58 TOSHIBA

7 -$3 PANASONIC

8 -$211 ACER

TBR

$629

$479

$243

$128

$111

$58

-$3

-$211

-$250 -$150 -$50 $50 $150 $250 $350 $450 $550 $650

SOU

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COM

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ATA

PC OPERATING INCOME (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


Appendix: PC

TBR


Appendix: Proprietary Server

RANKING REVENUE COMPANY

TOP 3 COMPANIES

1 $1,522 IBM

2 $459 HP

3 $440 ORACLE/SUN

TBR

$1,522

$459

$440

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800

SOU

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PANY

DATA

PROPRIETARY SERVER REVENUE (IN $ MILLIONS)

2Q11 1Q11 AVERAGE


RANKINGOPERATING

INCOME COMPANY

TOP 3 COMPANIES

1 $87 HP

2 $40 ORACLE/SUN

3 -$413 IBM

TBR

$87

$40

-$413

-$425 -$375 -$325 -$275 -$225 -$175 -$125 -$75 -$25 $25 $75 $125

SOU

RCE: TBR AND

COM

PANY

DATA

PROPRIETARY SERVER OPERATING INCOME (IN $ MILLIONS)

2Q11

1Q11

AVERAGE

2Q11 Average = $-95 2Q11 Standard Deviation = $276

TBR


Appendix: x86 Server


1 $3,302 HP

2 $2,054 DELL

3 $1,516 IBM

4 $50 ORACLE/SUN

5 $17 ACER

TBR

$3,302

$2,054

$1,516

$50

$17

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500

SOU

RCE: TBR AND

CO

MPAN

Y DATA

x86 SERVER REVENUE (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


RANKINGOPERATING

INCOME COMPANY TOP 3 COMPANIES

1 $396 HP

2 $301 DELL

3 $86 IBM

4 $1 ORACLE/SUN

5 -$2 ACER

TBR

$396

$301

$86

$1

-$2

-$10 $40 $90 $140 $190 $240 $290 $340 $390 $440 $490 SOU

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x86 SERVER OPERATING INCOME (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


TBR


Appendix: Storage


1 $1,882 EMC

2 $1,017 HDS

3 $976 HP

4 $966 NETAPP

5 $891 IBM

6 $502 DELL

7 $326 ORACLE/SUN

TBR

$1,882

$1,017

$976

$966

$891

$502

$326

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

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STORAGE REVENUE (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


RANKINGOPERATING


1 $284 IBM

2 $230 EMC

3 $107 HDS

4 $82 NETAPP

5 $70 HP

6 $56 DELL

7 $15 ORACLE/SUN

TBR

$284

$230

$107

$82

$70

$56

$15

$0 $50 $100 $150 $200 $250 $300

SOU

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STORAGE OPERATING INCOME (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


TBR


Appendix: Microelectronics


1 $13,032 INTEL

2 $3,392 TOSHIBA

3 $1,574 AMD

4 $920 SONY

5 $567 IBM

TBR

$13,032

$3,392

$1,574

$920

$567

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

SOU

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MICROELECTRONICS REVENUE (IN $ MILLIONS)

2Q11

1Q11

AVERAGE


RANKINGOPERATING


1 $3,935 INTEL

2 $272 TOSHIBA

3 $229 SONY

4 $105 AMD

5 -$48 IBM

TBR

$3,935

$272

$229

$105

-$48

-$200 $300 $800 $1,300 $1,800 $2,300 $2,800 $3,300 $3,800 $4,300 $4,800 SOU

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MICROELECTRONICS OPERATING INCOME (IN $ MILLIONS)

2Q11

1Q11

AVERAGE

2Q11 Average = $899 2Q11 Standard Deviation = $1,702

TBR


Financial Model Strategy Metrics

As a % of Revenue

Gross Margin

SG&A

Sales & Marketing

General & Administrative

R&D

Total Operating Expenses

Operating Margin

Net Margin

Revenue

Year-to-Year Change

Revenue

Gross Profit

SG&A

Sales & Marketing

General & Administrative

R&D

Total Operating Expenses

Operating Income

Net Income

Revenue is scored based on total revenue generated by the company.

• Higher profit margins yield a higher CBQ benchmark score, with operating margin receiving the highest weight, as it demonstrates a company’s ability to create and bring its products to market.

• Gross margin receives the second-highest weighting, as improvements in the gross margin line demonstrate higher contribution margins by the company.

• Net margin receives a lower weighting than other margins, as there are more external factors outside the control of management that do not necessarily reflect the operations of the company’s primary business activities (such as taxes or investment gains/losses).

• Lower SG&A, Sales & Marketing, General & Administrative, R&D and Total Operating Expenses yield a higher CBQ benchmark score, as these indicate lower costs incurred and higher profit generation.

• Year-to-year change in revenue, gross profit, operating income and net income yield higher CBQ Benchmark scores.

• Lower growth rates for SG&A, Sales & Marketing, General & Administrative, R&D and Total Operating Expenses generate a higher CBQ Benchmark score.

Appendix: CBQ Taxonomy

TBR


Go-to-Market & Product Strategies Metrics

Annual Revenue per SalespersonHigher revenue per salesperson yields a higher CBQ Benchmark score, as it indicates the revenue-generating capabilities of the company’s sales force.

