Inflation Eases, Cisco Layoffs, MSP Demand, Jamf-Microsoft Deal, and AI Growth

[00:00:02] [SPEAKER_00]: It's Monday, August 19th, 2024, and I'm Dave Sobel.

[00:00:05] [SPEAKER_00]: Four things to know today.

[00:00:07] [SPEAKER_00]: Inflation eases as the CPI rises 2.9 percent, shifting the Fed's focus to labor market

[00:00:14] [SPEAKER_00]: amid surging mortgage applications.

[00:00:17] [SPEAKER_00]: An IDC report highlights MSP's role as 40% of U.S. S&Bs lack in-house IT, driving the

[00:00:24] [SPEAKER_00]: demand for managed services.

[00:00:26] [SPEAKER_00]: Cisco is going to lay off 6,000 employees in a restructuring focused on AI and security.

[00:00:32] [SPEAKER_00]: And Jamf and Microsoft deepen their collaboration.

[00:00:36] [SPEAKER_00]: Apple device management solutions are coming to Azure Marketplace.

[00:00:40] [SPEAKER_00]: This is the Business of Tech.

[00:00:44] [SPEAKER_00]: The latest Consumer Price Index report indicates that inflation is no longer a pressing issue,

[00:00:51] [SPEAKER_00]: with overall CPI rising 2.9 percent over the past year.

[00:00:55] [SPEAKER_00]: From Axios, this allows the Federal Reserve to focus on the weakening labor market and

[00:01:00] [SPEAKER_00]: potential interest rate cuts.

[00:01:02] [SPEAKER_00]: While grocery and used vehicle prices have decreased, housing costs continue to exert

[00:01:08] [SPEAKER_00]: upward pressure on inflation.

[00:01:10] [SPEAKER_00]: Additionally, mortgage applications have reached a 19-month high, driven by lower long-term

[00:01:16] [SPEAKER_00]: interest rates, although overall mortgage activity remains low compared to historic levels.

[00:01:21] [SPEAKER_00]: The American consumer showed surprising strength in July, with retail sales rising 1 percent,

[00:01:28] [SPEAKER_00]: indicating resilience against recession fears.

[00:01:31] [SPEAKER_00]: And a Gallup-Bentley University survey reveals that fewer Americans at 38 percent want companies

[00:01:37] [SPEAKER_00]: to take public stances on political issues, marking a 10-point decline since 2022, particularly

[00:01:44] [SPEAKER_00]: among previously supportive groups.

[00:01:47] [SPEAKER_00]: This shift may be due to fatigue, and companies risk losing consumers by endorsing political

[00:01:53] [SPEAKER_00]: candidates.

[00:01:54] [SPEAKER_00]: While LGBTQ+, Black, and Democratic individuals still favor corporate activism, businesses

[00:02:01] [SPEAKER_00]: are increasingly cautious, focusing on internal communications and prioritizing topics like

[00:02:07] [SPEAKER_00]: mental health, climate change, and diversity.

[00:02:10] [SPEAKER_00]: Why do we care?

[00:02:12] [SPEAKER_00]: Vibes are different from data, and it'll take time for consumers to feel better.

[00:02:17] [SPEAKER_00]: That said, if we're considering consumer sentiment, it should be more positive as

[00:02:22] [SPEAKER_00]: we move into the fall.

[00:02:23] [SPEAKER_00]: I included the political data because of its timeliness.

[00:02:26] [SPEAKER_00]: With an election in the U.S. looming, many businesses may be best served by staying out

[00:02:32] [SPEAKER_00]: of political commentary for the immediate future, leaning into the potentially good

[00:02:37] [SPEAKER_00]: news on the economy and away from potential political risks.

[00:02:40] [SPEAKER_00]: It's less than 90 days to the election anyway.

[00:02:46] [SPEAKER_00]: Today's episode is supported by Corview.

[00:02:49] [SPEAKER_00]: Your customers need your Microsoft 365 expertise, and Corview has the only M365 management

[00:02:55] [SPEAKER_00]: platform designed for MSPs.

[00:02:58] [SPEAKER_00]: Manage hundreds of tenants, automate manual tasks, and monitor compliance, all while

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[00:03:36] [SPEAKER_00]: IDC's research, sponsored by ConnectWise, underscores the role of managed service providers

[00:03:41] [SPEAKER_00]: in assisting small and medium-sized businesses with unified data and automation.

[00:03:46] [SPEAKER_00]: Key findings reveal that approximately 40 percent of U.S. SMBs lack full-time in-house

[00:03:52] [SPEAKER_00]: IT employees, and those that do typically have fewer than four.

[00:03:57] [SPEAKER_00]: UK small and mid-sized businesses are optimistic about the next 12 months, with many viewing

[00:04:02] [SPEAKER_00]: digital transformation as essential for growth.

[00:04:06] [SPEAKER_00]: Research shows that 18 percent have already invested in digital initiatives, while 30

[00:04:10] [SPEAKER_00]: percent consider it very important.

[00:04:12] [SPEAKER_00]: Despite challenges like inflation and rising costs, over a third feel confident in overcoming

[00:04:18] [SPEAKER_00]: obstacles and 89 percent expect growth in 2024.

[00:04:23] [SPEAKER_00]: The potential for significant revenue and job creation exists if SMBs digitize effectively.

[00:04:29] [SPEAKER_00]: Tech leaders anticipate increased budgets for IT in 2025, with 90 percent expecting

[00:04:35] [SPEAKER_00]: higher spending driven by AI and modernization efforts.

