Unlike the general notebook market, in which

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1 Magic Quadrant for Global Enterprise Notebook PCs, 2H05 Gartner RAS Core Research Note G , Mikako Kitagawa, Brian Gammage, Leslie Fiering, 12 January 2006, R Unlike the general notebook market, in which price is usually the primary purchase criterion, the global enterprise market also requires consistent hardware configurations, appropriate life cycle services, global support and fast turnaround on warranty repairs. WHAT YOU NEED TO KNOW This Magic Quadrant is designed to provide assistance in the notebook vendor selection process for global enterprise customers who buy or manage large numbers of notebooks in multiple regions. The results of this analysis combine objective evaluations of the vendor attributes that matter most to largeenterprise customers when selecting notebook suppliers: product portfolio, global capability, financial health, and service and support. Each vendor s position is accurate for the factors included in this analysis, but we encourage notebook buyers not to use these results as the sole criteria in requests for proposals or selection processes. Instead, customers should assess their priorities and apply these while performing due diligence as part of the vendor evaluation process. It is not uncommon for customers with unique requirements to find that a lesser-known vendor is best-suited to meet their needs. Gartner s Magic Quadrants for PC vendors are built using a quantitative evaluation of key parameters. No subjective evaluations are applied to these, and there is no scope for different interpretations of identical input data. All information is sourced externally either from published material (such as market data), or from information supplied to Gartner by PC vendors. any potential errors in vendors submissions are highlighted for modification or correction. The questionnaire is designed based on necessary criteria. The detail of criteria in each axis and the weight are discussed at evaluation criteria section in this document. The magic Quadrant for Global Enterprise Notebook PCs is updated each year to reflect the changes of the market dynamics. For our 2005 update we have added evaluation criteria for each vendor s bid response capabilities and vertical offerings. No evaluation criteria were retired. Details of the evaluation criteria considered when building this Magic Quadrant are detailed in the evaluation criteria section of this document. MAGIC QUADRANT Market Overview Commoditization and saturation are major notebook market trends in advanced regions, which account for 70 percent of the worldwide PC market. In a commoditized market, price becomes the major purchase criterion, while market saturation increases the pressure for vendors to lower prices. But while these forces apply to the general market for notebooks, they are less visible in the global enterprise segment. For large-enterprise customers that buy on global contracts, price is only one of many purchase criteria that also include availability of models globally, global account management, the ability to provide appropriate services and support globally, and rapid turnaround on warranty repairs regardless of region. Working with notebook vendors that meet these requirements helps reduce the total cost of ownership for notebooks. The latter is supplied using a detailed questionnaire, to which answers are either yes, no or numerical measures. All information received from vendors is certified by a representative of the vendor and subject to strict nondisclosure by Gartner. Information for input is scrutinized for accuracy before use, and For enterprise buyers, most notebook PC vendor selection criteria are the same as those used to evaluate desktop PC vendors. However, the notebook

2 form factor and style of use introduce a number of additional requirements that must be factored into the notebook PC vendor selection process. Figure 1. Magic Quadrant for Global Enterprise Notebook PCs challengers leaders Dell The primary value of notebook PCs is their ability to let users work outside the traditional office environment. Vendors must have support and warranty offerings that can provide timely service to a notebook in any geographical area, regardless of where it was purchased. Vendors must also be able to provide solutions to the unique notebook challenges in asset management and system image management. ability to execute MPC Toshiba Acer Gateway Lenovo Fujitsu/ Fujitsu Siemens HP The leaders in this Magic Quadrant are international vendors that can provide consistent products and services across multiple regions. While smaller vendors can also play effectively in this market, a lack of global capabilities for delivery and/or support would put them into a niche player s or challenger s position. Such smaller vendors are typically specialized in certain vertical markets. Key Findings Four vendors show a distinct move in this Magic Quadrant in 2005 compared with 2004 update: Lenovo, Toshiba, Gateway and MPC. Lenovo moved from the Challengers quadrant to Leaders quadrant because of its acquisition of IBM s PC division (PCD). By acquiring IBM s solid global presence and enterprise-class products and enterprise customer base, Lenovo has become one niche players Source: Gartner (December 2005) visionaries completeness of vision As of December 2005 of the leaders in the global enterprise notebook market. IBM now resells ThinkPad notebooks from Lenovo and no longer produces its own. As a result, IBM has been dropped from the Magic Quadrant. Gateway remains in the Niche Players quadrant; however, its position has moved right along the Completeness of Vision axis. This move results mainly from improvement of the U.S. sales organization and expansion of its geographic presence through the acquisition of emachines in 2H04. Gateway, which did not sell PCs outside the U.S. before this acquisition, gained a retail presence The Magic Quadrant is copyrighted December 2005 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the Leaders quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose Gartner, Inc. and/or its Affiliates. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice. 2

