tbr 4q10 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: April 6, 2011

Authors: Ezra Gottheil, Greg Richardson, Krista Macomber, Cassandra Mooshian and Emily Searles – Analysts, Computing

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

Fourth Calendar Quarter 2010

mailto:[email protected]

TBR

April 2011 TBR CBQ End-of-Quarter Benchmark Report | 4Q10 ©2011 Technology Business Research, Inc.3

Executive Summary3 Key Findings & Trends4-5 Drill-Downs

Segment Geographic

6 Market Overview7 Market Leaders8-9 Quarterly Focus

IT vendors will differentiate products with cross-platform operating systems and apps, pushing customer adoption and high-margin sales.IT vendors compete aggressively for share in emerging Chinese cities, targeting the region’s next growth frontiers.

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

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

34-44 CBQ Financial MetricsAppendix

45-70 Additional Metrics71-75 CBQ Taxonomy76 TBR Capabilities

Content

TBR


Mobile devices will lay a foundation for client and infrastructure systems growth through 2011

Demand for increased connectivity will drive growth in mobile devices and the infrastructure to support them

• The emergence of new mobile devices – including tablets – will open doors to growth opportunities for device and infrastructure companies in 2011.

• PC vendors will augment their portfolios with consumer and commercial mobile devices to meet short-term demand and create longer-term upselling and cross-selling opportunities.

• Server and storage vendors will benefit from the flood of new devices working their way on to networks, creating new demand for infrastructure to support the increased traffic.

Vendors will increasingly leverage new operating systems and app stores to differentiate devices

• As end-users increasingly push for personal data and apps on demand, TBR believes interoperability across the entire portfolio will be key to product differentiation and driving sales.

• A standardized operating system such as HP webOS, Apple iOS and Google Android across the portfolio enables access to users’ content from any device, addressing this customer requirement and providing for high-margin cross-selling opportunities.

• In coming quarters, TBR anticipates vendors that do not embrace this trend will be challenged to drive unit and profit growth.

Vendors are targeting expansion in Western China to cultivate new growth opportunities

• PC vendors are setting their growth sights on Western China, as companies jockey for position to deliver multiple devices to a consumer market the industry deems under-penetrated.

• Vendors are leveraging both portfolio and go-to-market changes, such as Acer’s partnership with Founder, in addition to new investments in local facilities, including the establishment of Dell operations centers in Chengdu, to generate a strong feet-on-the-street presence.

Executive Summary

TBR


Hardware vendors are supporting profitability by utilizing acquisitions and alliances to expand their software and services capabilities

LOB Key Changes & Drivers Top Rev. Top Growth Keep on the Radar

PCThe combination of a corporate refresh with holiday consumer spending drove revenue for PC vendors, while they shifted their focus to mobile device offerings, such as tablets.

HP$11.5 billion

Apple 22.0%

We expect PC vendors will continue to benefit from corporate refresh, while some will struggle to stay ahead of mobile trends.

x86 Server Virtualization and corporate refresh drove sales of x86 servers in 4Q10.

HP$3.4

billion

HP17.0%

TBR expects vendors to manage attrition to the cloud by leveraging solution-based offerings with x86 servers.

Prop ServerVendors pushed to associate increased ROI with proprietary servers, driving sales and countering the effects of x86 server migration.

IBM$2.4

billion

IBM32.9%

Vendors will drive revenue growth by complementing proprietary server capabilities with distributed systems.

StorageVendors ramped up acquisitions while building out comprehensive portfolios that deliver integrated solutions, capitalizing on customers transitioning to the cloud.

EMC$1.9

billion

NetApp32.3%

TBR expects the massive influx of unstructured data and drive to move into virtual environments will continue through 2011.

Micro-electronics

Mobile devices are driving strong demand for NAND flash memory, which suffered a drop in supply after a power outage at Toshiba plant.

Intel$11.5billion

IBM 27.8%

TBR believes the March earthquake in Japan, which resulted in production disruption for Toshiba, Fujitsu and Sony, will cause microelectronic shortages in 2011.

Executive Summary

TBR


Emerging markets will continue to lead growth entering 2011, as businesses build out IT infrastructures to growing network usage

Geo Key Changes & Drivers Top Rev. Top Growth Keep on the Radar

United States/

Americas

Vendors worked to increase marketing capabilities to drive consumer sales, augmenting the effects of an enterprise IT refresh cycle.

HP$14.2billion

Apple57.3%

TBR anticipates resurging consumer demand in 2011 will boost performance in the Americas.

EMEAVendors worked to expand their channel presence, with a focus on the region’s growth markets, to grow revenue despite challenging macroeconomic conditions.

HP$12.3 billion

Apple49.2%

TBR believes stabilizing economic conditions will drive increased customer spend and resulting revenue growth in EMEA.

Asia PacificCBQ companies targeted China as a key lever for growth in APAC in 4Q10, as the country’s expansive consumer market and comparatively strong economy yield high customer demand.

Panasonic$21.2billion

Apple149.3%

We expect healthy demand in emerging markets to offset the effects of Japan’s March earthquake and drive APAC growth in coming quarters.

Emerging Markets

Emerging markets such as the BRIC countries remained a key target for growth, as vendors worked to expand channel partnerships and deliver new products and need-based solutions while increasing marketing capabilities to grow brand awareness and drive sales. This is particularly evident in the SMB and midmarket sectors, as customers strive to leverage IT to grow their businesses amidst economic recovery.

TBR believes hardware vendors will work to deliver infrastructure and need-specific solutions to capitalize on demand in emerging markets, helping drive overall growth.

Executive Summary

TBR


Mobile PCs and virtualization drove consumer and commercial demand for hardware, software and services, implying multifaceted growth

NOTE: SPHERE SIZE DEPICTS SIZE OF REVENUE.

• Consumer demand improved, partly as a result of the holiday season, boosting revenue for vendors with strong offerings catering to the market, such as Apple. Vendors, including Acer, saw continued weakening demand in netbooks declining revenue.

• Large hardware vendors such as HP, Dell and IBM focused on integrating technology and services from recent acquisitions to broaden their portfolios, bundling hardware with software and services to expand globally and grow commercial revenue.

HP

Sony Intel

AMD

Apple

IBM

Lenovo

Panasonic

NetApp

Oracle/Sun

Acer

EMC

HDSDellToshiba

Fujitsu

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Operating Margin

4Q10 REVENUE GROWTH VS. OPERATING MARGIN

SOURCE: TBR

TBR

Avg. Revenue Growth 11.1%

Avg. Operating Margin12.9%

Executive Summary

TBR


Hardware vendors enhance their product portfolios and expand their channel traction to provide for sustainable revenue and margin growthRevenue, Growth & Operating Margin LeadersCompany Size Key Strategy Drivers & Changes

HP $32.3 billion

Expand portfolio of consumer products to target emerging markets while driving sales of converged infrastructure to enterprise customers

HP grew share in all PC segments, posting double-digit server and storage growth while significantly increasing commercial sales of printing hardware.

IBM $29.0 billion

Capitalize on the continued server refresh cycle and bundle System x and System z servers as part of larger, integrated solutions

IBM is coupling POWER servers with Smart Analytics, CloudBurst and POWER VM capabilities to drive revenue of mainframe and x86 servers.

Panasonic $27.7 billion

Target new growth verticals with bundled solutions to diversify and increase revenue base

Panasonic is coupling Toughbooks with display and video technologies to cross-sell PCs, displays, TVs and projection equipment for profitable growth.

Company Growth Key Strategy Drivers & Changes

Apple 70.5% Leverage brand image and innovative design to gain share of the consumer market

Apple delivered innovated design and lightweight mobile platforms to consumers to drive sales.

Panasonic 31.6% Leverage demand for packaged solutions and green technology to drive growth

Revenue growth was driven by strong consumer demand for and resulting sales within its home appliances, PEW and PanaHome and Other products.

NetApp 25.3%Couple low-end penetration with a recently upgraded portfolio, including the latest edition of Data ONTAP, to generate upselling opportunities

NetApp posted nearly 50% year-to-year midmarket unit growth in 4Q10, driving strong corporate performance.

Company OM % Key Strategy Drivers & Changes

Intel 37.9%Augment higher enterprise sales and lowered COGS due to 32nm manufacturing with traction in new high-margin markets via portfolio expansion

Intel’s operating margin climbed 143 basis points annually in 4Q10 on the back of rising ASPs and strong corporate revenue growth.

Apple 29.3%Leverage innovative products and aggressive marketing to maintain a strong reputation around products and services, driving growth and margins

Improving component prices coupled with increased iPad and iPhone 4 sales resulted in strong margin performance for Apple in 4Q10.

AMD 25.0%Innovate to deliver technologies that improve the end-user experience on visual and data-intensive applications increasingly adopted by customers

Falling microprocessor ASPs, coupled with strong sales of new Fusion APUs, enabled AMD to maintain industry-leading margins in 4Q10.

Executive Summary

TBR


IT vendors will differentiate products with cross-platform operating systems and apps, pushing customer adoption and multi-device salesComputing companies are leveraging cross-platform operating systems and app stores to enable users to access content from any device. This strategy has positioned vendors for cross-selling opportunities and to meet emerging demand for apps and personal data on-demand.

• HP is rolling out a webOS-based tablet and smartphones, and integrating the operating system into its traditional PCs in late 2011, to provide seamless wireless synchronization of key personal information across devices.

• With iOS, Apple provides interoperability across the entire portfolio, enabling the vendor to leverage strength in one product line to drive sales of a weaker product line.

• Vendors selling Google Android-based devices stand to benefit from platform standardization as well; for example, the integration of smartphones with Google TV provides end-users a number of options, such as using the phone as a remote for the television, and cross-device access to the Google Android app market and games.

As users migrate to mobile devices, TBR believes a “human-centric” view will position vendors to drive revenue, unit and profit growth through 2011.

• TBR believes the shift from a “device-centric” sales strategy to delivering a portfolio of unified offerings is significant to drive growth, as companies are able to bundle devices into larger, high-volume and high-margin deals.

• We anticipate companies that are slow to adopt cross-device interoperability and access to app stores will face headwinds in the market, as these features emerge as competitive differentiators and key levers to accelerate revenue and margin growth.