[00:04:40] [SPEAKER_00]: Forrester projects a 5.3 percent rise in tech spending for 2024, although many increases

[00:04:45] [SPEAKER_00]: will only match inflation.

[00:04:48] [SPEAKER_00]: And in Q2 2024, 14 percent of global PC shipments were AI-capable, totaling 8.8 million units.

[00:04:56] [SPEAKER_00]: Vendors like Apple, Lenovo, HP, and Dell are expanding their AI-capable offerings, with

[00:05:02] [SPEAKER_00]: significant growth expected in the second half of the year.

[00:05:05] [SPEAKER_00]: Canalys forecasts around 44 million AI-capable PCs to be shipped in 2024, and 103 million

[00:05:12] [SPEAKER_00]: next year, driven by increasing demand for advanced features and performance.

[00:05:17] [SPEAKER_00]: Apple Max accounted for 60 percent of that 8.8 million.

[00:05:23] [SPEAKER_00]: Why do we care?

[00:05:23] [SPEAKER_00]: I'm actually surprised the number is as low as 40 percent.

[00:05:27] [SPEAKER_00]: I would expect a lot more SMBs to not hire internal resources, considering how hard they

[00:05:32] [SPEAKER_00]: are to retain, keep engaged, and managed.

[00:05:34] [SPEAKER_00]: And as the market for AI-capable devices grows, so will the demand for supporting services

[00:05:40] [SPEAKER_00]: such as AI integration, security, and optimization.

[00:05:43] [SPEAKER_00]: Companies providing AI solutions and modernization services should prepare for increased demand.

[00:05:49] [SPEAKER_00]: However, they should be cautious of potential budget constraints due to economic conditions,

[00:05:53] [SPEAKER_00]: focusing on offering reliable pricing models and clear ROI justifications to secure those

[00:05:59] [SPEAKER_00]: contracts.

[00:06:00] [SPEAKER_00]: It always ties back to business outcomes.

[00:06:05] [SPEAKER_00]: Cisco is cutting 7 percent of its workforce, approximately 6,000 employees, as part of a

[00:06:11] [SPEAKER_00]: restructuring plan focusing on AI and security.

[00:06:14] [SPEAKER_00]: The company expects to incur up to $1 billion in pre-tax charges related to severance and

[00:06:20] [SPEAKER_00]: restructuring costs.

[00:06:22] [SPEAKER_00]: This move follows declining revenues, particularly in its core networking business, while security

[00:06:27] [SPEAKER_00]: product revenues have increased.

[00:06:30] [SPEAKER_00]: Cisco aims to pivot resources toward faster growth areas, including AI and cybersecurity,

[00:06:35] [SPEAKER_00]: amid a broader trend of layoffs in the tech industry.

[00:06:39] [SPEAKER_00]: Why do we care?

[00:06:41] [SPEAKER_00]: Well, this layoff is a strategy change.

[00:06:43] [SPEAKER_00]: It's important to note that Cisco's leadership is changing its product and services mix and

[00:06:47] [SPEAKER_00]: need the change to people at the organization to do so.

[00:06:51] [SPEAKER_00]: Not all layoffs are the same, and I wanted to highlight that one here.

[00:06:54] [SPEAKER_00]: I don't think we need to read too much into it.

[00:06:59] [SPEAKER_00]: Jamf has joined the Microsoft ISV Partner Program, signing a five-year agreement to

[00:07:04] [SPEAKER_00]: enhance collaboration through Microsoft Cloud and AI Solutions.

[00:07:08] [SPEAKER_00]: Jamf's offering will be hosted on Azure and available on the Azure Marketplace by late

[00:07:13] [SPEAKER_00]: 2024, providing a unified approach to Apple device management and cybersecurity for Microsoft-based

[00:07:19] [SPEAKER_00]: organizations.

[00:07:20] [SPEAKER_00]: This partnership builds on a seven-year history of collaboration, integrating Jamf's solutions

[00:07:25] [SPEAKER_00]: with Microsoft tools to improve endpoint management, identity security, and data analytics.

[00:07:32] [SPEAKER_00]: Why do we care?

[00:07:34] [SPEAKER_00]: How the worlds are coming together.

[00:07:36] [SPEAKER_00]: My main observation is how marketplaces do tend to impact the value offered, as noted

[00:07:41] [SPEAKER_00]: by the specific mention in the coverage.

[00:07:43] [SPEAKER_00]: For existing Microsoft customers, this integration offers a way to adopt Jamf's solutions without

[00:07:50] [SPEAKER_00]: leaving their familiar Azure environment.

[00:07:52] [SPEAKER_00]: With Microsoft's dominance in the enterprise market, it's easy to see how this is a strong

[00:07:57] [SPEAKER_00]: match.

[00:07:59] [SPEAKER_00]: Today's episode is supported by Huntress.

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[00:08:45] [SPEAKER_00]: Visit huntress.com slash MSP radio to find out more.

[00:08:52] [SPEAKER_00]: Thanks for listening.

[00:08:53] [SPEAKER_00]: It's National Potato Day.

[00:08:55] [SPEAKER_00]: Do we need this one?

[00:08:56] [SPEAKER_00]: Does anyone forget the potato?

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[00:09:05] [SPEAKER_00]: On our live show this week, I'm joined by Ryan Morris and Seth Robinson.

[00:09:09] [SPEAKER_00]: Should be a lively panel discussion 3pm Wednesday on YouTube and LinkedIn.

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[00:10:02] [SPEAKER_00]: Once again, thanks for listening to me.

[00:10:04] [SPEAKER_00]: I'll talk to you again on our next episode of the Business of Tech.