The hardware market is the stalwart of the IT market, dominated by such US $bn powerhouses as IBM, HP and Dell, and Japanese conglomerates, such as Toshiba and NEC; despite their bulk - employing often hundreds of thousands of employees - these IT hardware vendors have also shown an ability to innovate and lead the market in new directions. Examples include IBM and Intel’s innovations in semiconductors or Dell’s continual ability to lower the price of a PC. Also evident from the ‘Top Ten Hardware Vendors’ report is that size does matter. When a large company, such as IBM or HP tries to tune its products, marketing strategies, and sales channels, local economic and competitive conditions in the 140 or so countries it operates in inevitably confounds its ability to achieve a balanced performance. Whenever a company is so broadly and deeply entrenched in many market sectors and geographies, a lot can go wrong even though a lot is going right. That's the price any company pays for being large. The continually changing dynamics of the sector and the might of the hardware vendors make it an exciting industry to watch, even if the top ten has not changed remarkably in recent years. This report profiles the leading vendors in the industry and also includes a brief summary of the near-misses: numbers 11 to 20 in a final chapter. The ranking of The Top Ten Hardware Vendors report is based on the CBR Top 50, an exclusive list of the 250 biggest public revenue generators in the IT industry, ranked on their latest annual results. The focus of the report is on vendors that primarily sell to other businesses. Hence, it does not include consumer electronics vendors, such as Sony, nor does it include vendors such as Siemens, which generate a large proportion of their income from other industrial activities, whether sector-specific (such as healthcare) or more general automation systems.

Table of Contents
Top Ten Hardware Vendors
Executive Summary 16
Market context 16
IBM 18
Hewlett-Packard 19
Dell 19
Toshiba 20
NEC 21
Fujitsu 21
Nokia 22
Intel 23
Motorola 23
Cisco Systems 24
Top 20 vendors 25
Chapter 1 Introduction 28
What is this report about? 28
Methodology 29
Chapter 2 Market context 32
Summary 32
Overview 32
Market trends 34
Commoditization 34
Innovation 35
Mobile 35
Blade servers 35
iv
Convergence 36
Chapter 3 IBM 40
Summary 40
Introduction 40
Current positioning 42
Restructuring 42
Competitive stance 42
Chip innovations 42
Servers 43
Storage 45
Conclusions 46
Strengths 47
Market leadership 47
Technology base 47
Focused business model 47
Weaknesses 48
Impact of pension and benefit costs 48
Legal proceedings 48
Loss of major customer 49
Opportunities 49
Growth and innovation in hardware services 49
Increased financial flexibility 50
Opportunities in government sector 50
Threats 50
Lose market share due to offshore consulting companies 50
On-going SEC investigations 51
Chapter 4 Hewlett-Packard 54
Summary 54
Introduction 54
Current positioning 57
Technology Solutions Group 57
Enterprise Storage and Servers 57
Personal Systems Group 59
Imaging and Printing Group 61
Future growth trends 62
Next-generation data center architecture 62
Always-ready, always-on mobile computing 63
Ubiquitous printing and imaging 63
Competitive stance 64
v
SMEs 64
RFID (Radio Frequency Identification) 65
Printing innovations 66
Conclusions 69
Strengths 70
Reorganization of business processes 70
Leadership position in various fields 70
Dominant presence in Asia Pacific and EMEA 70
Weaknesses 71
Slow revenue growth 71
Decline in digital entertainment market 71
Opportunities 71
Opportunities in PC business 71
Next generation data center architecture 71
RFID (Radio Frequency Identification) 72
Threats 72
Pricing pressure 72
Component pricing 72
Chapter 5 Toshiba 74
Summary 74
Introduction 74
Current positioning 76
Digital Products 76
Mobile communications 77
Digital media network 77
PCs and networks 78
Electronic Devices 78
Semiconductors 78
Display devices and components 79
Toshiba Matsushita Display Technology 80
Partnerships 80
HP 80
Vodafone 81
Competitive stance 81
Mobile 81
Notebooks 82
Semiconductors 84
Hard disk drives 85
Conclusions 86
Strengths 87
Strong brand equity 87
Leading supplier of ADC 87
Leading electronics manufacturer 87
Weaknesses 87
vi
Restrictions on capital investment 87
High Japan focus 88
Opportunities 88
Display devices and components 88
Growth in the semiconductor industry in Japan 88
Growth in Europe 88
Flash memory market 89
Threats 89
Increased competition in PC market 89
Fast pace of technology industry 89
Chapter 6 Dell 92
Summary 92
Introduction 92
Current positioning 95
Desktop PCs 96
Mobility 96
Software and peripherals 96
Servers and networking 97