Executive Summary: Quarterly Focus

TBR


Computing vendors are competing for share in emerging Chinese cities to accelerate revenue and unit growth through 2011PC companies are expanding in China to capture growing consumer demand

PC vendors are upping the ante for growth in China, focusing on regional partnerships and expansion in lower-tier cities. By transferring attention from target markets in Eastern China to less developed parts of Western China, PC vendors are aiming to build brand affinity early in consumers’ minds to sell multiple connected devices.AcerAcer will leverage a sales, marketing and development partnership with China-based Founder to expand its reach in the country while simultaneously developing region-specific products to help accelerate adoption.DellDell is investing $100 billion over 10 years in manufacturing, customer service, sales and marketing in Western China to expand its addressable market by increasing its feet-on-the-street presence in tier-one and tier-two cities.

HPHP will leverage the interconnectivity of its webOS devices to demonstrate innovation and quality, helping shed the negative quality image the company was exposed to in late 2010 as a result of faulty notebooks.LenovoLenovo employed its “Protect and Attack” strategy to gain share and remain the incumbent in China’s PC market while expanding in Western China via transactional sales and mobile devices.

Existing Dell China location

New Dell China location

Shanghai – R&D and product design

Dalian – International service center

Xiamen – Two manufacturing facilities; one enterprise command center

Chengdu – Manufacturing and customer

support centers

Map of Dell’s China facilities

Executive Summary: Quarterly Focus

TBR


PC vendors will leverage differentiated consumer PC lineups and expansion in emerging markets to drive growth through 2011


• Overall seasonally increased consumer spend coupled with corporate refresh drove strong performance for most vendors. Acer’s large bet in netbooks is plaguing the company’s unit sales, as netbook sales succumb to tablet cannibalization.

• PC vendors shifted resources to emerging markets to position for growth through 2011.

Acer

Apple

DellHP

Lenovo

Panasonic

Toshiba

Sony

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PC Revenue Growth

4Q10 YEAR-TO-YEAR PC REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average PC Revenue Growth = 11.0%

Average CorporateRevenue Growth for

Segment = 17.2%

TBR

Segment View: PC

TBR


CBQ vendors are integrating mobile devices into their PC segments to enhance consumer offeringsPC Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $11.5 billion

Leverage scaled, commodity product sets and resulting increased profitability compared to peers to combat weak consumer spending

HP grew share in all PC segments and increased profitability due to falling component prices and greater revenue from higher-margin commercial segments.

Dell $7.9 billion

Dell will no longer forfeit PC profitability to win on price; the company will improve PC gross margins, enabling investment in sales and R&D for sustainable growth.

Notebook PC revenue increased 4.2% year-to-year, as 4.3% unit shipment growth offset a slightly depressed ASP. Desktop revenue grew 3.7% year-to-year, as 3.2% unit shipment growth augmented a slight uptick in ASP.

Lenovo $5.4 billion

Maintain a solid customer base by enhancing and updating all “Think-brand” PCs, and introducing these products into emerging markets

Lenovo will leverage its partnership with NEC to expand its reach into Japan in 2011 and beyond.

PC Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 22.0%Apple maintains a premium market positioning, touting its reputation for innovative products and quality service to drive sales.

Release of the new MacBook Air drove PC revenue. The device’s popular light weight and portability led to strong initial adoption.

Lenovo 21.4%Maintain commercial customer base in China with enhanced Think-brand PCs while driving brand recognition to gain share in emerging markets

Corporate refresh and consumer sales of Idea-brand products drove notebook revenue, while success of all-in-ones, coupled with SMB desktop products, yielded strong desktop performance.

Sony 18.5%Sony is investigating 3-D technology as a product line differentiator in an attempt to drive sales. The company revealed its Vaio 3-D laptop in 4Q10.

Sony separated its Vaio PC line into two tiers to increase global awareness and unit sales.

Segment View: PC

TBR


Enterprise refresh remains the vehicle for growth, with portability and integrated solutions driving PC innovation for growth

Key 4Q10 M&As, Alliance Changes & DealsCompany TBR Insights

Acer

Acer and Ducati Motorcycle Company formed an alliance in 4Q10 under which Acer will provide hardware, including high-performance mobile devices for the development and testing of Ducati motorcycles.

Fujitsu

Fujitsu signed OEM agreement with Ncomputing with the intent to integrate Ncomputing’s 64-bit vSpace virtualization and NUMO(TM) system Fujitsu’s with its PC, servers and services to provide fully integrated multi-workplace solutions optimized for SMB customers.

Portfolio/GTM & RM ChangesCompany TBR Insights

Acer

In January, Acer released new Aspire notebooks and netbooks based on the AMD E-series accelerated processing unit for improved consumption of high-definition entertainment, multitasking and power savings.

HP

HP introduced the DreamScreen 400 in India. TBR views the product as significant, with real potential as a first consumer device in emerging markets, and eventually as a simpler PC for users worldwide who do not need standard software support and PC complexity.

DellDell will leverage tablets to buck its recent headwinds in the consumer market. The company announced it will deliver 10-inch Android and Windows 7-based systems in 1H10, aiming to shed the image of its initial, 7-inch Streak device, which faced adoption challenges.

Trends & Outlook• TBR believes PC vendors will work to drive growth in tablets and PCs in the coming quarters, highlighting tablets as tools for

consuming data, while touting the traditional compute capabilities of PCs, particularly in commercial markets.• TBR anticipates the enterprise PC refresh cycle will support unit and ASP growth in 2011.• TBR anticipates consumer PC demand will face headwinds in 2011, namely in China. We believe certain Tier 1 and Tier 2

areas, such as Beijing, are entering saturation, as post-recessionary refresh cycles of traditional PCs slow. We expect a shift in focus to new devices, such as tablets, and other emerging markets, such as India and China’s rural areas, for growth.

Segment View: PC

TBR


X86 vendors with strong hardware roots continue to capitalize on enterprise demand


• TBR expects cloud-related integration, enterprise demand and emerging markets will continue to drive x86 server sales throughout 1H11 for top vendors.

• HP, IBM and Dell achieved strong x86 revenue growth in 4Q10, driven by enterprise replacement of older x86 models. Oracle continued to struggle to compete in the hardware market, showing significant decline in x86 revenue.

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Dell

IBM

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x86 Revenue Growth

4Q10 x86 REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for Segment: -5.2%

Average x86Revenue Growth = -3.6%

TBR

Segment View: x86 Server

TBR


Virtualization and corporate refresh drive double-digit growth of x86 server sales, while putting the squeeze on proprietary server offeringsx86 Server Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $3.4 billion

Relying on price, R&D, sales and marketing, HP has increased its market share in x86 servers during most quarters over the last four years.

The acquisition of Vertica Systems enables data analysis and faster distribution of results, contributing “pull” to HP server sales.

Dell $2.1 billion

Capitalize on higher demand for infrastructure supporting mobile devices, including servers, to handle increased Internet datacenter traffic and mobile device management solutions for new devices in business environments.

In 4Q10, Dell’s server business benefited from the company’s solutions strategy and Perot acquisition, growing revenue by double digits.

IBM $1.8 billion

TBR believes IBM is capitalizing on growing demand for x86 servers in cloud and virtualized datacenters to support high-end growth of System x servers.

To employ its analytics strategy in x86 servers, IBM announced newly enhanced Smart Analytics System 5600 models.

x86 Server Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

HP 17.0%Leverage acquisitions, including 3Par, and a strong Converged Infrastructure strategy to drive x86 unit shipment and revenue growth

HP is capitalizing on the continued enterprise refresh as well as its efforts to sell bundled and integrated solutions to drive x86 growth.

Dell 15.9%Drive solutions sales of servers, storage and services to enterprise customers for increased revenue and profit growth

Revenue growth was driven by strong demand for both blade and rack servers from enterprise and SMB customers during the quarter.

IBM 15.8%Capitalize on the continued server refresh cycle and bundle System x as part of larger, integrated solutions to drive x86 revenue growth

System x continued on a double-digit growth trajectory, led by more than 30% year-to-year growth in high-end System x. As a result, revenue increased 15.8% year-to-year to $1.8 billion in 4Q10.


TBR


Vendors continue to drive revenue by touting ROI with powerful, efficient x86 servers

Key 4Q10 M&As, Alliance Changes & Deals

Company TBR Insights

Dell

Dell dove deeper into virtualization deals with the Chicago Board Options Exchange (CBOE). Dell replaced CBOE’s Sun x86 servers with Dell x86 servers to create a high-performance IT environment.

HP

Payroll Processor Paycor chose the HP ProLiant DL980 G7 server as its legacy system upgrade. Paycor will leverage HP’s unified management framework to manage its mixed environment of servers.

IBM/AMD

IBM partnered with AMD for its pieces of its System x server line. IBM uses this system as a part of a larger integrated solution that will drive revenue growth through 2011.

Portfolio/GTM & RM Changes

Company TBR Insights

Fujitsu

Fujitsu’s strategic transition to x86 servers will increase upselling and cross-selling opportunities as it shifts away from mainframe and UNIX. Fujitsu will face increased competition in the x86 from Dell, HP and IBM, making gains in market share slow.

HP

HP continued to increase x86 market share in 4Q10, similar to every quarter for the past four years. x86 servers, coupled with commodity products, resulted in lower margins in 4Q10 for HP versus its competitors.

AMD

AMD increased its Opteron Series family with five new products, powered by its 8- and 12- core x86 processors. These new server CPUs specifically target SMBs with increased performance-per-dollar through reduced power consumption.

Trends & Outlook• Demand for private and public cloud environments will facilitate increased sales of x86 servers bundled with software,

storage and services through 2011, as customers seek integrated and optimized solutions to increase efficiency.• Converged infrastructure strategy and an established presence in the lower-end of the server market will continue to make

HP the market leader in x86 servers, while IBM and Dell fight for second.• TBR believes vendors will continue to differentiate between low-end and high-end servers in the market, driving growth of

performance-per dollar machines, while constraining the growth of Unix-based servers.


TBR


IBM leveraged a refreshed System z platform to drive revenue growthand create new hurdles for competitors in an already challenged market


• TBR believes the high-cost, low-volume nature of the proprietary server market, compounded by increasing competition from x86 options, is hindering growth and widening the gap between competitors.

• Mainframe upgrades drove IBM proprietary server revenue in 4Q10. Proprietary servers remain an important offering for HP to deliver on client needs; however, revenue growth is challenged by competition and new technologies.

IBM

Oracle/Sun

HP

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Proprietary Server Revenue Growth

4Q10 PROPRIETARY SERVER REVENUE GROWTH VS CORPORATE REVENUE GROWTH

Average Corporate Revenue Growth for Segment = -8.3%

Average Proprietary Server Revenue Growth =

-9.4%

TBR

SOURCE: TBR

Segment View: Proprietary Server

TBR


Proprietary Server Revenue LeadersCompany Size Key Strategies Drivers & Changes

IBM $2.4billion

IBM shows that cloud is not simply an x86 play by delivering cloud capabilities on Power and System z platforms, demonstrated by use cases such as Linux on System z.

