Competitor Analysis Template

Contents

Executive Summary

B U - w

Company At a Glance Quick facts about the company; Latest financials Financials by operating units, geography, verticals, etc Management Structure/Organization Structure (BU Org) Competitive Landscape/Business mapping Competitive Market Position Key Updates

i A n a l s ( i d e ta i ) se ysi n l Quick View; key Financials Strategic significance Product/Service Offerings GTM Positioning Maps for key/strategic products/offerings Competitive Comparison Analysts Comments Outlook for the BU

Comparative

Strategic Analysis Competitors Evolution Objectives, Implementation, Plans

Performance (company peer comparison) Key Financials: Vertical wise; Customer Group wise; Geography wise Key Performance Indicators Comparison Versus Company Analyst Comments Competitor Outlook Key Takeaways/Recommendations Backup Slides

Executive Summary (I)

ardware (STG), software, services and solutions (IGS) as well as provides financing to its customers (GF) tax profits th revenue contribution of 20% and pre-tax profit contribution of 40% saw a marginal increase in revenue in 2006 of 0.3% from research and design to loan and lease financing customer and partner purchases; as such is faced

B . Major Trends Among the major trends facing IBM are: Demand for standardized products overtaking demand for leading tech, customized products Growth of SMB Demand for vertical focused products, services and solutions Demand growth from emerging markets Also increase in competition from emerging markets As compared to its peers, IBM is facing the pressure of low rate of revenue growth

XYZ Corp. At a Glance

XYZ Corp.

Competitor Overview
Quick Facts
One of the top 3 global IT players
$100

Latest Financials Q406

Revenue ($B) & Y/Y Growth (%)
Revenue 9.7% Growth Y/Y 20% $95 $90

HQ: Armonk, New York, United States Employees: 330,000 Portfolio: Mainframes, servers, storage, peripherals, IT services, software, microelectronics Sales Channel: Own sales force and one of the largest partner network R&D: 6.0% of sales Competition: H-P, EDS, Microsoft, Accenture, Fujitsu, Sun, NetApp Presence: Global in more than 150 countries

8.1% 0.3% (5.4%)

10%

$85 $80 $75 $70 $81.2 2002 $89.1 2003 $96.3 2004 $91.1 2005

0% $91.4 2006

-10%

Net Profit ($B) & Y/Y Growth (%)

45 Gross Profit Net Income 35.5 36.5 46.6% 40% 21.3% 13.3% 3.2 2002 1.7 2003 10.5% 2.0 2004 2.2 2005 7.6% 3.5 2006 0% Growth 38.3 80% 40 35 30 25 20 15 10 5 0 29.7 32.5

Management: Samuel Palmisano CEO & Chairman; Mark Loughridge - CFO; J Bruce Harreld Marketing SVP Performance:

XYZ Corp.
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

Revenue by Operating Units

Revenue % by Operating Units (Revenue in $B)
2% 20% 28%

$0.6 B 19% $4.9 B

25%

3%

Y/Y Growth % 3.3% 15.3% 4.3% 6.4%

Global6 B $0. Financing Software

$5.7 B $7.2 B

$6.9 B
49% 53%

Hardware IGS

Q405

$12.0 B
Q406

$12.8 B

IBM holds strong ground in Services and Software, the biggest chunk of IT spend IBM continued to improve its software portfolio as it offers better margins than its

hardware or services business Besides, IBMs recent acquisitions in software are also believed to be driving IBM Global Services (IGS) Growth, as customers are buying software as a solution that requires support from services

XYZ Corp.
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5%

Revenue by Geography
Revenue % by Geography (Revenue in $B)
18%

$1.1 B 18% $4.5 B

35%

4%

OEM AP

$1.1 B $4.8 B $9.3 B

Y/Y Growth %
-

34%

$8.3 B
43% 43%

EMEA

6.7% 12.0% 6.7%

Americas

Q405

$10.5 B
Q406

$11.2 B

IBM continues to invest to build capabilities in the BRIC countries to: Address fast growing domestic opportunities and Enhance IBMs globally integrated operations IBM reported strong performance in EMEA with growth coming from Italy, UK and France Asia growth was driven by 4Q06 revenue increase in Japan

XYZ Corp.
100%

Revenue by Vertical
Revenue % by Vertical
2% 5% 18% 10% 9% 12%
40%

Y/Y Growth % 24.7% 8.9% 4.2% 13.0% 6.7% 10.3%

3% 4% 19% 10% 10% 12% 14% 29%

Other OEM SMB Communications Distribution Industrial Public

80%

60%

16% 28%

20%

Financial Services

0%

Q405

Q406

Financial and SMB companies make up a large chunk of total IBM revenue IBM sees SMB as an attractive market and is adopting various initiatives to increase

its presence in the segment

XYZ Corp.