Enhanced Services 98
Storage 98
Competitive stance 99
Printing and imaging 99
Desktop PCs 99
Mobility 100
Conclusions 101
Strengths 102
Leading market position 102
Notable clientele 102
Effective business model 102
Strong operating performance 103
Weaknesses 103
Single source suppliers 103
Low R&D spending 104
Poor customer service 104
Opportunities 104
Growth in the software and peripherals market 104
Expansion into mobility products 105
High consumer spending in the US 105
Entry into high-end PC market 106
Threats 106
Threat from competitors 106
Slowing growth in the PC market 106
Component price fluctuations 107
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Chapter 7 NEC 110
Summary 110
Introduction 110
Future outlook 112
Current positioning 115
IT Solutions 116
Network Solutions 117
Electron Devices 119
Alliances and M&As 120
Competitive stance 121
IP 121
VOIP 121
Mobile handsets 122
Servers 122
Conclusions 124
Strengths 125
Strong industry position 125
Diverse business portfolio 126
Growing network solutions business 126
Weaknesses 127
Declining revenues and operating profitability 127
Decelerating R&D expenses 127
Overdependence on the Japanese market 128
Opportunities 128
Increasing PC sales 128
Growing demand for mobile phones 128
Strategic alliances 129
Threats 129
Rapidly changing technology 129
Adequate protection of intellectual property rights 130
Cyclical nature of semiconductor market 130
Appreciating yen 131
Chapter 8 Fujitsu 134
Summary 134
Introduction 134
Current positioning 137
Software and Services 139
Platforms 139
Electronic Devices 141
Competitive stance 142
Semiconductors 142
Servers 143
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Conclusions 143
Strengths 144
Improvement in quality control 144
Leading market share in ADSL and Optical Transmission systems
markets 145
Ability to provide a fully integrated IT infrastructure 145
Weaknesses 146
Continued decline in electronic device revenues 146
High dependence on Japanese market 146
Opportunities 146
Reorganization of Fujitsu business 146
Investment in semiconductor business 147
Growth in IP infrastructure 147
Buoyant European public-sector orders 147
Threats 148
Appreciating Yen 148
Slowdown in the demand for semiconductors 148
Slowdown in LCD market 149
Chapter 9 Nokia 152
Summary 152
Introduction 152
Current positioning 155
Mobile Phones 156
Multimedia 157
Enterprise Solutions 158
Networks 159
Mergers and alliances 160
Competitive stance 161
New markets 161
Enterprise mobility 162
Conclusions 163
Strengths 164
Market leadership 164
Product development 165
Top-notch brand recognition 165
Weaknesses 166
Patent infringement 166
Loss of GSMA contract 166
Opportunities 166
One billion mobile phones in 2006/2007 166
Mobile phones as media channels 167
New markets 167
Rise in demand for 3G technology 167
Threats 168
Technological risk 168
ix
Safety concerns 168
Chapter 10 Intel 170
Summary 170
Introduction 170
Current positioning 173
Digital Enterprise group 174
Mobility group 175
Flash Memory group 177
Digital Home group 177
Digital Health group 178
Channel Platforms Group 178
New partners 178
Competitive stance 179
Chip innovation 179
Wireless mobility 181
Conclusions 183
Strengths 184
Industry leader 184
Balanced geographical mix 184
Weaknesses 184
Poor performance in home market 184
AMD lawsuit 185
Customer concentration 185
Opportunities 186
Growth in China 186
Growth in mobile computing and notebooks market 187
Capacity expansion 187
Threats 187
Slowdown in PC sales 187
Consolidation in the PC business 188
Intense competition 188
Chapter 11 Motorola 190
Summary 190
Introduction 190
Current positioning 193
Mobile Devices 194
Government and Enterprise Mobility Solutions 195
Networks 195
Connected Home Solutions 196
Acquisitions 198
x
Competitive stance 199
Enterprise mobility 199
Linux 202
Conclusions 203
Strengths 203
Market position 203
Global manufacturing facilities 204
Portfolio of offering 205
Weaknesses 205
Dependence on few customers 205
Reduced profits due to low-cost mobile phones 205
Opportunities 206
Rise in demand for 3G technology 206
Expansion of MMS capacity 206
Low cost mobile phones 207
Threats 207
Technological risk 207
Consolidation in the telecom industry 208
Chapter 12 Cisco Systems 210
Summary 210
Introduction 210
Current positioning 213
Routers 213
Switches 213
Advanced Technology 214
Acquisitions 216
Future acquisitions? 217
Competitive stance 218
Enterprise WLANs 218
Centralized switch-based approach 220
VoWLAN 220
WLAN security 221
Unified Wireless Network 221
Network Access Control 222
IP communications 223
Storage 225
Security in the network 226
Consumer electronics 228
Conclusions 229
Strengths 230
Market dominance and stable financial position 230