3 in Europe, the Middle East and Africa (EMEA) and Japan from the emachines acquisition. MPC s position has moved from the left along the Completeness of Vision axis within the Niche Players quadrant. Although there are no major changes in MPC s ability and capability as a notebook supplier, Gateway s acquisition of global go-to-market capabilities means that MPC is now the only vendor evaluated that does not have a presence in multiple regions. Other vendors remain in the same quadrant, without significant moves compared with our 2004 update. The details for each vendor are discussed in the vendor comments section. Toshiba declined to disclose some information for evaluation, and its position has been negatively affected by this. Market Definition/Description The market is defined and described as follows: The main products in this market are notebook PCs in various form factors and configurations. Mobile thin-client terminals and PDAs are not included in this Magic Quadrant. The main customers in this market fall into three private sector segments: Enterprises that operate globally Enterprises that operate regionally but have some global presence, Midmarket or large enterprises that operate in one or more countries and have more than 1,000 employees. Large-government customers are not included into this Magic Quadrant. The government market has specific requirements and criteria that differ from the private sector. Inclusion and Exclusion Criteria This Magic Quadrant focuses on notebook suppliers that work directly or indirectly with enterprise buyers. Added No new vendors have been added. Dropped IBM has been dropped as a result of spinning off its PCD to Lenovo. Evaluation Criteria Ability to Execute This axis evaluates technology providers on the quality and efficacy of the processes, systems, methods or procedures that enable IT provider performance to be competitive, efficient and effective, and to positively affect revenue, retention and reputation. Ultimately, global enterprise notebook providers are judged on their ability and success in capitalizing on their vision. The ability to execute consists of the following criteria: Product availability includes product portfolio and range. Overall viability includes product quality and availability, service and support, and financial strength. Sales execution includes availability of special sales teams. Market execution includes the vendor s market share in the global enterprise market. Customer experience includes the vendor s ability to provide support and services. Operations includes inventory turns and channel inventory. Table 1: Performance metrics for alliances Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Source: Gartner Weighting high no rating high 3

4 Completeness of Vision This axis evaluate technology providers on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and how well they map to the Gartner position. Ultimately, global enterprise desktop PC providers are rated on their understanding of how market forces can be exploited to create opportunity for the provider. The completeness of vision consists on following criteria: Market understanding includes customer feedback mechanisms. Marketing organization includes the vendor s ability to provide various professional services. Sales strategy includes the vendor s capability to work with customers through its sales force and sales tools. Product strategy includes strength of R&D, capability of product design and the ability of the vendor to offer image stability. Vertical/industry strategy includes the capability of providing vertical specific services. Geographic strategy includes capability of providing product and services globally. Leaders Notebook PC vendors in the Leaders quadrant register the highest scores on Ability to Execute and Completeness of Vision. These vendors have wider geographic coverage, comprehensive sales organization, financial stability, comprehensive customer support, broader product portfolio, longer product availability, larger market presence and wider vertical market coverage. Challengers Challengers have high scores in Ability to Execute, but their Completeness of Vision scores are not as high as the leaders. Challengers often have a good market presence and financial stability, but they may have less geographic coverage or lack of vertical industry coverage. 4 Visionaries Visionaries have high scores in Completeness of Vision; however, their Ability to Execute scores are not as high as vendors in the Leaders quadrant. Their market presence may be less than the leaders and their financial stability may not be as solid. Also, their sales organization and customer-support mechanism may not be as comprehensive as the leaders. Niche Players Vendors in the Niche Players quadrant do not have high scores in both axes. They have a low market presence, and market coverage is limited. Meanwhile, they may specialize in particular areas in a vertical market segment, or have product portfolios in which leaders may not have much focus. Vendor Comments Acer Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Source: Gartner Acer remains in the Challengers quadrant with little change in this update. Acer has a broad product portfolio and has continued to improve product stability and availability during Its financial health and scale of production qualify Acer as a global notebook PC supplier. However, it is still weak in the North American market and lacks capabilities in key areas for enterprise customers, such as professional services and account management. Acer s direct-sales capabilities are limited, and the company remains highly dependent on channel partners and transactional sales. Recent expansion of Acer s North America operations could potentially move Acer to a higher position if account management and service capabilities also improve. Recommendations: Acer can be considered as a prospective supplier for global notebook PC contracts Weighting no rating no rating high