IBM is coupling POWER servers with Smart Analytics, CloudBurst and POWER VM capabilities to drive revenue.

HP $555 million

Capitalize on customer uncertainty around cloud by bundling inherent skill sets and technologies, including server hardware, in ways that address emerging end-customer datacenter needs

TBR anticipates headwinds for HP’s high-end server business, as Oracle cuts support for Itanium processors in a move to disrupt HP’s Integrity server line and shift customers to SPARC servers.

Oracle/Sun

$454 million

Leverage strength in software, such as Oracle WebLogic Server application server, to assist customers in transitioning to the cloud

Oracle introduced Oracle VM for Sparc, an application delivery platform cloud using Sun Sparc T series that allows customers to migrate mission-critical applications to a virtual environment.

Proprietary Server Growth LeadersCompany Growth Key Strategies Drivers & Changes

IBM 32.9%Drive growth by moving new datacenter workloads to System z, while simultaneously expanding System z’s install base by targeting key mainframe customers in emerging markets

The mainframe refresh cycle drove adoption of IBM’s latest System z offering, the zEnterprise 196. System z revenue rose 65.0% year-to-year to $1.5 billion in 4Q10, while MIPS grew 58% year-to-year – its largest gain in over six years.

HP –0.2%Leverage Converged Infrastructure solutions of hardware, software and services to defend datacenter presence from attrition to the cloud

Strong commercial spending and sales of Converged Infrastructure solutions resulted in unit shipment and revenue growth in 4Q10 for HP’s high-end servers.

Oracle/Sun –4.6%

Oracle will leverage Suns top 4,000 customers to sell products directly while focusing on integrated systems, including servers.

Oracle introduced the Sparc-based hardware rollouts, such as the M5000 servers, to improve its struggling hardware business.

IBM is embracing demand for virtualization and cloud-ready servers by tailoring System z to integrate with distributed systems


TBR


Vendors will bundle high-end servers with storage and software to develop integrated solutions for virtual environments

Trends & Outlook• TBR believes pent-up demand in financial and telecommunication institutions will drive proprietary server

revenue in 2011 as a result of refreshed products and the long refresh cycle coming out of the recession. Growth will continue to soften, however, as the performance gap between less expensive servers narrows.

• We expect IBM System z to continue posting double-digit revenue growth through 2011. IBM will leverage its System z BladeCenter Extension, which enables the unified management of POWER, System x and workload accelerators with System z to spur revenue growth throughout its hardware segment.


Lenovo

Lenovo formed a joint venture with NEC to tap into the high-end server market in Japan. The joint venture will leverage Lenovo’s low-cost manufacturing model with NEC’s high-margin products, enhanced market position and distribution channels.


IBM

IBM will leverage the strategic promotion of the integrated solutions to solve business needs. IBM will combine POWER Servers with Smart Analytics, Cloud Burst and Power VM to drive revenue and profit growth.

Fujitsu

Fujitsu has ample opportunity for growth within the supercomputing segment due to the demand for large amounts of data to be processed using proprietary servers. Despite difficult competition within the x86 market, Fujitsu continues to be a leader in the high-end proprietary server market.


TBR


Increased demand for virtualized and cloud environments lays the trajectory for growth in an increasingly consolidated storage market


• On average, storage vendors maintained double-digit growth, as emerging cloud and virtualized infrastructures created demand for scalable, unified storage, and the strong value proposition of high storage utilization spurred corporate spending.

• TBR believes smaller players, such as NetApp and HDS, will rely on a strong ecosystem of channel, OEM and technology partners to keep pace with the growing multiplatform vendors investing heavily in acquisitions to expand their storage portfolios and target key growth markets within the industry.

Dell

EMC

HDS

HPIBM

NetApp

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Storage Revenue Growth

4Q10 STORAGE REVENUE GROWTH VS CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for segment = 5.3%

Average Storage Revenue Growth = 8.1%

TBR

Segment View: Storage

TBR


Storage Revenue LeadersCompany Size Key Strategy Drivers & Changes

EMC $1.9 billion

Transition from an information storage provider to a serverless infrastructure company with an integrated solutions strategy to address a wider range of customer data requirements

EMC posted double-digit growth in both high-end and mid-tier platform products, driven by strong demand for Symmetrix and BRS offerings.

IBM $1.2 billion

Leverage acquisitions, such as XIV for high-end customers and Storwize for the midmarket, and create new pools of data with Smarter Planet and Analytics strategic initiatives to drive consistent storage revenue growth through 2011

IBM’s storage revenue increased 8.0% year-to-year to $1.2 billion with more than 20% storage revenue growth in Growth Markets, demonstrating the company’s efforts to expand in emerging markets.

HDS $1.0 billion

HDS is expanding its Universal Storage Platform to capitalize on customer migration to virtualized environments, driving unit shipment growth by solving specific customer datacenter needs.

HDS introduced the Hitachi Clinical Repository (HCR) solution in 4Q10 to gain traction in the high-growth healthcare market.

Storage Growth LeadersCompany Growth Key Strategy Drivers & Changes

NetApp 32.3%Meet growing demand for cloud computing and virtualization by leveraging acquisitions, partnerships and product development to expand the unified storage portfolio

NetApp utilized its recently upgraded portfolio, including the latest edition of Data ONTAP, to capitalize on upselling opportunities, driving increased midmarket and high-end demand.

EMC 16.0%Leverage Greenplum and Isilon Systems as a means to expand in key growth markets, including cloud computing and Big Data storage and management.

Storage hardware revenue increased 16.0% year-to-year and 17.0% sequentially to $1.89 billion, accounting for 38.8% of EMC’s total revenue.

HP 13.8%Couple 3PAR and “drop-in acquisitions” on the software side with bundled consulting services to defend datacenter presence from attrition to cloud.

TBR believes the addition of networking, previously a corporate investment, to HP’s Enterprise Storage and Servers business in 4Q10 lays the foundation for increased IT-as-a-Service and storage sales.

Storage vendors enhance their unified storage portfolios to break into virtualized and cloud-based datacenters and drive strong growth


TBR


Trends & Outlook• Storage is an adjacent hardware business that has emerged as a key strategic lever, as CBQ vendors aggressively

ramp up acquisition activity, such as Dell’s purchase of Compellent and HP’s snatching up of 3Par, to augment their core capabilities and penetrate high-growth areas of the storage market.

• CBQ vendors continued building out their unified storage portfolios to deliver comprehensive, integrated solutions and capitalize on new demand for storage in cloud computing and virtualized datacenters.

• As the pool of unstructured and object data, such as medical records, grows, TBR anticipates storage vendors will increasingly bundle hardware, software and services into solutions that address vertical-specific needs.

Vendors acquire to win leadership in key growth areas such as cloud and big data verticals, driving a diversified, sustainable growth runway


NetApp

NetApp acquired Akorri Networks for improved virtualization deployment services.

NetApp acquired LSI-Engenio to expand into the server-attached and embedded storage markets.

EMC

EMC Greenplum integrated Cloudera’s Distribution for Hadoop software into its Chorus enterprise analytics and data warehousing platform.In 4Q10, EMC acquired scale-out NAS vendor Isilon Systems.

Dell

Dell signed agreements to acquire virtualized storage vendor Compellent Technologies and Security-as-a-Service provider SecureWorks.

In early January, Dell acquired InSite One Inc., a cloud-based medical archiving company.


EMC

EMC positioned to enable channel partners to act as a spearhead in midmarket adoption by delivering a restructured midmarket portfolio – the VNX and VNXe – and reseller program.

EMC introduced two additions to its arsenal of hybrid cloud-enabling solutions to beef up its image as an end-to-end cloud and storage-as-a-service provider and capture greater share of the key growth market.

NetAppNetApp rolled out FlexPod, a FAS3200, scalable and cloud-ready storage architecture built jointly with Cisco and VMware that is delivered through service partners.


TBR


Enterprise PC and server refresh cycles support current growth, while emerging devices hold the keys for accelerated performance


• Increased PC and server demand due to the continued corporate hardware refresh cycle spending supported chip sales, keeping the average year-to-year microelectronics revenue growth rate above corporate growth for the segment.

• TBR believes semiconductor manufacturers are increasingly looking to technology and channel partnerships to cost-effectively develop and drive sales of comprehensive chipsets targeted at key growth devices, such as tablets and other mobile devices, to lay the foundation for strong performance in 2011.

AMD

IBM

Intel

Sony

Toshiba

-2%

0%

2%

4%

6%

8%

10%

-5% 0% 5% 10% 15% 20% 25% 30%

Corp

orat

e Re

venu

e G

row

th

Microelectronics Revenue Growth

4Q10 MICROELECTRONICS REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

TBR

Average Corporate Revenue Growth for Segment = 5.3%

AverageMicroelectronics Revenue

Growth = 13.9%

Segment View: Microelectronics

TBR


Hardware vendors focus on efficient manufacturing processes and developing chips catering to higher-margin devices to position for strong performance

Microelectronics Revenue Leaders

Company Size Key Strategy Drivers & Changes

Intel $11.5billion

Intel is ramping investment to augment revenue from its core markets, including PCs and servers, with growth in the mobile and embedded consumer electronics markets.

Intel’s server segment led all business segments in percentage of total revenue, increasing to 22.0% of overall revenue in 4Q10 as a result of accelerated customer adoption of cloud environments.

Toshiba $3.3 billion

Toshiba is shifting from its LSI business to NAND flash technology to ride the wave of mobile device demand while reducing the risk of volatile LSI product demand.

Power outages at a Toshiba NAND manufacturing facility resulted in a 20% loss in chip shipment during December and January, causing a significant setback for the vendor in the high-opportunity market.

AMD $1.6 billion

AMD ramps R&D spend into high-end gaming processors and graphics cards to capitalize on strong demand and drive high-end sales.

AMD launched and reported strong customer adoption of Accelerated Processing Units (APUs), dubbed Fusion, in 4Q10.

Microelectronics Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

IBM 27.8%IBM is leveraging the introduction of high-end systems and strong partnerships with game console manufacturers to drive segment growth.

Increased demand from networking and game console chip customers drove a fourth consecutive quarter of microelectronics revenue growth.

Sony 24.8%Sony piggybacks semiconductor sales on demand for PCs and partnerships with gaming console manufacturers.

