Contents 1. SLA – Senior Level Advisory – CSC/HPE Enterprise Services

2. Key Announcement implications – IoT – A Path to European Prosperity

3. In Depth Focus – World Wealth Report

4. Financial Round up – Brocade, Ciena, Cisco, DLink,

Extreme and Netgear

THE CHANNEL has been designed specifically for senior-level channel executives. It provides guidance

and highly-strategic advice on the channels and what senior channel executives should be aware of. It will guide management teams on the impact of competitor announcements, insights into the market, brief focus on services sub-segments, value stack, vertical focus and key director messages.

THE CHANNEL

| Channel Issues and Advice |

June 2016

1 SLA – Senior Level Advisory

Key Executives

Meg Whitman HP CEO will will join Board of Directors, which will

be split 50/50 between CSC and HPE

Mike Lawrie, CEO,

President and Chairman of combined company

CSC/HPE Enterprise Services

CSC's Mike Lawrie and HPE’s CEO Meg Whitman announced the merger of CSC and HPE Enterprise Services business on each company's earnings call in June, stating that the merger will create a company that will focus

on next-generation solutions, such as cloud and mobility. The resulting new entity will have an estimated 5,000 clients across 70 countries and will achieve first-year cost savings of $1 billion, according to CSC.

The Combination

Paul Saleh will continue as CFO after transaction closes

Mike Nefkens, SVP and GM of HPE Enterprise Services,

will be a key part of the new company’s executive team

reporting to Mike Lawrie

Benefits

HPE's Enterprise Services

HPE's Enterprise Services group reported an annual revenue loss of between 5 per cent and 11 per cent, adding up to a 22 per cent drop from

2013 to 2015.

CSC Acquisitions

In November, CSC bought Australia's largest independent and publicly owned IT services company, UXC Ltd., for $307.9 million; in December, it bought London-based outsourcing business Xchanging for $720 million; and, more recently, it acquired up European IT service provider Aspediens

of Switzerland.

Lawrie said the acquisitions were important for CSC, but were a slower way of bringing it the "critical mass" that it will have following the merger with the HPE unit.

With these acquisitions, CSC has acquired more ability in next-generation, cloud-based solutions, which will help its integration with HPE Enterprise

Services, combining the two businesses' capabilities in next-generation technology solutions.

Analysis

The deal is expected to close no later than 31st March 2017. CSC certainly needed a boost and if it pulls of a successful merger this could provide it rather than the piece-meal acquisitions it has been making. HPE, however, may experience some severe “push-back from the other SIs

who may see this close tie up with a manufacturer as threatening. NEXT >

2) Key Announcement Implications

2 Key Announcement Implications

Highlights

77 per cent noted more trust in the cloud than a year ago

Only 34 per cent of surveyed IT professionals believe

C-level executives and senior management

understand security risks of the cloud

72 per cent of those

surveyed point to compliance as the biggest concern with cloud adoption

Cloud Investment Trends: A majority of organizations are

planning on investing in IaaS (81%), closely followed by security-

as-a-service (79%), PaaS (69%) and SaaS (60%)

Security and Compliance: A majority of respondents (72%)

list compliance as the primary concern across all types of

cloud deployments, and only 13 per cent of respondents noted

The state of cloud adoption

As business requirements drive enterprises rapidly towards cloud computing and beyond smallscale projects and pilots, what are the key

trends and issues they will need to address? How can businesses reap the benefits of the cloud without compromising security and control?

In an eight-country survey, Intel Sec asked 1,200 IT decision-makers with responsibility for cloud security in their organizations about their plans for cloud adoption, their biggest challenges, and their investment priorities

over the coming year. This report looks at enterprise cloud adoption trends and how they differ across SaaS, IaaS, PaaS, Security as-a-Service, and also public, private, or hybrid cloud. We also look at how

organizations in more regulated industry sectors are trying to overcome compliance issues related to the adoption of cloud computing.

