Who Wins, Who Loses in the Cloud?

Arthur Cole

Enterprise IT is in the midst of a fundamental transformation that will permanently alter the way the knowledge work force, and those who support it, will live their daily lives.

For the most part, the changes will be positive — even if the transition itself produces more than a few hiccups. But it is also apparent that the changes wrought by virtualization and cloud computing will produce winners and losers in the IT space, and it is not unthinkable that some of the most well-known names in the industry could see their positions greatly diminished, if not eliminated altogether.

10gen’s Matt Asay offered up an interesting analysis along these lines on readwriteweb.com recently, noting that despite the 10-figure-plus development budgets at leading firms like IBM, SAP and Microsoft, not one of these powerhouses was responsible for the breakthrough technologies that have brought us to where we are today. Whether it’s the cloud, Big Data solutions or mobile technologies, all of the major advances seem to come from companies with relatively limited R&D budgets. Recall that before the cloud, Amazon was noted primarily as a seller of, what were those things called? Oh yeah. Books.

And if you follow the money, you’ll note that top analysts like Credit Suisse are bullish on small firms like Fusion-io, with the exception of Apple and EMC, which I’ll touch on in a moment. Stalwarts like IBM, HP, Dell, and even long-term specialty firms like NetApp, Emulex and QLogic, are rated neutral or underperform, largely because the company is not fully convinced that they can continue to maintain current revenue streams as enterprise budgets shift from hardware and infrastructure to software and services.

At the same time, it is widely expected that advances in mobile technology will continue to drive productivity in the enterprise. For traditional PC makers, this is bad news, but it has even graver implications for the enterprises that are eager to embrace BYOD. As Information Management’s Justin Kern noted after talking with experts at CES, mobile manufacturers are perfectly content to appeal directly to consumers for both hardware and services, so the days of the enterprise driving the technologies that workers eventually adapt in their homes is quickly coming to a close. In the future, the process will work in reverse as consumer-oriented technologies trickle up to the enterprise.

And then there’s VMware. As I noted above, EMC still has the respect of ratings firms like Credit Suisse. Part of this is undoubtedly due to the fact that data needs to be kept somewhere, and it doesn’t matter where EMC’s storage platforms wind up, the enterprise or the cloud, as long as the revenue winds up in its bank account. As CloudVelocity’s Greg Ness notes, with VMware under its belt, it has broad leverage in the next major change in enterprise infrastructure: software-defined networking. The company’s recent purchase of Nicira and its support for the OpenFlow protocol should provide cover even as enterprises push all the way into completely service-based data infrastructure.

It’s been said that the only thing constant is change. And unfortunately, change usually means abandoning a comfortable state of affairs for an unknown future.

Knowledge workers, particularly the young ones, will likely see their fortunes improve as data environments become more flexible. And if it plays its card right, IT could finally shed its reputation as the data gatekeeper and assume the new role of infrastructure enabler.



Add Comment      Leave a comment on this blog post
Jan 9, 2013 4:16 AM Sean Sean  says:
I think that cloud will get smaller this year. So, if 2012 was the year of Yammer, 2013 will be the year of Bitrix24 so to speak. So you are absolutely right about 'being bullish on small". Reply

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