Sony integrated Flash memory into the new PSP2, replacing the platform’s older technology and spurring semiconductor demand.

Toshiba 8.5%Toshiba is leveraging its new 24nm manufacturing process for flash memory to drive demand as well as revenue and margin growth.

Mobile devices, such as smartphones, boosted demand for semiconductors; coupled with cost-reduction, this drove a significant year-to-year improvement to semiconductor operating income.


TBR


Trends & Outlook• Rising sales of PCs and servers, largely due to the business refresh cycle, drove semiconductor demand in 4Q10.• Chipmakers’ development of processes boosting chip production efficiency, such as Toshiba’s 24nm manufacturing,

coupled with restructuring efforts to align operations with higher-margin technologies yielded improved profitability in 4Q10.

• TBR expects Intel to experience a setback in 1H11, as it takes on expenses and revenue losses due to a flaw in the Series 6 chipset for its latest Sandy Bridge processor.


Toshiba

Toshiba purchased the remaining 19.9% of Toshiba Storage Device Corporation (TSDC) from its partner Fujitsu to gain greater control and advancement in NAND flash memory.

To shift focus away from low-end, non-memory chip production, Toshiba will sell its factory producing cell graphic chips used in PlayStation 3 to Samsung and its system LSI chip facility to Sony.

IntelIntel’s partnership with Bang & Olufsen will increase its presence in the market for devices enabling Internet-connected TV – a key growth market Intel has yet to infiltrate.


AMD

AMD rolled out new FirePro graphics cards, which offer efficient support for various displays, targeted at the medical, financial, design and engineering verticals.

AMD rolled out Embedded G-Series low-power processors for improved x86 performance.

Intel

Intel rolled out its new Sandy Bridge processors to add value for customers and improve performance via increased platform integration on its platform.

Intel announced Atom SoC processors to gain entrance into rapidly growing verticals, including the automotive and healthcare industries, via embedded applications such as in-vehicle information and entertainment systems.

New applications, including in mobile devices and Internet-connected TV, will drive microelectronics revenue throughout 1H11


TBR


A strong enterprise presence and marketing capabilities in the consumer sector are benefiting winning hardware vendors in the Americas

• Growth in the Americas remained in the double digits in 4Q10, driven by improving customer spending in the region.

• Apple led CBQ companies in growth in the Americas, while Panasonic overcame NetApp to regain its position as the runner-up and AMD accelerated growth to achieve the No. 3 ranking. TBR attributes leading performance primarily to the ongoing enterprise refresh and demand for differentiated products in the high-end consumer market.


HPAcer

Dell

Lenovo

Panasonic

NetApp

Oracle/Sun

Sony

Fujitsu

AMD

IBM

IntelEMC

Toshiba

Apple

HDS

-40%

-20%

0%

20%

40%

60%

80%

-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70%Corp

orat

e Re

venu

e G

row

th

Americas Revenue Growth

4Q10 AMERICAS REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

Average Corporate Revenue Growth for segment = 11.1%

Average Americas Revenue Growth = 10.5%

TBR

Geographic View: Americas

TBR


Hardware vendors increase traction in the private sector via refreshed portfolios to overcome weak federal and consumer spend in the region

Americas Revenue LeadersCompany Size Key Strategies Drivers & Changes

HP $14.2 billion

HP is increasingly relying on Canada and Latin America for new growth in the Americas, as the mature U.S. market grows comparatively stagnant.

Growth in the Americas in 4Q10 is primarily attributable to strong sales of enterprise hardware, including Super Dome 2 systems.

IBM $12.2 billion

IBM leverages its established presence in the Americas coupled with improving demand from consumers to drive growth in the region.

Americas sustained a third quarter of positive post-recessionary revenue growth in 4Q10, driven by increased demand for high-end hardware.

Apple $12.1 billion

Apple is pushing iPad and iPhone sales to drive growth, namely via expanded retail coverage, to drive growth in the Americas.

Apple has more than doubled its potential U.S. market, and much more than doubled the part of the U.S. market it has penetrated, with its Verizon iPhone; TBR expects this to yield increased revenue from the Americas in coming quarters.

Americas Revenue Growth Leaders

Company Growth Key Strategies Drivers & Changes

Apple 57.3%Apple is pushing iPad and iPhone sales and expanding its retail coverage to drive growth in the Americas.

Apple leveraged a strong retail presence to combat the maturity of key devices in the U.S. market and drive strong growth in the Americas.

Panasonic 24.9%Drive PC sales to private sector customers in the U.S. to capitalize on the enterprise PC refresh cycle and combat restricted government IT spend

In the face of decreased federal spend, Panasonic leaned on strengthened enterprise demand in the U.S. to drive growth in the Americas.

AMD 21.6%AMD innovates and forges strategic partnerships to differentiate its product portfolio and increase its marketing capabilities to position for growth in the Americas.

AMD rolled out its Fusion technology and joined the Multicore Association’s Board in 4Q10 to drive increased unit shipment and revenue growth in the Americas.


TBR


Strategic partnerships and strong demand in growth markets remain the key to growth in the Americas for hardware vendors


Fujitsu

Fujitsu appointed Rich Marcello as executive VP of Platforms Products to drive sales and revenue growth in North America.

Christer Bergman was appointed to Fujitsu Frontech North America Inc. and will head the development of PalmSecure technology.

PanasonicPanasonic opened a 3-D innovation center at its Hollywood Laboratory in Nevada to capitalize on growing consumer demand for 3-D technology.

ToshibaToshiba America Information Systems rolled out IP 5000-series business phones, which appeal to SMBs via increased affordability.

Intel

Intel is constructing a factory in Oregon, slated to be operational by 2013, to handle 450mm wafers for decreased manufacturing costs as part of an ongoing $6 billion to $8 billion investment to upgrade U.S. facilities to 22nm production.


HP

HP announced Ingram Micro as its first authorized distributor of HP Visual Collaboration videoconferencing solutions, to access Ingram’s network of value-added resellers in the U.S.

FujitsuFujitsu entered the U.S. smart meter market in 4Q10 as a result of a deal with New Mexico-based Kit Carson Electric.

Apple

In signing a deal with Verizon, Apple has more than doubled its potential U.S. market for iPhone sales, and much more than doubled the part of the U.S. market it has yet to penetrate.

Trends & Outlook• Growth in emerging markets such as Latin America continued to outpace mature markets, including the U.S. Hardware

vendors are working to expand their presences and increase sales in these countries to offset weak customer spending in mature markets and drive growth in the Americas.

• Vendors continued utilizing partnerships to cost effectively increase their addressable customer base via distribution and carrier agreements, such as Apple’s alliance with Verizon, and new technologies.

• TBR anticipates improved performance in the Americas entering 1H11, predicated on resumed spending by consumer and public sector customers. We expect CBQ vendors to leverage product development, marketing and alliances to capitalize on demand for additional IT infrastructure and storage.


TBR


Hardware vendors strive for increased traction in EMEA to overcome weak customer spending, particularly in the consumer market, and drive growth


.

• High volatility in European markets resulted in the CBQ average EMEA revenue growth declining to the single digits in 4Q10. TBR anticipates improved performance in coming quarters in tandem with economic recovery.

• Pure-play vendors, including Apple, NetApp, HDS and Lenovo, overall fared the best in terms of growth; TBR believes customers in EMEA are spending incrementally to sustain their IT operations, with a focus on cost-effective hardware that boosts business process efficiency to drive growth.

HP

IBM

Acer

Sony AMD

Apple

Dell

EMC Lenovo

PanasonicNetApp

Oracle/Sun

Toshiba

Fujitsu

Intel HDS

-40%

-20%

0%

20%

40%

60%

80%

-40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60%

Corp

orat

e Re

venu

e G

row

th

EMEA Revenue Growth

4Q10 EMEA REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOU

RCE:

TBR

Average Corporate Revenue Growth for Segment = 11.1%

Average EMEA Revenue Growth = 7.3%

TBR

Geographic View: EMEA

TBR


Hardware vendors are increasing their channel presences within EMEA to drive revenue in the region amidst uncertain economic conditionsEMEA Revenue LeadersCompany Size Key Strategy Drivers & Changes

HP $12.3 billion

Strong alliances and traction in channel partner relationships enhance HP’s position as a provider of affordable solutions that simplify operations and help customers prepare for growth, encouraging spending amidst economic recovery in the EMEA region.

Revenue from EMEA contributed 38.0% to total revenue, up 100 basis points sequentially, while declining 100 basis points annually.

IBM $9.5 billion

Leverage strong traction in EMEA to overcome overall market uncertainty and drive sales in the region

IBM posted strong performance in Italy and France during 4Q10.

Apple $7.9 billion

Employ strong retail presence and channel alliances to meet high demand for the iPhone 4 and iPad in EMEA, driving revenue and unit shipment growth.

Economic recovery and resulting increased consumer spending are yielding strong growth in EMEA for Apple.

EMEA Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 49.2%Leverage new product releases – namely the iPad and iPhone 4 – to capitalize on increased consumer spending during economic recovery and sustain strong growth

Apple leveraged iAd expansion to Europe and increased demand for the iPhone and iPad to overcome market contraction and maintain double-digit EMEA growth.

NetApp 34.8%Invest in countries with stronger economies such as Germany to offset weaker markets, namely in Southern Europe, and maintain growth in EMEA

Despite a weak macroeconomic environment, the EMEA region led NetApp’s segments in growth as spending picked up through 4Q10.

Panasonic 15.6%Increase presence in emerging markets in EMEA to overcome shaky macroeconomic conditions and sustain strong revenue growth in the region

Panasonic maintained double-digit growth in Europe on the back of an enterprise IT refresh cycle driven by improving economies in the region.


TBR


Vendors extend their reach into growth markets such as mobile devices via R&D and channel and technology alliances to spur demand in EMEA


Toshiba Toshiba is set to release the newest version of its tablet PC exclusively in EMEA during 1H11.

DellTo capitalize on growing demand for mobility within the healthcare market, Dell piloted a mobile clinical computing solution at 10 European hospitals in 4Q10.

HP

To enhance its position as a provider of affordable solutions that simplify operations and help customers prepare for growth, and drive spending amidst economic recovery, HP launched the EMEA SMB Networking program for channel reseller partners.