Key Stakeholders for

Sales

Management Structure
Samuel J. Palmisano Chairman President & CEO
Appointed recently to form major alliances

Nicholas M. Donofrio EVP, Innovation & Technology John E. Kelley SVP Technology & IP

Brought in this position to give impetus to drive innovation across IBM

Mark Loughridge SVP & CFO

Doug Elix SVP; Group Executive, S&D

Paul M.Horn SVP; Director, Research

Linda S. Sanford SVP Enterprise On Demand Transformation

Robert W. Moffat Jr. SVP Integrated Operations

J. Bruce Harreld SVP Mktg & Strategy

Ravi Marwaha GM, Global Business Partners Mike Kozel VP, Global Business Partner Strategy

Steve Solazzo GM, Global SMB

Dave Turek VP, Deep Computing

Richard A. Stomp VP, Global Telecommunicatio n Industry

Rich Lechner VP, Virtualization

Richard D. Michos VP, Global Sales SMB Solns & Services

Ex-Hewlett-Packard VP Managed Services, TSG

William M.Zeitler SVP; Group Executive, STG Kathleen Smith VP; Emerging Business Markets, STG

Michael E. Daniels SVP GTS, IGS

Virginia M. Rometti SVP GBS, IGS

Steve Mills SVP; Group Executive, Software

Barry Rudolph VP; System Storage

Donny Sabah GM, Rational

Has returned to IBM from Lenovo. Hopes to woo back

Ex Citibank VP and

Brought on-board in early 2006 to gain traction in APJ market

Ex- IBM Head of FSI

XYZ Corp.

Operating Structure
Service Lines- Categorized on the basis of Operating Groups

XYZ is a diversified company but moving toward services and software. Its offerings are categorized under Five operating groups which are further organized into a total of 17 industries. IBM Operating Units
Growth closely linked with sales of Software

IBM Corp
Software
$18.204 B

Global Services
$22.499 B

Hardware
$48.247 B

Global Financing
www.ibm.com B $2.379

$0.094 B

Other

TS MS BPO

Server Storage Semiconducto rs

DB Tivoli Lotus WebSphere

20%

-10%

Fastest Growing and have highest margins Growth : X % Margin :Y %

XYZ Vs. Competitors

Business Mapping
Servers Storage PC

Have moved out of this business ; Joint venture with Ricoh ; click on the arrow for details

Semiconduc Printing tors Systems

Software

IT Services

Security Financing Solutions

IBM

R R

R R

R R R

R R

EDS XXX Microsoft SAP Oracle EMC

Tick signifies the Presence of the Vendor in a Product Segment

R R R R

R R

R R R R
Arrow represents movement into or out of a business area

XYZ Corp.
Key Updates
Date
Jan 07

Action buttons links certain key facts between 2 slides

Update
IBM announced the creation of a joint printing business with Ricoh which would eventually control IBMs entire Printer Systems Division IBM partnered with LeftHand Networks. The partnership will enable LeftHand Networks device management, storage to create a and remote copy SAN/iQ softwarePlasma TV IBM worked with Panasonic clustering, web platform for the companys capabilities to be installed on IBM System x3650 servers, converting them into a scalable iSCSI customer support program storage solution that offers a number of enterprise-class features Acquired Palisades Technology Partners to increase portfolio of GTS divisions Moved its global procurement division to Shenzhen, China. This is the first time IBM has relocated a division of corporate HQ overseas Restructured its Services business. It has taken the networking services piece of IGS & turned it into a new business unit, ICS (Integrated Communications Services ) Began detailing a new approach in designing computer processors, with specific features for verticals the first target being the Financial services vertical

Dec 06 Nov 06 Oct 06

Key facts should be highlighted in text-dominated slides

XYZ Corp. Strategic Analysis

Evolution Option I

XYZ Corp.
Evolution
1911 1950 1960 Company Growth

established. Early Growth in Business Computing

Mainframe Phase Unbundling of software and services from hardware Anti-trust litigation Tremendous success with System/360, System/370 series Mainframe business PCs for businesses IBM

1980

consolidation

1990

2000

lost out to rivals to tap the PC market growth with its focus on mainframes Recorded one of the largest loses in its history Revamped business mix to increase its focus on software & services Started building software portfolio with Lotus acquisition Begun increasing its patent portfolio, which helped in tech collaborations Focus on services, especially on consulting arm acquisition of PwC; Sold its low margin PC business Also focused on building its high-value chips and hardware technologies Made efforts to align R&D org with its product development group to improve return on research investment; Majority of research effort was on software Began focus on SMB and Open Sources markets