5 only when ization and global account management are not major priorities in the procurement process. Gartner will continue to review Acer s suitability as a prospective enterprise supplier, as its scale and financial health make it one of the fastest-rising stars in the global PC market. Dell Dell s position in the Leaders quadrant has improved on the Completeness of Vision score in this update. The change is mainly a result of expansion of its global sales organization, particularly in EMEA. Its Ability to Execute score is the highest among all players, reflecting Dell s financial stability, strong market presence and ability to provide global service and support. Dell s strong execution is supported by its solid direct model and efficient supply chain. Dell has successfully expanded its international sales organization, but service delivery in many emerging markets remains inconsistent. Dell s Latitude notebook portfolio addresses largerenterprise needs, including manageability, image stability, system image management and life cycle management. Dell s notebook portfolio does not include an own-branded tablet PC or rugged notebook. However, the impact on Dell s breadth of product portfolio is minimal, because both product categories continue to mainly service niche market requirements. Recommendation: Global enterprises and large organizations (irrespective of location) should consider Dell as a prospective supplier for all business notebook requirements. However, buyers should be aware that Dell s service capabilities are not consistent across all markets. Organizations looking for delivery, service and support in emerging markets should seek additional confirmation of local capabilities. Fujitsu/Fujitsu Siemens Although they are separate corporate entities, Fujitsu and Fujitsu Siemens offer a common range of global PC products and so are evaluated as a single aggregate vendor. Information for the two was combined and submitted to Gartner by a single source representing both companies. Fujitsu/Fujitsu Siemens remains in the Leaders quadrant, with a slightly improved evaluation for Ability to Execute compared with our 2004 update. This is because of improvements in its service and support offerings for EMEA and expansion of its sales organization in the U.S. However, its U.S. market presence continues to lag behind that in other regions. Fujitsu/Fujitsu Siemens has established its LifeBook notebook series as a commercial brand, and its pen-tablet-based products have strong customized capabilities for vertical solutions. Recommendation: Fujitsu/Fujitsu Siemens should be considered for global notebook PC contracts only by organizations for which the majority of users are based in EMEA or Japan. Organizations with high numbers of users in other regions should consider it as a potential supplier only if they have some other compelling reasons to do so (such as a broader portfolio purchase with leveraged discounts). For tablet PC vertical solutions, Fujitsu/Fujitsu Siemens should be considered as a supplier, regardless of customer location. Gateway Gateway remains in the Niche Players quadrant, with an improvement in evaluation for Completeness of Vision. This move is partially a result of strengthening its U.S. sales organization and improvements in its presence outside the U.S., which resulted from its acquisition of emachines in Although Gateway is known as a consumer-centric company with a retail-focused management team, the company continues to serve midsize academic and U.S. government clients. Gateway s newfound access to global markets will not have an immediate impact on its overseas enterprise business, because its main presence outside the U.S. is in retail. However, Gateway s direct model within the U.S. is solid and will provide a platform for serving global enterprise customers if and when it is established within other regions. Gateway s financial health has improved steadily since the acquisition. Recommendation: Gateway is not recommended for new global notebook contracts, but should be considered as a prospective supplier for midsize to small quantities in the U.S. market. Outside North America, customers should expect limited supply capability. 5