Trends & Outlook• TBR estimates EMEA revenue growth to improve with economic recovery in EMEA, primarily due to demand for

critical IT upgrades, particularly in the enterprise and SMB markets.• Vendors augmented internal R&D spend with technology partnerships to penetrate key growth markets such as

Internet-connected TV within EMEA, laying the foundation for unit shipment and revenue growth.• We anticipate hardware vendors will continue pursuing alliances to cost-effectively expand their channel presence

in EMEA with a focus on the region’s growth countries, helping spur increased customer spend.


Intel

Intel partnered with Bang & Olufsen, a Denmark-based provider of high-end video and audio products, to develop devices enabling Internet-connected TV and gain traction in the key growth market within the region.

Sony

Sony partnered with Spotify to promote market expansion of its subscription-based music business in Europe. TBR believes Sony’s Music Unlimited Powered By Qriocity will augment declining revenue in the physical music business.


TBR


Domestic know-how and a portfolio catering to emerging demand and verticals are key in the race to capitalize on high demand in APAC


• Overall APAC performance deteriorated slightly in 4Q10 compared to 3Q10, largely due to unfavorable annual compares, but was still above the average corporate revenue growth.

• Apple remained an outlier in terms of growth on the back of continued strong demand for the iPhone and iPad in APAC, while Japan-based vendors leveraged strong traction in the region and product line enhancements to generate the greatest amount of revenue from the region compared to peers.

Toshiba

SonyHP

FujitsuDell

IBMIntel

Panasonic

AcerAMD

HDSEMC

Lenovo

Oracle/Sun

NetApp

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

-60.0% -40.0% -20.0% 0.0% 20.0% 40.0% 60.0%

Corp

orat

eRev

enue

Gro

wth

APAC Revenue Growth

4Q10 APAC REVENUE GROWTH VS. CORPORATE REVENUE GROWTH

SOURCE: TBR

TBR

Average Corporate Revenue Growth for Segment =11.1%

Average APAC Revenue Growth = 19.1%

Apple:(70.5, 149.3)

Geographic View: APAC

TBR


Vendors strategically ramp spending and forge partnerships to gain share in ChinaAsia Pacific Revenue LeadersCompany Size Key Strategy Drivers & Changes

Panasonic $21.2 billion

Lessen reliance on Japan while working to increase channel presence, with a focus on China’s large consumer market, for a more expansive addressable APAC customer base

The Chinese region increased by 290 basis points annually to 12.8% of overall revenue, while recent acquisitions resulted in share gains in Asia.

Sony $12.6 billion

Leverage strategic initiatives in China, including an expanded manufacturing headcount and the release of key products including the PlayStation, to gain traction in the key growth market

Japan contributed the highest amount of Sony’s total revenue for the fourth consecutive quarter, reaching 29.7% in 4Q10 due in part to the eco-point system subsidy.

Toshiba $12.2 billion

Target high-growth markets including China for expansion in light of decelerating growth in the APAC region as a whole

Domestic revenue increased 80 basis points annually to 45.0% of total revenue, as Japan’s economic stimulus measures drove customer spending on products including LCDs and PCs.

Asia Pacific Revenue Growth LeadersCompany Growth Key Strategy Drivers & Changes

Apple 149.3% Continue to expand retail presence in China as a key corporate growth initiative

The availability of the iPhone 4 in China and strong regional demand for MacBook Air and MacBook Pro drove a fifth sequential quarter of triple-digit growth.

Panasonic 35.4%Meet consumer and enterprise demand for green IT products, and leverage Toughbook traction to expand in emerging verticals to combat the effects of negative year-to-year compares going forward

Panasonic leveraged the acquisitions of Sanyo Electric Co. and PEW for an increased foothold in the region, while shifting to a regional sales approach to drive Toughbook unit shipments in 4Q10.

NetApp 26.6%Leverage partners and investment in sales and marketing, R&D and innovation to spur demand and generate greater revenue from APAC

NetApp realized its fourth consecutive quarter of double-digit year-to-year growth due to its efforts to expand the channel and build on a small base.


TBR


Trends & Outlook• APAC hardware vendors target emerging markets in APAC, namely India and China, as key levers for overall revenue

growth. While the region sustained stronger overall economic growth coming out of the recession compared to EMEA and the Americas, it is beginning to feel the effects of challenging compares.

• Companies based outside of APAC expanded channel partnerships, while APAC-based companies coupled strong domestic presence and product innovation with restructuring initiatives to boost sales and margins.

• In March, Japan-based vendors, including Fujitsu, Sony and Toshiba, were forced to suspend manufacturing in the country due to a level 8.9 earthquake. TBR anticipates significant implications for the companies’ 2011 roadmaps; we believe demand in Japan will fall off, and expect the vendors to have difficulty meeting demand from customers based abroad due to production constraints.

Hardware vendors look to the APAC region for growth, but unfavorable compares and Japan’s earthquake will create challenges in 2011


DellDell is expanding its manufacturing operations to China to improve costs of labor and increase unit sales in China’s fast-growing economy.

Panasonic

To expand its global footprint of Toughbook PCs, Panasonic is focused on restructuring its sales, eliminating country-specific sales teams and creating regional sales and marketing in geographies including APAC.


Apple

Apple allied with the Dentsu Group to bring the iAd mobile advertising network to Japan and capitalize on the large, growing market of mobile iOS device users in the country.

Apple licensed its main ODM, Foxconn, as an Apple retailer in APAC. Foxconn will increase its 34 stores in the region to 500, all of which will sell Apple products, augmenting the 20 stores Apple plans to open in China in FY11.

HDSHDS partnered with Redington, a large distributor in India, to increase its revenue share and more effectively capitalize on the key growth market.


TBR


RANKING TBR SCORE COMPANY TOP 3 COMPANIES

1 9.22 HP

2 8.53 IBM

3 8.25 PANASONIC

4 8.06 APPLE

5 7.90 SONY

6 6.38 TOSHIBA

7 5.75 DELL

8 5.25 FUJITSU

9 4.87 INTEL

10 3.69 LENOVO

11 3.51 ACER

12 3.50 EMC

13 2.85 ORACLE/SUN

14 2.82 AMD

15 2.75 NETAPP

16 2.69 HDS

TBR

$32,302

$29,019

$27,689

$26,741

$25,983

$18,708

$15,692

$13,284

$11,457

$5,808

$4,916

$4,889

$1,753

$1,649

$1,268

$1,025

$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)

4Q103Q10AVERAGE

Top Ranking AnalysisHP maintained the top spot in terms of total

revenue, up 3.6% year-to-year to $32.3 billion in 4Q10. TBR attributes the growth to HP's

success in leveraging all aspects of its diverse portfolio to deliver products that cost-

effectively and comprehensively address customer needs. We believe HP's efforts to

add value to core hardware offerings via software and services, coupled with a

strengthened focus on networking, position the company for new revenue and margin

growth in 2011.

4Q10 Average = $13,886 4Q10 Standard Deviation = $11,405

HP’s continued focus on delivering integrated solutions across its product portfolio yield a steady, diverse revenue stream

Financial Metrics: Revenue

TBR


Strong customer adoption of new key products has laid the foundation for continued runaway revenue growth for Apple

Peaches1012

Financial Metrics: Revenue Growth


1 10.00 APPLE

2 6.14 PANASONIC

3 5.50 NETAPP

4 5.10 LENOVO

5 4.88 EMC

6 4.15 HDS

7 3.78 INTEL

8 3.66 TOSHIBA

9 3.59 IBM

10 3.46 DELL

11 3.34 SONY

12 3.31 FUJITSU

13 3.29 HP

14 2.94 AMD

15 2.25 ACER

16 0.00 ORACLE/SUN

TBR

70.5%

31.6%

25.3%

21.4%

19.2%

12.0%

8.4%

7.3%

6.6%

5.3%

4.1%

3.9%

3.6%

0.2%

-6.6%

-35.1%

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

SOU

RCE: TBR AND

COM

PANY D

ATA

REVENUE YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE

Top Ranking AnalysisApple posted the strongest year-to-

year corporate revenue growth among CBQ companies for a third consecutive quarter in 4Q10, as arefreshed notebook product line augmented seasonally increased consumer spend and continued

rapid customer adoption of iPhone 4 and iPad, resulting in strong

corporate performance.

4Q10 Average = 11.1% 4Q10 Standard Deviation = 21.8%

TBR


Intel and NetApp continue jockeying for the leading gross margin metric, working to couple strong revenue growth with cost-effective operations


1 8.61 INTEL

2 8.32 NETAPP

3 7.82 EMC

4 6.76 ORACLE/SUN

5 6.47 IBM

6 6.35 HDS

7 6.01 AMD

8 5.25 APPLE

9 4.54 SONY

10 3.98 FUJITSU

11 3.80 PANASONIC

12 3.62 HP

13 3.43 TOSHIBA

14 3.21 DELL

15 2.07 LENOVO

16 1.93 ACER

TBR

67.5%

65.0%

60.7%

51.5%

49.0%

48.0%

45.1%

38.5%

32.4%

27.5%

26.0%

24.4%

22.9%

21.0%

11.2%

9.9%

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

SOU

RCE: TBR AND

COM

PANY D

ATA

GROSS MARGIN

4Q10

3Q10

AVERAGE

Top Ranking AnalysisIntel surpassed NetApp as the

industry leader in terms of gross margin. Intel's gross

margin grew to 67.5% in 4Q10, up from 65.9% in 3Q10 and

64.7% in 4Q09, driven by the company's lower

manufacturing cost and increased revenues from 32nm

processors.


Financial Metrics: Gross Margin

TBR


The combination of falling component costs with rising ASPs and unit shipment growth drove Intel’s operating margin expansion in 4Q10


1 9.15 INTEL

2 7.82 APPLE

3 7.17 AMD

4 7.04 IBM

5 6.29 EMC

6 5.73 NETAPP

7 4.96 HDS

8 4.94 HP

9 4.45 ORACLE/SUN

10 4.45 DELL

11 4.26 SONY

12 3.97 PANASONIC

13 3.78 ACER

14 3.69 TOSHIBA

15 3.66 LENOVO

16 3.62 FUJITSU

TBR

37.9%

29.3%

25.0%

24.2%

19.3%

15.7%

10.6%

10.5%

7.3%

7.3%

6.1%

4.2%

2.9%

2.4%

2.1%

1.9%

0.0% 10.0% 20.0% 30.0% 40.0%

SOU

RCE: TBR AND

COM

PANY D

ATA

OPERATING MARGIN

4Q10

3Q10

AVERAGE

Top Ranking AnalysisIntel maintained the top position

among peers in terms of operating margin in 4Q10. Intel’s operating margin climbed to 37.9% in 4Q10 from 37.3% in 3Q10 and 23.6% in 4Q09, attributable to increased

ASPs and strong corporate revenue growth.