XYZ Corp. Evolution

Pure-play Storage Vendor

Evolution Option
II

From a Storage Vendor to an Information Infrastructure Company

Information Infrastructure Company

1991

Storage Company

2002

Storage & Information Management

2004
Information Infrastructure

Supplier of Addon Memory boards to Intel and other IT companies

Storage Solutions Supplier

Heavy focus on Software functionality

Entry into the SMB Market

One EMC Integration of acquired entities

1979 1981

1987 1989

1993 1994

2002 2003
In-organic growth through Acquisitions to pursue its ILM strategy

2007

Computer Furniture

Solid-state Disk Storage System for Minicomputer

Exclusive focus on Disk Storage

Open, Platform Independent Storage Consulting Services

XYZ Corp. Game Plan

From One-stop IT/Computer Technology Player
Re-design Products & Services Portfolio

Strategy Option I

Past State

Organizational Changes Key Enablers Restructuring GTM Processes

High-value Add Innovativ e Technolog y Provider

Strategic Aim

XYZ Corp.s Strategic Objectives

Be a technology leader and attract high value customers for increased growth and profitability

Strategy Option I

IBMs Core Objective

Create more flexible and agile customercentric organizational processes

To invest in sales and marketing resources, targetinginternal and external f the Re-designing faster growing regions, sectors and technologies

Establish and maintain technology leadership at reduced investments

Drive growth through IBM Labs and Microelectronics expertise

Leverage core products and services in highvalue solutions such as SoA and OnDemand

Acquisitions and Divestitures to drive focused portfolio and growth

Portfolio

Investments in high growth geographies; in global sales and delivery channels in software and sales; in software growth through internal skills and acquisitions Optimize its resources and processes to increase productivity; improve flexibility and scalability

Strategy Option II

XYZ Corp. Strategy

IGS Enterprise application support; SoA Geographic BRIC; Customers Presence in all IT spend segments

Elaborating Core Competitor Strategies

Objectives Increase profitability while sustaining growth Be #1 IT company Maintain perception of leading-edge technology & services to attract high margin customers

Customers - Presence in all IT spend segments STG SMB, Technology leadership

Software - SoA

Software - SoA

IGS Enterprise application support; SoA

Geographic BRIC; Customers Presence in all IT spend segments

STG SMB, Technology leadership

Customers - Presence in all IT spend segments

Optional

XYZ Corp. Strategic Shift

Strategy Earlier
Proposition

Key Elements Underscoring the Shift

Strategy Now

Use this framework if there has been a significant shift in a companys strategy

Target Market

GTM

Key take-aways/Implications to :

XYZ Corp.
Product Categories Sales & Distribution channels Key Alliances and Partners

Go-To-Market plan
Product Group 1
Direct Sales Force Distributors

Product Group 2
VARS Resellers

Product Group 3
OEMs

Key Alliances

Key Marketing Initiatives

Marketing & Sales Campaign Market mix modeling Pricing analysis Research & Development Enterprise

Advertising & Sales Promotion Advertising Channels Advertising Spend Sales Promotion Activities

Branding/Positioning Mission/Vision Statement Positioning Vs Competitors

Key Customer Segments

Commercial

SMB

Entry

XYZ Corp Acquisition Roadmap

Driving XYZ Corp. towards Information Infrastructure

XYZ Corp.

Strategic Partnerships

to work on the Cell microprocessor design, and its underlying SOI (silicon-on-insulator) process technol nductor research and development alliance to investigate, identify and commercialize new technologies f

Since 2002; To work on chip-making technologies based on a 22-nanometer and 32-nanometer proc Early research on new chip technologies including transistors, chip connection, packing and

cooperate on blade system and chassis development, networking infrastructure and comprehensive blade sy greed to open up their blade server specifications to attract third-party vendors to develop thin compu

Multimedia Subsystems) focused on IBM blade architecture ass of blades that would meet the specific and demanding data flow, reliability and security needs requ Joint Development Center, where personnel from both companies can work on this and other select projec

XYZ Corp.
Objective

Delivery Channels
Targeting customers better, especially the mid market, through SOA partner programs and packaged services offerings through channel partners to extend the reach of IGS capabilities
More Detail

Direct Sales Force

IBM Corp. Sales & Marketing Channels

Support Organizations: Ibm.com, Telemarketing

Helping IBM reach the SMB market more effectively as compared to the partner channel

Value Added Resellers

Global Partner Network

OEMS

Has one of the largest partner communities more than 90,000 partners worldwide; including over 100 strategic alliance partners such as Cisco, SAP, Red Hat and Novell IBM attributes close to $32 billion of its overall $91billion in revenue (about 35%) to its partners IBMs new partner programs are helping the company from being a big and expensive IT provider to being a vendor that offers affordable solutions for SMBs Ex: IBMs Software Value Incentive program rewards partners for each part of the sales cycle to improve partner alignment in deals and improve SMB customer experience Ex: PartnerWorld Express Advantage allows IBM partners to link their applications and services with IBM solutions, including IBMs financing options, and co-market them to the SMB segment

XYZ Corp.
Strengths Leadership Partner Network Technology Leadership Etc.