6 HP HP maintains high scores in Completeness of Vision because of to its solid geographic presence and proven capability of providing products and services globally. HP also has the broadest product offering, including tablet PCs and rugged notebooks. HP has improved its financial stability during 2005; but continues to lag behind Dell in this regard, and this is reflected in our evaluation of Ability to Execute. HP has also strengthened its sales organizations in key regions since our 2004 update, and this investment has resulted in an improved position for Completeness of Vision. After a half-year under its new CEO, HP s commitment to the large-enterprise notebook market segment seems to have stabilized. Recommendation: HP should be considered a prospective supplier for global enterprise customers regardless of location. However, customers should be aware that HP has gone though a major restructuring, which may result in changes to its long-term strategic direction. Lenovo Lenovo has moved from the Niche Players quadrant to the Leaders quadrant in this update. This significant move is a result of its acquisition of IBM s PCD, including all of IBM s enterprise notebook business in all regions, in 1H05. Lenovo took over both IBM s ThinkPad notebook brand and its well-regarded ThinkVantage technologies, which encompass hardware, management software and deployment capabilities. Despite the challenges of fully integrating the different Chinese and U.S.-based operations, the breadth and quality of ThinkPad branded notebooks will not be adversely affected. Service and support will continue to be provided by IBM s Global Services, and enterprise customer account management will still be maintained by IBM. IBM salespeople will have the same PC commission structure and quota that they did prior to the PCD spinoff and a vested interest in maintaining previous service and support levels. Recommendation: Consider Lenovo as a prospective supplier for all business notebook requirements regardless of location. Organizations should also investigate the potential advantages and licensing costs of extending use of ThinkVantage utilities to their PC installed base. Customers that had originally purchased notebooks from IBM should monitor performance against associated service commitments to ensure the service levels and qualities are maintained now the notebook products are supplied by Lenovo. MPC MPC remains in the Niche Players quadrant but with a reduced evaluation for Completeness of Vision compared with Although MPC s capabilities are little changed since 2004, improved market presence by other competitors means it has lost ground in relative terms. MPC is now the only player in this Magic Quadrant that has no market presence outside North America. Within North America, MPC s is able to provide enterprise-class products and services, and the company has a strong track record of working with large-government customers. MPC s financial position continues to be sound despite the change of the parent company to HyperSpace during Recommendation: MPC should not be considered for global notebook contracts or for high-volume deployments over short intervals. MPC s capabilities and customer approach mean it should be considered as a prospective supplier for U.S.-only, midvolume notebook contracts, or as a second source. Toshiba Toshiba maintains its long-standing capability to provide enterprise-class products and associated services, such as system image management. The company has a presence across all regions but its focus has shifted more toward consumer and transactional business during recent years. Toshiba s weak direct-sales capability and high dependency of channel partners continue to be a concern. Recommendation: Consider Toshiba as a potential global supplier of notebook PCs but ensure customer needs are clearly understood and reflected in contracts. 6

7 Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets, skills, etc., whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization s financial health, the financial and practical success of the business unit, and the likelihood of the individual business unit to continue investing in the product, to continue offering the product and to advance the state of the art within the organization s portfolio of products. Sales Execution/Pricing: The vendor s capabilities in all pre-sales activities and the structure that supports them. This includes deal management, pricing and negotiation, pre-sales support and the overall effectiveness of the sales channel. Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor s history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization s message in order to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This mind share can be driven by a combination of publicity, promotional, thought leadership, word-of-mouth and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements, etc. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Completeness of Vision Market Understanding: Ability of the vendor to understand buyers wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers wants and needs, and can shape or enhance those with their added vision. Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the Web site, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling product that uses the appropriate network of direct and indirect sales, marketing, service and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: The vendor s approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature set as they map to current and future requirements. Business Model: The soundness and logic of the vendor s underlying business proposition. Vertical/Industry Strategy: The vendor s strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including verticals. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: The vendor s strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the home or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market. 7