Financial Metrics: Operating Margin

TBR


Acer maintains a small headcount base and is working to centralize operations, resulting in low SG&A spend compared to CBQ peers


1 7.45 ACER

2 7.38 APPLE

3 7.18 LENOVO

4 6.85 HP

5 6.19 DELL

6 6.00 SONY

7 5.69 INTEL

8 5.63 AMD

9 5.50 TOSHIBA

10 5.47 PANASONIC

11 4.52 FUJITSU

12 4.47 IBM

13 4.29 ORACLE/SUN

14 2.32 EMC

15 1.77 HDS

16 1.07 NETAPP

TBR

6.8%

7.1%

8.0%

9.6%

12.6%

13.5%

14.9%

15.2%

15.8%

15.9%

20.3%

20.5%

21.4%

30.4%

33.0%

36.2%

0.0% 10.0% 20.0% 30.0% 40.0%

SOU

RCE: TBR AND

COM

PANY D

ATA

SG&A AS A % OF REVENUE

4Q10

3Q10

AVERAGE

Top Ranking AnalysisAcer maintained the smallest SG&A

expense as a percentage of total revenue among CBQ companies in

4Q10. Acer sustained negative year-to-year headcount growth and

continued working towards centralized operations and a

channel-centric sales model during the quarter.

4Q10 Average = 17.6% 4Q10 Standard Deviation = 9%

Financial Metrics: SG&A Expense

TBR


Acer sustains minimal R&D spend, focusing internal innovation around devices catering to key growth markets

RANKING TBR SCORE COMPANY

TOP 3 COMPANIES

1 7.31 ACER

2 7.03 DELL

3 6.96 LENOVO

4 6.68 APPLE

5 6.58 HP

6 5.96 HDS

7 5.85 TOSHIBA

8 5.83 SONY

9 5.67 FUJITSU

10 5.62 IBM

11 5.47 PANASONIC

12 4.13 EMC

13 3.15 NETAPP

14 2.67 INTEL

15 2.31 ORACLE/SUN

16 0.49 AMD

TBR

0.2%

1.1%

1.3%

2.2%

2.5%

4.4%

4.7%

4.8%

5.3%

5.4%

5.9%

10.1%

13.1%

14.6%

15.7%

21.3%

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

SOU

RCE: TBR AND

COM

PANY D

ATA

R&D EXPENSE AS A % OF REVENUE

4Q10

3Q10

AVERAGE

Top Ranking AnalysisAcer maintained the smallest level of R&D expense as a percentage of total revenue

compared to industry peers, a sequentially flat 0.2%. The company

focused investment on new devices that are both high-margin and associated with

rapildly growing markets, including mobile and other Internet-connected

devices.

4Q10 Average = 7% 4Q10 Standard Deviation = 6.1%

Financial Metrics: R&D Expense

TBR


Intel relies on channel partners to drive sales, a strategy that keeps its headcount low but unit shipment and revenue growth strong

Financial Metrics: Revenue Per Salesperson


1 10.00 INTEL

2 7.27 ACER

3 6.16 AMD

4 5.07 LENOVO

5 4.67 APPLE

6 4.60 HP

7 4.44 DELL

8 4.21 SONY

9 4.09 HDS

10 4.07 PANASONIC

11 4.04 FUJITSU

12 4.01 EMC

13 4.00 NETAPP

14 3.98 TOSHIBA

15 3.90 ORACLE/SUN

16 3.83 IBM

TBR

$36.50

$15.61

$10.89

$6.27

$4.60

$4.29

$3.61

$2.64

$2.13

$2.03

$1.93

$1.80

$1.74

$1.65

$1.32

$1.05

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00

SOU

RCE: TBR AND

COM

PANY D

ATAANNUAL REVENUE PER SALESPERSON (IN $ MILLIONS)

4Q10

3Q10

AVERAGE

Top Ranking AnalysisIntel retained the top spot for the annual

revenue per salesperson metric. The company augmented its large OEM channel

with accelerated investment in headcount to spur customer adoption of its products,

driving strong corporate revenue growth and a resulting higher revenue per salesperson

metric compared to CBQ peers.

4Q10 Average = $6,129,882 4Q10 Standard Deviation = $9,007,326

TBR


Acer maintained a small workforce to offset corporate revenue declines and maintain the industry-leading revenue per employee metric

Financial Metrics: Revenue Per Employee


1 10.00 ACER

2 8.23 APPLE

3 5.57 HDS

4 5.52 LENOVO

5 4.88 DELL

6 4.80 AMD

7 4.59 INTEL

8 4.58 NETAPP

9 4.43 SONY

10 4.21 HP

11 4.05 TOSHIBA

12 4.01 EMC

13 3.97 ORACLE/SUN

14 3.87 FUJITSU

15 3.75 PANASONIC

16 3.69 IBM

TBR

$2,994.38

$1,715.67

$853.20

$838.23

$630.71

$603.88

$538.56

$532.49

$486.42

$415.72

$362.87

$349.39

$337.15

$304.18

$264.30

$247.08

$0.00 $400.00 $800.00 $1,200.00 $1,600.00 $2,000.00 $2,400.00 $2,800.00 $3,200.00

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ANNUAL REVENUE PER EMPLOYEE (IN $ THOUSANDS)

4Q10

3Q10

AVERAGE

Top Ranking AnalysisAcer maintained an annual revenue per employee metric nearly twice that of its closest competitor, Apple. It employs a corporate-wide staff of 6,700, stagnant sequentially and up a slight 1.5% from

4Q09. TBR believes this small headcount base offset the effects of a 6.3% year-to-year revenue decline to enable Acer to significantly outperform peers in 4Q10.


TBR


AMD’s headcount fell by double digits annually, as streamlined business processes remain a key corporate focus


1 7.99 AMD

2 7.93 ORACLE/SUN

3 5.81 PANASONIC

4 5.72 FUJITSU

5 5.35 ACER

6 5.29 HP

7 5.27 DELL

8 5.26 SONY

9 5.22 HDS

10 5.22 TOSHIBA

11 5.20 IBM

12 5.10 INTEL

13 3.37 EMC

14 2.90 NETAPP

15 2.26 LENOVO

16 0.87 APPLE

TBR

-17.7%

-17.2%

-1.8%

-1.1%

1.5%

2.0%

2.1%

2.2%

2.5%

2.5%

2.6%

3.4%

16.0%

19.4%

24.0%

34.2%

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

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HEADCOUNT GROWTH YEAR-TO-YEAR

4Q10

3Q10

AVERAGE

Top Ranking AnalysisAMD overtook Oracle/Sun to post the

lowest headcount growth on a year-to-year basis in 4Q10. The company

maintainted a sequentially stagnant headcoutn base of 11,021, down 17.7%

from the year-ago quarter as the company works aggressively to reduce its expenses and drive improved profitability

going forward.


Financial Metrics: Headcount Growth

TBR


Rapid customer adoption of new products yields strong net income and margin growth, keeping Apple’s ROA higher than CBQ peers


1 9.94 APPLE

2 8.86 INTEL

3 7.17 IBM

4 6.39 ORACLE/SUN

5 5.96 AMD

6 5.77 NETAPP

7 5.40 HP

8 5.29 DELL

9 5.14 EMC

10 4.68 ACER

11 4.11 FUJITSU

12 3.93 HDS

13 3.90 LENOVO

14 3.70 TOSHIBA

15 3.40 SONY

16 3.33 PANASONIC

TBR

23.5%

19.7%

13.8%

11.0%

9.5%

8.9%

7.6%

7.2%

6.7%

5.1%

3.1%

2.4%

2.4%

1.7%

0.6%

0.3%

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

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RETURN ON ASSETS

4Q10 3Q10 AVERAGE

Top Ranking AnalysisApple grew its ROA to 23.5% in 3Q10, an increase of 310 basis points year-to-year,

maintining the top spot against CBQ peers. Apple's net income improved 77.7%

year-to-year while its total asset base grew by 60.9%, driven by continued strong sales of the iPhone 4 and iPad sales. Going forward, TBR believes Apple will remain a strong contender, as continued product

line refreshes yeild improved margins and cash.


Financial Metrics: Return on Assets

TBR


Intel posted industry-leading ROE in 4Q10, as AMD lost the effects of favorable year-to-year compares

Financial Metrics: Return on Equity


1 5.42 IBM

2 5.31 AMD

3 4.99 DELL

4 4.93 APPLE

5 4.76 INTEL

6 4.71 ORACLE/SUN

7 4.71 HP

8 4.69 TOSHIBA

9 4.69 NETAPP

10 4.62 HDS

11 4.62 ACER

12 4.60 LENOVO

13 4.54 EMC

14 4.53 FUJITSU

15 4.40 SONY

16 4.38 PANASONIC

TBR

66.4%

59.3%

39.4%

36.0%

25.1%

21.8%

21.6%

20.8%

20.6%

16.4%

16.2%

14.8%

11.1%

10.7%

2.6%

1.1%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0%

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RETURN ON EQUITY

4Q10

3Q10

AVERAGE

Top Ranking AnalysisIBM posted the highest ROE in 4Q10

compared to CBQ peers, driven by strong revenue growth and expense control.

TBR believes companies including Dell, Apple and Intel will work to capitalize on

IBM's trend of slowly declining ROE -which fell during the quarter from 79.9%

in 4Q09 - and to close the large gap in the metric going forward.