SWOT Option I

Corporate SWOT
Weaknesses GTM Time to Market Etc.

Unique Differentiators Value Prop: Consolidate, migrate, protect and manage business infrastructure Defines SMB as companies as Small (<200 employees ) and Mid (200-3500 employees) Major Solution offers Server, storage consolidation and virtualization Unix migration; MS Exchange server migration Business continuity, high availability, security, data archiving for regulatory compliance Server, storage, client, networking management Leverage strength in PC business to drive growth in servers, storage , imaging and printing products

Covers what sets this company apart from the rest of the players in the industry (and outside the indust
Source :

XYZ Corp.
Strengths

SWOT Option II

Corporate SWOT

Weaknesses
Narrow IT consulting experience and geographical reach compared to Services Acquisitions creating integration challenges Cannot provide single vendor end-to-end business infrastructure solutions Still widely known as a storage vendor within the enterprise management space

Portfolio pricing controlled by sales Well-trained and compensated sales force Mainframe expertise Global storage account managers Leading vendor in storage solutions, with strong focus in software Acquiring software and services companies to expand portfolio and market reach Sells solutions with partners (Oracle, SAP, etc.) Partnership with Dell-CLARiiON Sales

Opportunities
s reliance on HDS for high-end storage Recent acquisitions (data classification, security) provide access to new customers Expanding SMB through Channel Velocity program provides unified partner infrastructure Ability to integrate security software with hardware offerings to provide secure information across ILM solution < ILM + BI -- need copy and validation >

Threats
High reliance on high end mainframe based storage system Price pressure and commoditization of HW and Storage. IBM acquisitions to impact EMCs newly formed security initiatives With acquisitions spree, EMC could lose market perception as a storage vendor

XYZ Corp.s
Strengths
Portfolio pricing controlled by sales Well-trained and compensated sales force Mainframe expertise Global storage account managers Leading vendor in storage solutions, with strong focus in software Acquiring software and services companies to expand portfolio and market reach Sells solutions with partners (Oracle, SAP, etc.) Partnership with Dell-CLARiiON Sales

Optional

Leading vendor in Financial Services High market awareness in MDI and CME also

Corporate

Customer Segment (SMB)

Regional

SMB product portfolio designed to be small and focused Offering a dedicated website to facilitate and provide tailor-made solutions and support to the SMBs Low pricing of products, catering to the price sensitive SMB market Sales channel made up of direct (Direct Marketing Resellers) and indirect (Value Added Resellers), catering to SMBs with IT staff (through DMR) and non-IT staff (through VAR) Partnership with Dell-CLARiiON Sales

Vertical

Leader

in the high-end external disc storage market in the APeJ region. (APJ)

Product \ BU (Services)

Excellent storage services and support capabilities for EMC hardware and software Strong remote storage problem resolution for EMC hardware Server agnostic can place storage solutions in any environment Expensive but willing to negotiate to win sale

XYZ Corp.s
Weaknesses
Corporate
Narrow IT consulting experience and geographical reach compared to Services Acquisitions creating integration challenges Cannot provide single vendor end-to-end business infrastructure solutions Still widely known as a storage vendor within the enterprise management space

Optional

Customer Segment (SMB)

Regional

Newcomer in the SMB arena channel expertise for this market not fully developed Gaps in the feature set such as NAS and security in the Insignia product line Perceived as expensive in the SMB market Strategy to employ VARs (Value Added Resellers) and DMRs (Direct Marketing Resellers) may overlap with mutual interests, leading to possible conflicts. New range of SMB products not familiar to the users in SMB market. Non-IT savvy SMB users may shy away from switching over

Vertical

Narrow IT consulting experience and geographical reach compared to Services Cannot provide single vendor end-to-end business infrastructure solutions. Still widely known as a storage vendor within the enterprise mgmt space

Slowest growing region (APJ)

Product \ BU (Services)

Support structure not flexible; only one real support offering (Global Proactive 24x7 support) Global Proactive 24 does not offer proactive account services except for phone home capabilities 6 hour Call-to-Repair not offered as a packaged service by EMC EMC storage-only hardware and software support Not able to provide remote monitoring and management for servers or networks Limited geographic scope

XYZ Corp.s
Opportunities
s reliance on HDS for high-end storage Recent acquisitions (data classification, security) provide access to new customers Expanding SMB through Channel Velocity program provides unified partner infrastructure Ability to integrate security software with hardware offerings to provide secure information across ILM solution < ILM + BI -- need copy and validation >

Optional

Corporate

Customer Segment (SMB)

Partnership with Intel provides expanded customer and market reach Expanding SMB focus by fueling growth through channel partner

Regional

Vertical

Marketing broader solution outside of network management space expanding breadth of offering to compete with Software portfolio. Differentiate compliance and governance offerings with ILM focus Security has been identified as a Billion $ business in the next 2 5 years.