Cost per Revenue Dollar

Cost per Margin Dollar

Channel Expense as a % of Revenue

Marketing Expense as a % of Revenue

Annual Sales Expense per Sales Employee

Annual Sales & Marketing Expense per Sales & Marketing Employee

Cost per Revenue Dollar reflects the additional cost incurred to generate an additional dollar of revenue.

Cost per Margin Dollar reflects the additional cost incurred to generate an additional dollar of gross profit.

• Channel Expense as a % of Revenue reflects the costs a company incurs to manage its channel programs for bringing products and services to market, based on TBR’s modeled channel expenses.

• Marketing Expense as a % of Revenue reflects the marketing costs the company has incurred, including marketing headcount costs, advertising and program expenses. The metric is based on TBR’s modeled marketing costs and advertising costs (advertising is commonly reported by most companies).

Annual Sales Expense per Sales Employee is based on TBR’s modeled sales expense and sales headcount and includes direct and indirect sales staff and sales support.

Annual Sales & Marketing Expense per Sales & Marketing Employee is based on TBR’s modeled sales and marketing expense and headcount and includes direct and indirect sales staff, sales support and marketing expense.


TBR


Days Sales OutstandingDays Inventory OutstandingDays Cash OutstandingDebt/Asset Ratio

Lower Days Sales, Days Inventory, Days Cash and Debt/Asset ratios yield a higher CBQ Benchmark score, as:

• Lower Days Sales Outstanding indicates a faster collection process, giving the company the ability to generate cash from operations and reinvest it in the business;

• Lower Days Inventory Outstanding indicates the company is turning over product and not maintaining a high inventory balance, in turn incurring higher inventory carrying costs;

• Lower Cash Outstanding indicates a company is potentially using its cash to fund R&D, mergers & acquisitions, returns to investors, etc. versus maintaining a large cash balance on its balance sheet;

• Lower Debt/Asset Ratio indicates the company’s reliance on using debt for financing the business. Less debt is considered favorable for the CBQ Benchmark scoring as it indicates a company’s ability to self-fund operations, financing and investing activities. It will also result in lower operating costs, as higher debt results in higher interest payments.

Turns on InventoryFixed Asset TurnoverTotal Asset TurnoverCurrent RatioReturn on AssetsReturn on Equity

Higher Turns on Inventory, Fixed Asset Turnover, Total Asset Turnover, Current Ratio, Return on Assets and Return on Equity result in higher CBQ Benchmark scores, as:

• Higher Turns on Inventory indicate greater demand for a company’s products and potential lower inventory carrying costs;

• Higher Fixed and Total Asset Turnovers indicate more efficient use of a company’s assets in generating revenue;

• Higher Current Ratio indicates a company’s liquidity and ability to pay its current debts with its current assets;

• Higher Return on Assets and Return on Equity indicate a company’s profitability and ability to return value to shareholders.


Resource Management Strategy Metrics

TBR


Resource Management Strategy Metrics

Lower year-to-year Headcount Growth is considered favorable for CBQ Benchmark scoring, as TBR believes lower headcount growth reflects lower increases in a company’s total expenses.

Annual Revenue per Employee

Annual G&A Expense per G&A Employee

Annual R&D Expense per Developer

Headcount Growth, year-to-year

Higher Annual Revenue per Employee yields a higher CBQ Benchmark score, as the metric reflects the revenue-generating ability of the company’s employees versus other companies in the CBQ Benchmark.

• Lower Annual G&A Expense per G&A Employee results in a higher CBQ Benchmark score, as a lower metric indicates lower costs for the company, as modeled by TBR.

• Lower R&D Expense per Developer reflects lower costs per R&D employee and generates a higher CBQ Benchmark score.


TBR


Revenue & Operating Income by IT Segment for CBQ-covered Companies

The CBQ Benchmark ranks the companies in our five primary IT Hardware segments, which we model from highest to lowest in revenue and operating income.

PC, Proprietary Servers, x86 Servers, Storage and Microelectronics Revenue and Operating Income


TBR


TBR Consulting Capabilities

Customer Views Market Views Company Views Vendor Deep-dives LOB Deep-dives Geo Deep-dives

Satisfaction and drivers Landscape Analysis Financial Analysis Financial drill-downs, COS, Labor versus Non-labor, SG&A, G&A, OPEX,

CAPEX, R&D, Salary & benefits, Offshore versus Onshore …

Deal Analysis Industry Analysis Strategies & trends Strategy analysis, Portfolio, Asset, LOB, GEO, Vertical, GTM, Client, Delivery, Pricing, Channel, Marketing/Messaging/Value …

Opportunity Analysis Geo Analysis Structures &

resourcesAcquisitions, Asset Drill-downs, Locations, Space, Products, Equipment, IP/Patents, Software/Tools …

Emerging trends Segment Analysis Business models Structure, Organization, Sales Coverage, Contracts, Deals, Span of Control, Pricing …

Appendix: TBR Capabilities

TBR


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Technology Business Research is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, networking equipment, wireless, portal and professional services vendors.

Serving a global clientele, TBR provides timely and accurate market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

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TBR

©2012 Technology Business Research Inc.

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©2012 Technology Business Research Inc.

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