The 15 Biggest News Stories Of 2016 (So Far)

The Year So Far

Compiling a list of the 15 biggest news stories solution providers followed closely through the first half of 2016 proved to be a relatively easy exercise. It's been an eventful six months in the IT industry and the channel – but then when is it never eventful?

As is often the case, acquisitions, mergers and divestitures accounted for some of the biggest news stories in the first half of the year. That included unfinished holdovers from 2015, most notably Dell's pending $62-billion acquisition of EMC. But it also included new pairings like the proposed merger of Hewlett Packard Enterprise's enterprise services business with CSC to create what will become the third largest solution provider in the market. Also making the list is Microsoft's blockbuster deal to acquire business social media site LinkedIn for $26.2 billion.

Cisco, meanwhile, continued to transform itself under new CEO Chuck Robbins. Microsoft retreated from the consumer smartphone market and took heat for its aggressive Windows 10 upgrade initiatives. Apple found itself in a battle with the FBI over iPhone security. Chinese companies moved to Lexmark and Ingram Micro. And the IT industry lost a pioneer with the passing of former Intel CEO Andy Grove.

What do you think have been the biggest IT industry news stories of 2016 so far? [Editor's Note: For an updated look, see our full-year review of 2016's biggest news stories]

15. Oracle Loses Rounds In Legal Fights With HP And Google

The first half of 2016 was not kind to Oracle's legal teams.

On June 30 a California jury ordered the company to pay Hewlett Packard Enterprise a whopping $3 billion in damages in a long-running dispute between the two vendors over Oracle's software support for HPE's Itanium servers. Oracle announced in 2011 that it would stop developing its software for the Itanium chip, saying the processor was at the end of its life. HP said Oracle was contractually obligated to continue supporting the chip and sued.

That followed a ruling by a federal jury one month earlier that Google had not infringed on Oracle's intellectual property when it developed the Android mobile operating system. Oracle had sought up to $9 billion in damages, arguing that technology used in the Android mobile operating system violated a copyright applying to the Java programming language and other Oracle patents.

Oracle has vowed to appeal in both cases.

14. Lexmark To Be Acquired By Chinese Printer Manufacturer For $3.6 Billion

Lexmark International, the printer manufacturer and supplier of print and document management applications, agreed in April to be acquired by a group of investors led by Apex Technology, a China-based inkjet and laser printer hardware maker. Shareholders have approved the deal and the company expects to complete the acquisition by year's end.

Lexmark, a $3.5 billion company, was created in 1991 when IBM spun off its printer business. The company has been a mainstay in the channel, but it has struggled to maintain sales and profit growth.

News of the company's sale wasn't a complete surprise. In October the company began a review of strategic alternatives – including a potential sale – to enhance shareholder value.

13. Accenture Accelerates Acquisitions

Accenture remained in full shopping mode in the first half of 2016, making a number of acquisitions that expanded the system integration giant's capabilities in security, business analytics, Internet of Things and digital marketing.

Since 2013 Accenture, No. 2 on the CRN Solution Provider 500, has made some 40 acquisitions, spending more than $2.5 billion in the process. Last year the company's leadership set a goal to spend as much as $1 billion on acquisitions during its current fiscal year ending Aug. 31. Making good on that vow, Accenture spent some $835 million on acquisitions in the third quarter (ended May 31) alone.

In January Accenture acquired CRMWaypoint, a supplier of cloud advisory and technology services in the Netherlands, and a month later bought London-based Formicary, a provider of systems integration and technology consulting services for trading platforms.

The acquisitions continued in April when Accenture purchased a majority stake in Japan-based digital agency IMJ Corp., and then in May bought OPS Rules, a Waltham, Mass.-based analytics and data science consulting company. And in June Accenture boosted the capabilities of its new cybersecurity unit by acquiring Israel-based Maglan, and entered into an agreement to acquire dgroup, a German-based digital transformation consulting services company.

12. Silicon Valley Pioneer Andy Grove Dies

Andy Grove, who as Intel's third employee, director of engineering and eventually the chipmaker's president and CEO helped create the Silicon Valley of today, died in March at the age of 79.

Grove left Fairchild Semiconductor to join Intel shortly after the company's founding in 1968 by Robert Noyce and Gordon Moore. Intel would grow to become one of the most recognized brands in information technology and, by manufacturing the x86 line of chips that launched the PC industry, has remained a mainstay of the channel to this day.

11. Microsoft Narrows Smartphone Focus, Slashes 1,850 Jobs In Mobile Business

Microsoft's retreat from the smartphone business began in July 2015, a little more than a year after completing its $7.2 billion acquisition of Nokia, when the company wrote off $7.6 billion related to the acquisition and cut 7,800 jobs.