Expansion plans in India and China (APJ) Focus on SMB market (APJ)

Product \ BU (Services)

XYZ Corp.s
Threats
Corporate
High reliance on high end mainframe based storage system Price pressure and commoditization of HW and Storage. IBM acquisitions to impact EMCs newly formed security initiatives With acquisitions spree, EMC could lose market perception as a storage vendor

Optional

Customer Segment (SMB)

Heavy reliance on partners specifically Partnership with Dell creates conflict of Dell

Regional

with EMC Insignia Partners storage services may lead to customer dissatisfaction <may need evidence to support this claim>

Dell interest

Vertical

Open-source (Xen) virtualization software puts VMwares continued success in jeopardy. EMC ILM definition and product mix not widely accepted. With the spate of acquisitions ,EMC could be spreading itself too thin with increased risk of the company and sales force losing focus on the core storage business.. Potential of EMC defocusing SMARTS

No specific points

Product \ BU (Services)

XYZ Corp.
Expectations

IBM expects its Software business to continue to be the strong growth driver IBM is expanding its existing software offerings, especially those aimed at business users such as Lotus Connections, Lotus Quickr, Sametime, and WebS ere Portal Express IBM expects to gain in server market targeting entry and midrange customer segment with benefits such as consolidation through virtualization IBM BladeCenter JS21 Web serving farm server, and System p5 560Q midrange Linux server are examples of product introductions for the target segment IBM continues to invest in high value-added business solutions like enhancing their global development center capabilities in India & China to leverage the Webify acquisition & to accelerate SOA The first Power6 systems, lower-end models, are due in mid 2007. Power6 is expected to run at 4-5 GHZ with similar power consumption as Power5; an improved memory controller; improved SMT capabilities; a new floating-point engine, etc TBR believes that IBM will continue to focus on BRIC as an area of growth for its main businesses of software, services and hardware, including its System z mainframe IBM, with the help of AMD, Sony and Toshiba, developed a new material to build a critical part for 45nm transistors. IBM expects this new material will lead to smaller, faster and more efficient chip circuitry than before IBM plans to double the performance of its microprocessors in 2008 by using smaller, more efficient memory IBM plans to use DRAM instead of SRAM as the embedded memory cache built onto each chip, according to a paper presented at the ISSCC (International Solid State Circuits Conference) trade show in San Francisco

XYZ Corp.

Future Outlook
Text information Secondary resources analyst opinion or companys own future plans/expectations

XYZ Corp. BU Analysis

XYZ Corp.
BU I overview
Quick Facts
One of the top 3 in the global IT Outsourcing
$100

Latest Financials Q406

Revenue ($B) & Y/Y Growth (%)
Revenue 9.7% Growth Y/Y 20% $95 $90 $85 $80 $75 $70 $81.2 2002 $89.1 2003 $96.3 2004 $91.1 2005 $91.4 2006 -10% (5.4%)

Portfolio: Mainframes, servers, storage, peripherals, IT services, software, microelectronics Sales Channel: Own sales force and one of the largest partner network R&D: 6.0% of sales Competition: H-P, EDS, Microsoft, Accenture, Fujitsu, Sun, NetApp Presence: Global in more than 150 countries Management: Performance:

8.1% 0.3%

10%

0%

Net Profit ($B) & Y/Y Growth (%)

45 40 35 30 25 20 15 10 5 0 21.3% 13.3% 3.2 2002 1.7 2003 10.5% 2.0 2004 2.2 2005 7.6% 3.5 2006 0% 29.7 32.5 Gross Profit Net Income 35.5 36.5 46.6% 40% Growth 38.3 80%

BU I

Strategic Significance & Goals

Strategic significance of the BU How it fits into the overall companys goals Leveraging lead in technology Focus on growth segment of SMB and growth market of blades Leverage R&D in chip Core and maintain leadership Gain Strategy technologymarket in Blades to come out with high end business solutions Build storage solutions with focus on differentiation through storage management and integration software Implementation Bundling initiatives such as Sales and marketing initiatives SoA and Information on Demand, including open source which combine hardware, software initiatives to bring out bestTie-up with NetApp for mid-range andclass solutions in- services systems