TBR



1 7.95 ACER

2 7.64 LENOVO

3 7.61 APPLE

4 6.94 DELL

5 6.90 HP

6 5.91 TOSHIBA

7 5.72 PANASONIC

8 5.15 FUJITSU

9 5.10 IBM

10 5.07 SONY

11 4.56 INTEL

12 3.52 AMD

13 3.39 HDS

14 2.78 EMC

15 2.36 ORACLE/SUN

16 1.59 NETAPP

TBR

7.0%

9.0%

9.2%

13.7%

13.9%

20.5%

21.8%

25.6%

25.9%

26.1%

29.5%

36.5%

37.4%

41.4%

44.2%

49.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

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TOTAL OPERATING EXPENSE AS A % OF REVENUE

4Q10

3Q10

AVERAGE


Appendix: Total OPEX

TBR



1 8.78 INTEL

2 7.60 AMD

3 7.55 APPLE

4 6.80 IBM

5 6.02 NETAPP

6 5.89 EMC

7 5.19 HDS

8 5.07 HP

9 4.70 DELL

10 4.24 SONY

11 4.08 ACER

12 4.07 ORACLE/SUN

13 3.98 PANASONIC

14 3.97 LENOVO

15 3.94 FUJITSU

16 3.81 TOSHIBA

TBR

29.6%

22.7%

22.5%

18.1%

13.6%

12.9%

8.8%

8.1%

5.9%

3.3%

2.4%

2.3%

1.7%

1.7%

1.5%

0.8%

-10.0% 0.0% 10.0% 20.0% 30.0%

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NET MARGIN

4Q10

3Q10

AVERAGE


Appendix: Net Margin

TBR


Appendix: Gross Profit YTY


1 7.30 INTEL

2 6.86 APPLE

3 5.11 DELL

4 4.80 NETAPP

5 4.57 EMC

6 4.40 LENOVO

7 3.98 PANASONIC

8 3.68 TOSHIBA

9 3.65 HP

10 3.51 IBM

11 3.25 HDS

12 3.22 SONY

13 3.17 FUJITSU

14 3.05 AMD

15 2.40 ACER

16 1.94 ORACLE/SUN

TBR

67.5%

60.6%

33.3%

28.4%

24.8%

22.2%

15.7%

10.8%

10.4%

8.2%

4.1%

3.7%

2.9%

1.1%

-9.2%

-16.4%

-20.0% 0.0% 20.0% 40.0% 60.0%

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GROSS PROFIT YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE


TBR



1 10.00 ORACLE/SUN

2 6.98 ACER

3 5.33 HP

4 5.28 AMD

5 5.25 TOSHIBA

6 5.11 SONY

7 5.00 IBM

8 4.92 FUJITSU

9 4.54 DELL

10 4.23 HDS

11 4.07 PANASONIC

12 4.00 EMC

13 3.96 INTEL

14 3.53 NETAPP

15 2.47 LENOVO

16 0.43 APPLE

TBR

-48.4%

-10.4%

4.1%

4.6%

4.8%

6.0%

7.0%

7.7%

11.1%

13.8%

15.2%

15.8%

16.1%

20.0%

29.3%

47.2%

-50.0% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

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SG&A YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE


Appendix: SG&A YTY

TBR


RANKING TBR SCORE COMPANY

TOP 3 COMPANIES

1 8.12 ORACLE/SUN

2 7.82 AMD

3 6.52 DELL

4 5.95 HDS

5 5.90 TOSHIBA

6 5.57 FUJITSU

7 5.53 INTEL

8 5.46 SONY

9 5.15 IBM

10 4.73 ACER

11 4.34 EMC

12 4.22 HP

13 3.09 NETAPP

14 3.07 PANASONIC

15 1.99 LENOVO

16 1.47 APPLE

TBR

-21.4%

-18.5%

-5.6%

0.0%

0.5%

3.9%

4.2%

4.9%

8.0%

12.2%

16.0%

17.2%

28.4%

28.6%

39.3%

44.5%

-30.0% -15.0% 0.0% 15.0% 30.0% 45.0% 60.0%

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R&D EXPENSE YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE


Appendix: R&D YTY

TBR



1 9.20 ORACLE/SUN

2 8.32 INTEL

3 6.93 AMD

4 6.88 ACER

5 5.27 TOSHIBA

6 4.90 FUJITSU

7 4.90 SONY

8 4.86 IBM

9 4.71 HP

10 4.59 DELL

11 4.30 HDS

12 4.03 APPLE

13 3.74 EMC

14 3.52 PANASONIC

15 3.17 LENOVO

16 3.11 NETAPP

TBR

-29.6%

-22.1%

-10.3%

-9.9%

3.8%

6.9%

6.9%

7.2%

8.5%

9.5%

12.0%

14.2%

16.7%

18.5%

21.6%

22.1%

-45.0% -30.0% -15.0% 0.0% 15.0% 30.0%

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TOTAL OPERATING EXPENSE YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE


Appendix: OPEX YTY

TBR



1 5.56 ORACLE/SUN

2 4.78 TOSHIBA

3 4.71 DELL

4 4.65 HDS

5 4.64 INTEL

6 4.63 APPLE

7 4.62 NETAPP

8 4.61 EMC

9 4.58 LENOVO

10 4.56 HP

11 4.55 IBM

12 4.54 PANASONIC

13 4.53 SONY

14 4.53 ACER

15 4.50 FUJITSU

16 4.45 AMD

TBR

741.0%

172.9%

124.5%

78.7%

74.1%

65.7%

53.6%

46.3%

24.8%

13.0%

9.0%

2.6%

-6.3%

-7.5%

-31.2%

-67.9%

-150.0% -50.0% 50.0% 150.0% 250.0% 350.0% 450.0% 550.0% 650.0% 750.0% 850.0%

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OPERATING INCOME YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE


Appendix: Operating Income YTY

TBR



1 4.87 FUJITSU

2 4.81 ORACLE/SUN

3 4.81 TOSHIBA

4 4.79 DELL

5 4.77 SONY

6 4.75 HDS

7 4.74 APPLE

8 4.73 NETAPP

9 4.72 INTEL

10 4.72 EMC

11 4.71 PANASONIC

12 4.71 LENOVO

13 4.70 HP

14 4.70 IBM

15 4.70 ACER

16 4.66 AMD

TBR

336.8%

229.1%

222.8%

177.5%

146.1%

104.5%

77.7%

59.9%

48.5%

47.4%

34.6%

25.3%

15.8%

9.3%

5.3%

-68.1%

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

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NET INCOME YEAR-TO-YEAR CHANGE