So it wasn't a huge surprise in May when the company announced an additional $950 million write-down and cut 1,850 jobs, more than two-thirds at Microsoft Oy (formerly Nokia) in Finland, and said it would "streamline" its smartphone hardware business to focus on businesses and niche areas.

The announcement, nevertheless, was the final confirmation that the Nokia acquisition was a huge mistake for Microsoft and that its efforts to become a player in the general smartphone market had failed. In the first quarter of 2016 Microsoft's Windows Phone OS held only 0.7 percent of the worldwide smartphone market. Microsoft maintained that it would continue developing Windows 10 Mobile and support its Lumia phones.

10. IBM To Buy Channel Superstar Bluewolf

IT vendors have acquired solution providers in the past when there was a specific skill or service they provided that could give the vendor a competitive edge. But when IBM announced on March 31 a deal to acquire Bluewolf (reportedly for more than $200 million), people really took notice. (The acquisition was completed May 12.)

The acquisition certainly makes sense for IBM. The company has been focusing on software and services in recent years and exiting more commodity businesses like the x86 server business it sold to Lenovo in 2014. Bluewolf, a leading solution provider in the market, goes far beyond basic IT implementation and configuration capabilities to provide high-value services in change management, analytics, digital marketing, cloud governance and more.

But is it a loss for the channel? While Bluewolf was only No. 238 on the CRN Solution Provider 500, it has been widely seen as one of the leading new-generation strategic service providers that is setting the pace for the channel. The disappearance of such a bellwether channel company into IBM leaves a significant void.

9. Xerox To Split Into Two Companies

Xerox, which fell to No. 150 on this year's Fortune 500, has struggled in recent years to find its strategic footing. Last October, after reporting its worst quarterly revenue since 2009, the company announced a review of its operations to determine the best course of action for its future. Further complicating the company's efforts was activist investor Carl Icahn's ownership of more than 7 percent of Xerox outstanding shares.

In January Xerox announced a plan to split into two companies. One, retaining the Xerox name, will focus on printers and document management hardware and generated $11 billion in revenue in 2015. The other, which will become a $7 billion company named Conduent, will provide business process outsourcing and managed services.

The companies expect to complete the split by the end of this year and current CEO Ursula Burns will step down.

8. Robbins Shakes Up Cisco's Executive Ranks, Corporate Structure

When Chuck Robbins became Cisco Systems CEO in July 2015, he began shaking up the networking giant's top executive ranks. That's generally par-for-the-course: New CEOs want to install their own management teams.

But the shakeups at Cisco have continued into this year and even seem to have accelerated. Robbins isn't just restructuring the executive suite, he's restructuring the company – most dramatically in its engineering operations. Robbin's goal is to make Cisco a more nimble, more innovative company – even as it shifts its focus from commodity network hardware to software and services.

All that has led to some disruption in the ranks. Partners told CRN there was an internal power struggle underway when four top engineers left in early June. In late May Nick Adamo, the leader of Cisco's global service provider business, announced that he was leaving. That was quickly followed by the news that Nick Earle, the "founding father" of Cisco's cloud strategy, said he planned to leave the company later this year.

7. Chinese Logistics Giant Buying Ingram Micro For $6 Billion

In a move that could reshape the IT distribution landscape, Chinese logistics firm Tianjin Tianhai Investment Company announced February 17 a deal to acquire Ingram Micro, the IT industry's top distributor, for $6 billion.

Ingram, a $46 billion distribution powerhouse, will be folded into HNA Logistics, part of the HNA Group, a Chinese conglomerate. Tianjin Tianhai is a partially owned subsidiary of HNA Logistics. Ingram Micro shareholders overwhelmingly approved the deal in January and it's on track to close before the end of 2016.

Six days after the deal was announced, Ingram Micro president Paul Read announced that he would step down from the company in September after assisting with the transition. Read had apparently been in line to replace Ingram CEO Alain Monie, but HNA wanted Monie to continue leading the company for the immediate future.

6. Symantec Completes Veritas Split, Buys Blue Coat

Security software developer Symantec has been on something of a roller coaster in recent years with executive changes and different strategies for turning the company around – including splitting off the company's Veritas storage management technology company, which Symantec acquired in 2004.

More than a year after announcing the plan, Symantec finally completed its divestiture of Veritas on Jan. 29 when it sold the company to private equity firm The Carlyle Group for $5.3 billion.

But Symantec wasn't done making news. In April the company said president and CEO Michael Brown would be stepping down – joining a number of other high-level executives who had previously exited.