Enterprise IT Ramps Up Cloud Investment

Fig 1 Average number of months until 80% of the respondent organization’s IT budget will be comprised of cloud computing services, split by country

Organizations are using an average of 43 cloud services now - although it’s worth noting some significant regional variations (Figure 2). The UK, for example, is the slowest in terms of cloud adoption (an average of just 29 cloud services per organization), while Brazilian enterprises are

among the highest adopters of cloud services (55 cloud services per organization).

knowing whether or not their

organizations stored sensitive data in the cloud

Security Risks and the Cloud: Perception and Reality: More than 1 in 5 respondents

expressed their main concern around using SaaS is having a data

security incident, and correspondingly, data breaches were a top concern for IaaS and

private clouds. On the contrary, results found that less than a quarter (23%) of

enterprises are aware of data breaches with their cloud service

providers

The C-Suite Blind Spot: High-profile data breaches with major financial and

reputational consequences have made data security a top-of-mind concern

for C-level executives

Shadow IT, Risk and Opportunity: Despite IT departments’ activity to cull shadow

IT activity, 52 per cent of the lines of business still expect

IT to secure their unauthorized department-sourced cloud services. Blue Skies Ahead? The state of cloud adoption infographic: http://www.mcafee.com/us/resources/misc/infog

raphic-executives-embrace-cloud.pdf

Fig 2 The average number of cloud services organizations are currently using, categorized by country

When looking at cloud adoption trends, it’s easy to fall into the trap of talking about just SaaS. In fact, the survey reveals that the majority of organizations are planning on investing in all cloud service models, but

(perhaps surprisingly) the highest percentage (81%) is actually for IaaS, compared to only 60% for SaaS (Figure 3). This is closely followed by Security-as-a-Service (79%), and even planned investment in PaaS (69%) is higher than SaaS. That is backed up by the SANS report, which also

shows that IaaS will be the largest area of growth for enterprise cloud deployments in the next year.

Fig 3 Which cloud deployments does your organization plan to invest in?

NEXT > 3) In Depth Focus

3 In Depth Focus

The World Wealth

Report 2016 has built

a strong and lasting

reputation as the

industry benchmark

for tracking High Net

Worth Individuals

(HNWIs) at a global,

regional and country

level.

Europe’s HNWI population and wealth both grew by 4.8% to 4.2 million and US$13.6

trillion respectively, lower than the global average growth rates of 4.9% and 4.0%, respectively, due to Europe’s ongoing fragile economic recovery

World Wealth Report

For 20 years, CapGemini have been providing unique insights into the

High Net Worth market.

Europe

Financial, Hi-Tech and

healthcare in the Top

3 Industries in 2016

Summary

Asia-Pacific surpassed North America for the first time to become the region with the largest amount of High Net Worth Individuals.

NEXT > 4) Financial Roundup

4 Financial Roundup

Recently Released Financials

Brocade Q216 – Revenue of $523.3M was down 2 per cent Y on Y and down 9 per cent sequentially. Gross margin was 67 per cent

o OEM 63 (63) per cent o Channel 37 (37) per cent

o International 47 (44) per cent o Services 18 (16) per cent o Data Storage 57 57) per cent

o Ethernet 25 (27) per cent

Cisco Q317 – Revenue of $12B was up 1 per cent Y on Y but

down 1 per cent sequentially. Gross margin was 65 per cent o US & Canada 60 (60) per cent o EMEAR 26 (26) per cent

o AsiaPac 15 (15) per cent

Ciena Q216 – Revenue of $640.7M was up 3 per cent Y on Y and

up 21 per cent sequentially. Gross margin was flat at 44 per cent o North America 62 (64) per cent o EMEA 15 (16) per cent

o Car and LATAM 9 (8) per cent o APAC 14 (12) per cent

o Packet Optical Transfer 68 (70) per cent o Packet Optical Switching 11 (9) per cent o CESD 1 (3) per cent

o SW and Service 20 (19) per cent

DLink Q116 – Revenue of $184.1M was down 12 per cent Y on Y and down 9 per cent sequentially. Gross margin was 27 per cent

o EMEA 21 (21) per cent o North America 15 (20) per cent

o AsiaPac 64 (59) per cent

Extreme Q316 – Revenue of $124.9M was up4 per cent Y on Y but down 10 per cent sequentially. Gross margin 50 per cent

o EMEA 35 (41) per cent o Americas 56 (49) per cent

o AsiaPac 9 (11) per cent

Netgear Q116 – Revenue of $310.3M was flat on Y and 14 per cent sequentially. GM was 32 per cent. Segment breakdown:

o EMEA 21 (29) per cent o Service Provider 27 (37) per cent

For further information, please contact:

Keith Humphreys – Managing Consultant at euroLAN – keith@eurolanresearch.com