Diverse customer base 231
Strategic alliances 231
Focus on Research and Development 232
Weaknesses 232
xi
Inventory management issues 232
Integration of mergers and acquisitions 233
Opportunities 233
Integrated management solutions 233
Emerging VoIP market 233
Threats 234
Competition from established players in the market 234
Threat from upcoming Asian vendors 234
Telecommunications regulatory environment 235
Chapter 13 Top 20 vendors 238
Summary 238
Introduction 238
Ericsson 240
Alcatel 240
Apple 242
Texas Instruments 243
Sun Microsystems 244
Nortel 245
EMC 247
Acer 248
Lucent Technologies 248
STMicro 249
Index 250
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List of Figures
Figure 1.1: Top 10 hardware vendors annual revenue 2005 ($bn) 18
Figure 3.2: IBM annual revenue and net income 2003-2005 ($bn) 41
Figure 3.3: SWOT Analysis: IBM 46
Figure 4.4: Hewlett Packard annual revenue and net income 2003-2005 ($bn) 56
Figure 4.5: SWOT Analysis: Hewlett Packard 69
Figure 5.6: Toshiba annual revenue and net income 2003-2005 ($bn) 76
Figure 5.7: SWOT Analysis: Toshiba 86
Figure 6.8: Dell annual revenue and net income 2003-2005 ($bn) 95
Figure 6.9: SWOT Analysis: Dell 101
Figure 7.10: NEC annual revenue and net income 2003-2005 ($bn) 112
Figure 7.11: SWOT Analysis: NEC 125
Figure 8.12: Fujitsu annual revenue and net income 2003-2005 ($bn) 137
Figure 8.13: SWOT Analysis: Fujitsu 144
Figure 9.14: Nokia annual revenue and net income 2003-2005 ($bn) 155
Figure 9.15: SWOT Analysis: Nokia 164
Figure 10.16: Intel annual revenue and net income 2003-2005 ($bn) 173
Figure 10.17: SWOT Analysis: Intel 183
Figure 11.18: Motorola annual revenue and net income 2003-2005 ($bn) 192
Figure 11.19: SWOT Analysis: Motorola 203
Figure 12.20: Cisco annual revenue and net income 2003-2005 ($bn) 212
Figure 12.21: SWOT Analysis: Cisco 230
xiii
List of Tables
Table 1.1: Top 10 hardware vendors annual revenue (2003-2005) $bn 17
Table 3.2: IBM’s key statistics 40
Table 3.3: IBM annual revenue and net income 2003-2005 ($bn) 41
Table 4.4: HP’s key statistics 55
Table 4.5: Hewlett Packard annual revenue and net income 2003-2005 ($bn) 55
Table 4.6: ESS net revenue 2003-2005 58
Table 4.7: PSG net revenue 2003-2005 60
Table 4.8: IPG net revenue 2003-2005 62
Table 5.9: Toshiba’s key statistics 75
Table 5.10: Toshiba annual revenue and net income 2003-2005 ($bn) 76
Table 5.11: Digital Products net revenue 2003-2005 77
Table 5.12: Electronic Devices net revenue 2003-2005 78
Table 6.13: Dell’s key statistics 93
Table 6.14: Dell annual revenue and net income 2003-2005 ($bn) 94
Table 6.15: Desktop PCs net revenue 2004-2006 96
Table 6.16: Mobility net revenue 2004-2006 96
Table 6.17: Software and Peripherals net revenue 2004-2006 97
Table 6.18: Servers and Networking net revenue 2004-2006 98
Table 6.19: Enhanced Services net revenue 2004-2006 98
Table 6.20: Storage net revenue 2004-2006 99
Table 7.21: NEC’s key statistics 111
Table 7.22: NEC annual revenue and net income 2003-2005 ($bn) 112
Table 7.23: IT Solutions revenue 2003-2005 116
Table 7.24: Network Solutions revenue 117
Table 7.25: Electron Devices revenue 2003-2005 119
Table 8.26: Fujitsu’s key statistics 135
Table 8.27: Fujitsu annual revenue and net income 2003-2005 ($bn) 137
Table 8.28: Software and Services revenue 2003-2005 139
Table 8.29: Platforms revenue 2003-2005 139
Table 8.30: Electronic Devices revenue 2003-2005 141
Table 9.31: Nokia’s key statistics 154
Table 9.32: Nokia annual revenue and net income 2003-2005 ($bn) 155
Table 9.33: Mobile Phones revenue 2003-2005 156
Table 9.34: Multimedia revenue 2003-2005 157
Table 9.35: Enterprise Solutions revenue 2003-2005 158
Table 9.36: Networks revenue 2003-2005 159
Table 10.37: Intel’s key statistics 171
Table 10.38: Intel annual revenue and net income 2003-2005 ($bn) 172
Table 10.39: Digital Enterprise revenue 2003-2005 174
Table 10.40: Mobility revenue 2003-2005 175
Table 10.41: Flash Memory revenue 2003-2005 177
Table 11.42: Motorola’s key statistics 191
Table 11.43: Motorola annual revenue and net income 2003-2005 ($bn) 191
Table 11.44: Mobile Devices revenue 2003-2005 194
Table 11.45: Government and Enterprise Mobility Solutions revenue 2003-2005 195
Table 11.46: Networks revenue 2003-2005 195
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Table 11.47: Connected Home Solutions revenue 2003-2005 196
Table 12.48: Cisco’s key statistics 211
Table 12.49: Cisco annual revenue and net income 2003-2005 ($bn) 212
Table 12.50: Router revenue 2003-2005 213
Table 12.51: Switches revenue 2003-2005 214
Table 12.52: Advanced Technology revenue 2003-2005 214
Table 12.53: Acquisitions in 2005 216
Table 13.54: Annual revenue and net income: final top 20 hardware vendors 2003-2005 239