In June the company made a bold move when it struck a deal to acquire security software company Blue Coat Systems for $4.65 billion, adding a wide range of cloud and Web security software to its portfolio. Perhaps equally important was the news that Blue Coat CEO Greg Clark would take over as Symantec CEO once the acquisition is completed sometime in the third quarter.

5. Microsoft Windows 10 "Nagware" Upgrade Efforts Rile Customers, Partners

Windows 10 launched in July 2015 to generally good reviews, no doubt a relief to the software giant following the criticism the product's predecessor, Windows 8, received following its debut.

But the initial applause for Windows 10 turned to boos from some partners and consumers this year as Microsoft's efforts to convince users to upgrade to the new OS became increasingly aggressive – some called the efforts abrasive and heavy-handed.

Partners complained about annoying Windows 10 upgrade pop-up windows and "nagware" buried in security patches. Once Microsoft classified the upgrade from optional to "recommended" earlier this year, some users awoke to find that their PCs had upgraded to Windows 10 without their knowledge. Some customers even called Microsoft's efforts deceptive when on-screen messages recommending the upgrade seemed designed to trick users into accepting Windows 10.

Some Microsoft partners were already unhappy with Microsoft over the company's decision last year – with little notice to the channel – to offer Windows 10 as a free upgrade for a year.

4. Dell Moves Closer To EMC Acquisition

Through the first half of 2016 Dell continued taking the steps necessary to complete its blockbuster acquisition of storage system manufacturer EMC, a deal valued at some $60 billion that's expected to close by October.

While reports of potential problems occasionally surfaced, such as with lining up the necessary financing for the deal, none ever proved to be a threat to completing what will be the biggest merger in the history of the IT industry. Dell and EMC continued taking the needed steps to wrap up the acquisition, including gaining antitrust approval from the U.S. Federal Trade Commission. And Dell struck deals to sell off its Perot Systems IT services business to NTT Data for nearly $3.1 billion and its software business to private equity firms for a reported $2 billion-plus.

Most significantly for channel partners of both companies, Dell (in early July) named John Byrne, who has been overseeing the company's channel operations since joining the company a year ago, to be the global channel chief of the combined companies once the acquisition closes.

3. Microsoft Strikes Deal To Acquire LinkedIn For $26.2 Billion

On June 13 Microsoft stunned the IT industry when it announced a deal to acquire business social network site LinkedIn for $196 million per share or $26.2 billion.

The two companies said they would integrate Microsoft's cloud Office 365 and Dynamics CRM applications with LinkedIn's business-to-business network of professionals – a move Microsoft partners said would provide them with a competitive edge over CRM cloud application vendor Salesforce had reportedly also bid to acquire LinkedIn.

Microsoft and LinkedIn expect to complete the acquisition by the end of 2016.

2. Apple And The FBI Engage In Legal Standoff Over Terrorist's iPhone, Ignite Encryption Debate

Following the December terrorist attack that killed 14 people in San Bernardino, Calif., the FBI recovered one of the attacker's mobile phones – an Apple iPhone 5C. Unable to access the phone's locked and encrypted data, the FBI in February asked Apple to develop software that would disable the phone's security features.

That set off a public debate over individuals' right to privacy versus law enforcement's need to protect the public. Apple refused the FBI's request, maintaining it would undermine the security of its products and set a dangerous precedent. Apple critics argued the company should assist law enforcement. The debate played out in such public venues as the RSA Conference in San Francisco in early March.

A U.S. magistrate judge issued an order requiring that Apple comply with the FBI's request, but Apple appealed. Before the case proceeded much further, the dispute came to an abrupt halt on March 28 when the FBI announced that it had successfully hacked into the phone with help from an unnamed third-party company.

While the immediate dispute came to an end, the larger questions were left unresolved and no one doubted there would be more debates on the issue in the future.

1. CSC, HPE Enterprise Services Merging To Form Solution Provider Powerhouse

On May 24 CSC and Hewlett Packard Enterprise announced that HPE would spin off its Enterprise Services business and combine it with CSC to create what will become the third largest solution provider in the market with 5,000 clients and annual revenue of $26 billion.

The news came on the heels of drastic periods of transformation at both companies. Just last year HPE was created through the split of Hewlett-Packard Co. into two companies. And CSC spun off its federal business and merged it with SRA International.

The deal starkly illustrates how quickly the dynamics of the IT industry are changing and the pace of corporate acquisitions and divestitures is accelerating as companies seek to re-invent themselves.

The companies expect to complete the merger by March 2017.