Gleaning truth from earnings reports

Plus, sales of ‘naked’ SIP handsets outstrip their proprietary counterparts

Once every three months, the business press goes into a tunnel and can write about only one thing: quarterly earnings reports. This big company earned so much per share, that company lowered its guidance for next year, and so on.

Should IT executives care about all this or just ignore it for the short-term racetrack chatter that it mostly is? On one hand, it pays to think long term, and most of these ups and downs are just a huge distraction. On the other, if you skim over the minutiae, you can get some good indications of broader trends that may affect how you think about your business’s direction and your vendor relationships.

Earnings season usually begins a couple weeks after a quarter ends, and you usually hear about the bad news first. This time around, IT vendors got a slow start out of the gate, with giants EMC and SAP announcing weaker than expected results, followed by AMD, Dell, and Intel, all of whom also disappointed.

So what? Does this mean the IT market overall is slowing or just that these particular vendors hit rough patches because of product issues, price competition, or some other doo-doo that was specific to their company? Or is the overall economy slowing? Is it time to start cutting back those travel and entertainment accounts even further?

I can tell you one thing — it doesn’t pay to try to be an economist. Leave that to the brainiacs at the Federal Reserve. But it does pay to take a quick look four times a year at your bigger vendors’ financial results and add them to your knowledge base and hypotheses about the future. Is there a new price war breaking out in hardware? Is SQL Server 2005 catching on in the marketplace? How are the latest-generation BI suites selling?

All of this information was readily available at numerous business news Web sites in the past two weeks, as vendors such as Hyperion, Microsoft, and Rackable Systems reported quarterly results. So go ahead, get out your banker’s spectacles and spend a few minutes with these reports each quarter. Your CFO will be impressed.

Naked and disruptive dept.: Sometimes a research report comes along that’s so dry and so juicy at the same time I can’t help but mention it. Disruptive Analysis is out with a new report claiming that sales of “naked SIP handsets” are continuing to outstrip sales of “closed IMS [IP multimedia subsystem] handsets” because the telco industry is focusing more on infrastructure development than on the consumer experience.

By largely ignoring IMS handset development, claims author Dean Bubley, the telcos are creating a vacuum which will be filled by more and more open (aka naked) SIP-enabled mobile phones, on which third-party application providers can exploit the SIP stack. Some of the study’s other findings: 1) There’s little consensus on what exactly an IMS phone is; 2) existing standards are too focused on protocols and not enough on the apps themselves; and 3) a lot more effort needs to be put into user interface design and interoperability among multiple vendors’ phones.

So what’s wrong with this picture? Why not have as much openness at the top of the stack as possible so the free market can work out the best solutions for billions of mobile handset users? Naked is good. Disruptive is good. Have a good weekend.

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