Significance of the BU in corporate strategy

Desired Outcome growth in blade Improve sales of more Capture strong profitable hardware products systems such as System z and System p Capture SMB market

BU I

Focus areas and strategy

Most important product lines and their significance

Launch date

Product: significance Evolution

Performance

Target customers

Key take-aways/Implications to :

Key segment performance comparison

120

Size of the bubble represents market share size. Along the y axis is revenues and

100

80 revenues

60

HP IBM

40

20

0 0 1 2 3 4 5

Key: 1=WW servers

2=x86

3=blades

4=windows

5=Linux

Key drivers of growth:

BU I

Go-To-Market plan
Product Categories Sales & Distribution channels Key Alliances and Partners Industry 1
Direct Sales Force Distributors

Industry 2
VARS Resellers

Industry 3
OEMs

Key Alliances

Key Marketing Initiatives

Marketing & Sales Campaign Market mix modeling Pricing analysis Research & Development Enterprise

Advertising & Sales Promotion Advertising Channels Advertising Spend Sales Promotion Activities

Branding/Positioning Mission/Vision Statement Positioning Vs Competitors

Key Customer Segments

Commercial

SMB

Entry

BU I
SWOT
Strengths
Portfolio pricing controlled by sales Well-trained and compensated sales force Mainframe expertise Global storage account managers Leading vendor in storage solutions, with strong focus in software Acquiring software and services companies to expand portfolio and market reach Sells solutions with partners (Oracle, SAP, etc.) Partnership with Dell-CLARiiON Sales

Weaknesses
Narrow IT consulting experience and geographical reach compared to Services Acquisitions creating integration challenges Cannot provide single vendor end-to-end business infrastructure solutions Still widely known as a storage vendor within the enterprise management space

Opportunities
s reliance on HDS for high-end storage Recent acquisitions (data classification, security) provide access to new customers Expanding SMB through Channel Velocity program provides unified partner infrastructure Ability to integrate security software with hardware offerings to provide secure information across ILM solution < ILM + BI -- need copy and validation >

Threats
High reliance on high end mainframe based storage system Price pressure and commoditization of HW and Storage. IBM acquisitions to impact EMCs newly formed security initiatives With acquisitions spree, EMC could lose market perception as a storage vendor

Analysts Opinion Software will contribute at least 22 percent of total revenue in 2008 from about 20 percent in 2006 Going forward, we believe these software acquisitions will help support top line growth, margin expansion, and free cash flow, unlocking hidden shareholder value - Benjamin A. Reitzes , UBS Investment Research On Lotus Connections : These social software applications have a high "value-to-effort" ratio, as is evidenced by the popularity (and value) of consumer space equivalents. Through 2008, these capabilities will give IBM a significant competitive edge over mainstream competitors that still lack them. - Gartner News Analysis Having a strong services business helps IBM sell everything from servers and storage to new software. Software and services are very complementary. They've made some key acquisitions in the last year, and they're not overspending on them. They're buying companies with established businesses that aren't too big, but that can grow - Doug Christopher , Crowell , Weedon & Co.,

BU

Outlook
Text information Secondary resources analyst opinion or companys own future plans/expectations

Strategic significance of BUs

ld Industry Focused solutions

Bundle business insight and technology across 17 industries and si IGS To be One Stop Shop IT solution provider for the enterprise mark

Corporate Strategy Le ve ra g i g co re p ro d u cts a n d se rvi s n ce I cre a se d ve rti lfo cu s to o ffe r ve rti l sp e ci c so l ti n s n ca ca fi u o

Software

STG

Drive revenue through utilizing IBM Labs, Microelectronics Engineering and R&D expertise

XYZ Corp. Comparative Performance Analysis

Size of the segment will show percentage share of that BU and the competitors within the

Competition mapping
Services

Printing business

Xerox Sun EDS Accenture Microsoft SAP Oracle Dell

Servers

EMC NetApp

Storage

Software

XYZ Corp.
35% 30% 25% 20% Y/ Y Growth 15% 10% 5% 0% -5%0% -10% -15% -20%

Competitive Market Position

G rowth Vs M kt Share

Axis Market share Y Axis Y/Y Growth Size of bubble Revenue

IBM , 59.5 N EC, 123.2 Hitachi, 78.1 HP, 85.3

Average Market Growth = 3.0% Market Size = $ 710.3 M

20% 25%

5%

10%

15% Fujitsu, 91.3

M kt Share %

$1 B X Axis Market share Y Axis Y/Y Growth Size of bubble Company Revenue

Key take-aways/Implications to :
Source :