4Q10

3Q10

AVERAGE

31651.9%


32,000.0%

Appendix: Net Income YTY

TBR


Appendix: Cost per Revenue Dollar


1 7.05 ACER

2 6.77 APPLE

3 6.68 INTEL

4 6.67 LENOVO

5 6.57 ORACLE/SUN

6 6.49 HP

7 6.45 AMD

8 6.09 SONY

9 5.75 TOSHIBA

10 5.66 PANASONIC

11 5.42 DELL

12 4.44 FUJITSU

13 4.38 IBM

14 2.09 HDS

15 1.41 EMC

16 0.87 NETAPP

TBR

$0.02

$0.03

$0.03

$0.03

$0.03

$0.04

$0.04

$0.05

$0.06

$0.06

$0.07

$0.10

$0.11

$0.18

$0.21

$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

4Q10

3Q10

AVERAGE

4Q10 Average = $0.08 4Q10 Standard Deviation = $0.07

TBR



1 8.35 INTEL

2 8.01 ORACLE/SUN

3 7.94 APPLE

4 7.71 AMD

5 6.64 HP

6 6.54 SONY

7 6.24 ACER

8 5.44 IBM

9 4.99 PANASONIC

10 4.67 LENOVO

11 4.67 TOSHIBA

12 3.39 EMC

13 3.37 DELL

14 3.30 NETAPP

15 2.74 FUJITSU

16 2.69 HDS

TBR

$0.04

$0.06

$0.07

$0.08

$0.15

$0.15

$0.17

$0.22

$0.24

$0.26

$0.26

$0.34

$0.34

$0.34

$0.38

$0.38

$0.00 $0.10 $0.20 $0.30 $0.40

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COST PER MARGIN DOLLAR

4Q10

3Q10

AVERAGE

4Q10 Average = $0.22 4Q10 Standard Deviation = $0.12

Appendix: Cost per Margin Dollar

TBR


Appendix: Channel Expense


1 7.41 EMC

2 7.25 INTEL

3 6.81 AMD

4 6.81 DELL

5 6.55 NETAPP

6 5.73 PANASONIC

7 5.22 SONY

8 5.20 APPLE

9 5.02 FUJITSU

10 4.95 IBM

11 4.46 HP

12 3.76 TOSHIBA

13 3.66 LENOVO

14 3.63 HDS

15 0.61 ACER

16 0.00 ORACLE/SUN

TBR

1.6%

2.8%

6.1%

6.1%

8.1%

14.3%

18.1%

18.3%

19.6%

20.2%

23.9%

29.2%

29.9%

30.1%

52.9%

75.2%

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

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CHANNEL EXPENSE AS A % OF SALES & MARKETING EXPENSE

4Q10

3Q10

AVERAGE


TBR


Appendix: Marketing Expense


1 7.76 EMC

2 7.05 ORACLE/SUN

3 6.87 HDS

4 6.02 FUJITSU

5 5.99 ACER

6 5.81 IBM

7 5.64 NETAPP

8 5.62 TOSHIBA

9 5.53 DELL

10 5.25 HP

11 4.67 PANASONIC

12 4.41 SONY

13 3.24 LENOVO

14 2.40 AMD

15 2.16 APPLE

16 0.00 INTEL

TBR

2.2%

8.3%

9.9%

17.4%

17.6%

19.1%

20.6%

20.8%

21.7%

24.1%

29.1%

31.4%

41.6%

49.0%

51.1%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

4Q10

3Q10

AVERAGE


TBR



1 7.30 PANASONIC

2 6.87 APPLE

3 6.86 ORACLE/SUN

4 6.58 TOSHIBA

5 6.22 EMC

6 5.99 SONY

7 5.97 FUJITSU

8 5.36 HDS

9 5.16 DELL

10 4.34 HP

11 4.19 LENOVO

12 4.06 AMD

13 3.94 ACER

14 2.45 IBM

15 1.50 NETAPP

16 0.26 INTEL

TBR

$110.24

$142.67

$143.53

$164.17

$191.36

$208.24

$210.16

$255.51

$270.27

$332.11

$342.76

$352.81

$361.88

$472.82

$543.93

$636.77

$0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00

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

4Q10

3Q10

AVERAGE


Appendix: Marketing Expense per Employee

TBR



1 8.20 APPLE

2 7.93 INTEL

3 7.65 LENOVO

4 6.19 IBM

5 6.03 NETAPP

6 5.59 PANASONIC

7 5.11 HP

8 5.10 ORACLE/SUN

9 5.06 SONY

10 4.97 EMC

11 4.31 AMD

12 3.68 DELL

13 3.65 TOSHIBA

14 2.81 FUJITSU

15 1.56 HDS

16 0.75 ACER

TBR

20.28

22.52

24.86

37.12

38.43

42.13

46.12

46.20

46.60

47.30

52.83

58.13

58.35

65.37

75.84

82.59

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

4Q10

3Q10

AVERAGE

4Q10 Average = 47.79 4Q10 Standard Deviation = 17.72

Appendix: Days Sales Outstanding

TBR



1 10.00 APPLE

2 8.73 IBM

3 7.73 DELL

4 6.63 ORACLE/SUN

5 5.73 LENOVO

6 5.14 NETAPP

7 4.66 HP

8 4.19 FUJITSU

9 4.04 ACER

10 3.91 EMC

11 3.67 SONY

12 3.66 PANASONIC

13 3.58 TOSHIBA

14 3.48 AMD

15 3.34 HDS

16 3.26 INTEL

TBR

67.95

45.71

38.13

29.77

22.92

18.45

14.78

11.25

10.08

9.07

7.28

7.15

6.55

5.78

4.74

4.11

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00

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TURNS ON INVENTORY

4Q10

3Q10

AVERAGE


Appendix: Turns on Inventory

TBR



1 7.80 APPLE

2 7.56 IBM

3 7.42 DELL

4 7.18 ORACLE/SUN

5 6.85 LENOVO

6 6.51 NETAPP

7 6.07 HP

8 5.37 FUJITSU

9 5.09 ACER

10 4.68 EMC

11 3.79 SONY

12 3.64 PANASONIC

13 3.28 TOSHIBA

14 2.62 AMD

15 1.39 HDS

16 0.33 INTEL

TBR

5.37

7.99

9.57

12.26

15.92

19.78

24.70

32.45

35.65

40.23

50.15

51.77

55.76

63.15

76.92

88.72

0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00

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DAYS INVENTORY OUTSTANDING

4Q10

3Q10

AVERAGE


Appendix: Days Inventory Outstanding

TBR



1 10.00 LENOVO

2 8.68 ACER

3 6.44 DELL

4 5.36 APPLE

5 4.63 ORACLE/SUN

6 4.55 HP

7 4.42 SONY

8 4.38 AMD

9 4.26 EMC

9 4.19 IBM

11 4.17 TOSHIBA

12 3.98 PANASONIC

13 3.93 HDS

14 3.86 FUJITSU

15 3.78 INTEL

16 3.74 NETAPP

TBR

104.75

57.00

32.14

20.11

12.03

11.07

9.63

9.27

7.89

7.11

6.95

4.83

4.26

3.42

2.61

2.08

0.00 20.00 40.00 60.00 80.00 100.00

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FIXED ASSET TURNOVER

4Q10

3Q10

AVERAGE

2Q10 Average


Appendix: Fixed Asset Turnover

TBR


Appendix: Days Cash Outstanding


1 7.05 TOSHIBA

2 6.89 ACER

3 6.78 HDS

4 6.66 HP

5 6.37 FUJITSU

6 6.12 PANASONIC

7 5.97 LENOVO

8 5.68 SONY

9 5.65 IBM

10 5.35 EMC

11 5.18 DELL

12 4.95 APPLE

13 4.76 AMD

14 3.83 INTEL

15 0.33 ORACLE/SUN

16 0.00 NETAPP

TBR

13.21

19.02

23.37

27.68

38.25

47.52

53.11

63.92

64.87

75.83

82.39

90.79

97.64

131.91

261.00

337.52

0 50 100 150 200 250 300 350

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DAYS CASH OUTSTANDING

4Q10

3Q10

AVERAGE


TBR



1 8.80 LENOVO

2 8.58 ACER

3 6.93 DELL

4 6.36 FUJITSU

5 5.94 AMD

6 5.71 APPLE

7 5.22 TOSHIBA

8 4.91 PANASONIC

9 4.65 HP

10 4.63 IBM

11 4.37 HDS

12 3.38 INTEL

13 3.13 SONY

14 3.12 NETAPP

15 3.03 EMC

16 2.48 ORACLE/SUN

TBR

2.09

2.04

1.63

1.48

1.38

1.32

1.20

1.12

1.06

1.05

0.99

0.74

0.68

0.68

0.65

0.52

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00 2.20 2.40

SOU

RCE: TBR AND

COM

PANY D

ATA

TOTAL ASSET TURNOVER

4Q10

3Q10

AVERAGE


Appendix: Total Asset Turnover

TBR



1 9.42 INTEL

2 8.49 APPLE

3 7.22 EMC

4 6.48 ORACLE/SUN

5 5.80 NETAPP

6 5.45 HDS

7 4.96 PANASONIC

8 4.85 DELL

9 4.69 HP

10 4.21 ACER

11 3.84 FUJITSU

12 3.41 SONY

13 3.21 IBM

14 3.21 AMD

15 3.18 TOSHIBA

16 2.74 LENOVO

TBR

0.20

0.29

0.41

0.48

0.55

0.58

0.63

0.64

0.65

0.70

0.74

0.78

0.80

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

RCE: TBR AND

COM

PANY D

ATADEBT/ASSET RATIO

4Q10

3Q10

AVERAGE


Appendix: Debt/Asset Ratio

TBR



1 10.00 INTEL

2 9.14 NETAPP

3 7.77 ORACLE/SUN

4 6.78 AMD

5 5.81 APPLE

6 4.67 DELL

7 4.24 ACER

8 3.84 HDS

9 3.69 IBM

10 3.68 FUJITSU

11 3.67 HP

12 3.35 PANASONIC

13 3.28 TOSHIBA

14 3.23 EMC

15 3.12 SONY

16 3.12 LENOVO

TBR

3.48

2.88

2.45

2.15

1.85

1.49

1.36

1.23

1.19

1.18

1.18

1.08

1.06

1.04

1.01

1.01

0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50

SOU

RCE: TBR AND

COM

PANY D

ATA

CURRENT RATIO

4Q10

3Q10

AVERAGE


Appendix: Current Ratio

TBR


RANKING REVENUE COMPANY TOP 3 COMPANIES

1 $11,522 HP

2 $7,864 DELL

3 $5,431 LENOVO

4 $5,430 APPLE

5 $4,131 ACER

6 $2,965 TOSHIBA

7 $2,472 SONY

8 $253 PANASONIC

TBR

$11,522

$7,864

$5,431

$5,430

$4,131

$2,965

$2,472

$253

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

SOU

RCE: TBR AND

COM

PANY D

ATAPC REVENUE (IN $ MILLIONS)

4Q103Q10AVERAGE


RANKINGOPERATING

INCOME COMPANY

TOP 3 COMPANIES

1 $587 APPLE

2 $584 HP

3 $204 DELL

4 $204 SONY

5 $135 ACER

6 $90 LENOVO

7 $2 TOSHIBA

8 $1 PANASONIC

TBR

$587

$584

$204

$204

$135

$90

$2

$1

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

RCE: TBR AND

COM

PANY D

ATA

PC OPERATING INCOME (IN $ MILLIONS)

4Q10

3Q10

AVERAGE

4Q10 Average = $226 4Q10 Standard Deviation = $235

Appendix: PC

TBR


RANKING REVENUE COMPANY

TOP 3 COMPANIES

1 $2,442 IBM

2 $555 HP

3 $454 ORACLE/SUN

TBR

$2,442

$555

$454

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

SOU

RCE: TBR AND

COM

PANY

DATA

PROPRIETARY SERVER REVENUE (IN $ MILLIONS)

4Q10 3Q10 AVERAGE


RANKINGOPERATING

INCOME COMPANY

TOP 3 COMPANIES

1 $661 IBM

2 $118 HP

3 $36 ORACLE/SUN

TBR

$661

$118

$36

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

SOU

RCE: TBR AND

COM

PANY

DATA

PROPRIETARY SERVER OPERATING INCOME (IN $ MILLIONS)

4Q103Q10AVERAGE


Appendix: Proprietary Server

TBR



1 $3,448 HP

2 $2,090 DELL

3 $1,842 IBM

4 $59 ORACLE/SUN

5 $22 ACER

TBR

$3,448

$2,090

$1,842

$59

$22

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

SOU

RCE: TBR AND

CO

MPAN

Y DATA

x86 SERVER REVENUE (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


RANKINGOPERATING

INCOME COMPANY TOP 3 COMPANIES

1 $637 HP

2 $288 DELL

3 $187 IBM

4 $1 ORACLE/SUN

5 -$1 ACER

TBR

$637

$288

$187

$1

-$1

-$10 $90 $190 $290 $390 $490 $590 $690 SOU

RCE: TBR AND

COM

PANY D

ATA

x86 SERVER OPERATING INCOME (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


Appendix: x86 Server

TBR



1 $1,894 EMC

2 $1,174 IBM

3 $1,025 HDS

4 $1,012 HP

5 $819 NETAPP

6 $574 DELL

7 $353 ORACLE/SUN

TBR

$1,894

$1,174

$1,025

$1,012

$819

$574

$353

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

SOU

RCE: TBR AND

COM

PANY D

ATA

STORAGE REVENUE (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


RANKINGOPERATING


1 $315 IBM

2 $109 HDS

3 $73 HP

4 $69 DELL

5 $64 NETAPP

6 $16 ORACLE/SUN

7 -$52 EMC

TBR

$315

$109

$73

$69

$64

$16

-$52

-$100 -$50 $0 $50 $100 $150 $200 $250 $300 $350

SOU

RCE: TBR AND

COM

PANY D

ATA

STORAGE OPERATING INCOME (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


Appendix: Storage

TBR



1 $11,457 INTEL

2 $3,259 TOSHIBA

3 $1,649 AMD

4 $932 SONY

5 $630 IBM

TBR

$11,457

$3,259

$1,649

$932

$630

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

SOU

RCE: TBR AND

COM

PANY D

ATA

MICROELECTRONICS REVENUE (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


RANKINGOPERATING


1 $4,347 INTEL

2 $413 AMD

3 $261 TOSHIBA

4 $223 SONY

5 -$25 IBM

TBR

$4,347

$413

$261

$223

-$25

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

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

URCE: TBR AN

D CO

MPAN

Y DATA

MICROELECTRONICS OPERATING INCOME (IN $ MILLIONS)

4Q10

3Q10

AVERAGE


Appendix: Microelectronics

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 Outstanding

Days Inventory Outstanding

Days Cash Outstanding

Debt/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 Inventory

Fixed Asset Turnover

Total Asset Turnover

Current Ratio

Return on Assets

Return 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 & resources

Acquisitions, 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


About Us

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.

Technology Business ResearchTechnology Business Research is a different kind of research company. Our bottoms-up approach provides a look at the technology industry unlike anything you’ve seen before. We analyze company performance in professional services, networking and mobility, computing and hardware, and software on a quarterly basis, leveraging our data to create industry benchmarks and landscapes that provide a business perspective on leaders and laggards and their business plans. We are experts in the business of technology.

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TBR

©2012 Technology Business Research Inc.

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