XYZ Corp. Vs
$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 Q205 Q305 Q405
$4,079 $3,925 $3,900 $3,837 1 4.6% 1 0.7% 1 0.6% 5.9% $4,1 69 $3,757 1.8% 1

Revenue and Profitability Comparison R evenue

$4,408 $4,1 03 $3,892 1 % 2.1

This Slide compares the Revenue , Operating Profit and Y/Y Growth for 30.0%
20.0% 10.0% 0.0% 10.0%

7.6% -1 .5%

-2.3%

Q106

Q206 HPS R enue $M ev HPS yy grow % th

Accenture R enue $M ev Accenture yy R enue grow % - ev th

20.0%
1 6.5%

Operat ing Profit

1 5.7% 1 3.0% 1 2.3% 0.4% 8.3% -2.2% 6.7% -1 .8% 0.0% 7.8% 8.9% 1 .6% 0.8%

10.0%

15.0%
0.9% 2.1 %

5.0%

10.0%

0.0%

5.0%
3.3% -9.0%

5.0%

0.0% Q205 Q305 Q405

Accenture Operating P rofit % HP S OP y-y grow % th

10.0% Q206

Q106

HP S Operating P rofit Accenture OP y grow % -y th

XYZ Corp. Vs
18% 20% 50% 21%

Portfolio Comparison
29% C&I MS TS 29% 21% IBM GS

GBS

50% 62%

GTS

HPS

Market

Note: For comparison all data is for calendar year 2005. IBM GS CQ306 is for period ending Sep 05. S CQ306 is fiscal year Q406. Market mix is total services market per IDC Services Forecaster, Dec 14, 2006 release (includes both and non-addressable for comparison purposes). IGS Market mix is as per company financials. Source: TBRI, IBM, S, IDC Q106,WW Services forecast update addressable

XYZ Corp. Vs
KPI Comparison
IBM Y / Y R e ve n u e G ro w th Y / Y N e t I co m e G ro w th n G ro ss M a rg i n R &D a s Pe rce n t o f S a l s e 0 .3 % 1 9 .6 % 4 1 .9 % 6 .7 % 6 .0 % 1 5 8 .5 % 2 4 .3 % 1 2 .3 % 3 .9 % $ 5 8 7 ,5 5 1

S G &A a s Pe rce n t o f S a l s 2 2 . 2 % e R e ve n u e p e r E m p l ye e ( $ ) $ 2 5 6 , 9 7 8 o

N o te : A l fi u re s a re fo r 2 0 0 6 Fi lYe a r; s Fi lYe a r e n d s i O cto b e r a n d th a t IB M s i D e ce m b e r l g sca sca n n

Margins are comparatively better for IBM; Possible reasons High margin product mix with software and services in the portfolio Relatively lower Revenue per employee higher proportion of services business and direct sales force Higher spend on R&D scope for creating improved product/service mix Higher SG&A spend better positioning and demand generation

Source :

IBM 2006 Annual Report;

2006 Annual Report

Restricted

XYZ Corp. Vs
100% 80% 38% 60% 40% 20% 0% 52% 35% 45% APJ 10% 20%

Geographic Comparison
Americas

EMEA

Americas

IBM

HP

region achieved revenues of $7,741 million in fiscal 2006, compared with $6,730 million for fiscal 2005, an increase of 15% in U.S. dollars and 14% in local currency terms. Growth was primarily due to the business in the United States, Canada and Brazil. EMEA region recorded revenues of $7,644 million for fiscal 2006 compared with $7,735 million for fiscal 2005, a decrease of 1% in U.S. dollars and an increase of 3% in local currency terms. The decrease was primarily due to a decline in business in the United Kingdom, including the impact of a $339 million reduction in consulting revenues associated with the resolution of the NHS contract.

and its Competitor

ompares the

Revenue Generated by Geographies for

XYZ Corp. Vs
100%

Comparison by Verticals
2% 5% 18% 10% 9% 12%
40%

3% 4% 19% 10% 10% 21% 24%

Other OEM SMB Communications Distribution Industrial Public Financial Services

80%

60%

16% 28% 10% IBM HP

20%

0%

Source : EMC Earnings release Q406

XYZ Corp. Vs
100% 20% 80% 60% 40% 38% 20% 0% 10% 35% Entry 52% 45%

Customer Segments by the Comparison of the Revenue Generated

Customer Segments for

& the competitor and highlight drivers for the growth as

Enterprise

SMB

IBM

HP

Cockpit View
Entry

Comparison of the Revenue or Market Share Change for

and the competitor

Change in Segments Over time

Placeholder for key highlights or insights from analysi

IBM is challenging

in this segments

XYZ

SMB

XYZ

Enterprise

XYZ

Performance Charting
Market Share Comparison for Segments
0%

Comparison of the Market Share Change for

and the competitor across various segm

50 %

100 %

x86
0% 50 % 100 %

Blade Servers
0% 50 % 100 %

SAN
0% 50 % 100 %

NAS
0% 50 % 100 %

DAS
0% 50 % 100 %

Tape Storage

XYZ

Key takeaways

Analysts Opinion
Software will contribute at least 22 percent of total revenue in 2008 from about 20 percent in 2006 Going forward, we believe these software acquisitions will help support top line growth, margin expansion, and free cash flow, unlocking hidden shareholder value - Benjamin A. Reitzes, UBS Investment Research On Lotus Connections: These social software applications have a high "value-toeffort" ratio, as is evidenced by the popularity (and value) of consumer space equivalents. Through 2008, these capabilities will give IBM a significant competitive edge over mainstream competitors that still lack them. - Gartner News Analysis Having a strong services business helps IBM sell everything from servers and storage to new software. Software and services are very complementary. They've made some key acquisitions in the last year, and they're not overspending on them. They're buying companies with established businesses that aren't too big, but that can grow - Doug Christopher, Crowell, Weedon & Co.,

XYZ Corp.
Expectations

tware business to continue to be the strong growth driver ing its existing software offerings, especially those aimed at business users such as Lotus Connections, Lotus Quickr, Sam Growth in server market targeting entry and midrange customer segment with benefits such as consolidation through virtualizatio er JS21 Web serving farm server, and System p5 560Q midrange Linux server are examples of product introductions for the t

iness solutions like enhancing their global development center capabilities in India & China to leverage the Webify acqui due in mid 2007. Power6 is expected to run at 4-5 GHZ with similar power consumption as Power5; an improved memory controll New Focus Areas BRIC as an area of growth for its main businesses of software, services and hardware, including its System z mainframe

a, developed a new material to build a critical part for 45nm transistors. IBM expects this new material will lead to smal s microprocessors in 2008 by using smaller, more efficient memory Innovation AM as the embedded memory cache built onto each chip, according to a paper presented at the ISSCC (International Solid Sta

XYZ Corp.

Future Outlook
Text information Secondary resources analyst opinion or companys own future plans/expectations

Backup Slides

XYZ Corp. Strategy

Core Strategy
Fully Integrated Technology Leadership

Elaborating Core Competitor Strategies

Implementation
System p server line BlueGene/L

Desired Outcome
Worlds fastest computer at a low cost Strong hold in high-end server Image of technological leadership Higher acceptability to broaden scope Broader scope to reduce cost production Concentration on design to reduce intensity of competition by achieving the required edge for its servers Enhancement of Brand image as a technical leader and as one stop solution provider

Rapid, Successful Innovation @ Lower Investment

Power.org Openpower Companies/Suppliers Universities Government

Computers (IBM's own) Game Consoles (Sony, Msft, Nint) Digital TVs Engineering & Technology Services (E&TS) to sell services to Power community

t analysts feel) Covers what the company plans y which are not short term; this can be obtained from analyst briefings, management discussion & analysis etc.wherever possible Quantify

to achiev

Key

Covers the companies moves in order to put the strategy in action Try to incorporate quantifiable data to validate these inputs Validate company strategy with solid take-aways/Implications to : examples of how the company has moved to achieve these goals

XYZ Corp.
Recent Acquisitions

Acquisitions & Divestitures

Acquisition Through acquisitions, IBM aims to blend software, hardware, and research into higherObjective margin, standardized services for value added integrated customer solutions Date Company Synergies Foreseen

January 2007 December 2006 November 2006

Softek Storage Solutions Expansion of the Storage & Data services business unit part of IBM Global Technology Corp. Services Consul Risk Management Inc To strengthen its service-management stack by adding compliance monitoring, auditing, and reporting capabilities for both mainframe and distributed environments Palisades technology partners Vallent To add the companys business consulting and software automation services to IBM GTS Vallent, with more than 200 customers and OEM agreements with Alcatel, Motorola and Lucent, improves IBMs presence in the Telco vertical Add sProvides systems integration & other IT services to SMB clients Improves IBM portfolio in SOA-based fabrics for Healthcare & Insurance; adds to Tivoli capabilities; expands content management software and security offerings

September 2006 Global Value Solutions SA August 2006 Webify; MRO; FileNet; and ISS

Since 2002, IBM has invested close to $16 billion to acquire over 60 companies primarily in software and services. The acquired technologies and capabilities have been integrated into IBMs offerings and solutions.In addition, IBM has divested several businesses including hard disk drives, displays, and most recently the PC business. The net effect of these acquisitions and divestitures is an improved profit profile for IBM