The May 18, 2015 Issue of Bloomberg Businessweek Magazine has an article about the struggle of big IT infrastructure companies like Cisco caused by the rise of cloud computing and more open technology design and standards.
The article says that: “Increasingly, smaller companies that want their own data centers will also be able to order gear more customized for their needs than that of the Cisco generation. Dozens of IT companies now build chips, motherboards, and servers from designs published by the Facebook led Open Compute Project, a four year old effort to lower data center costs…Open Compute Project head Frank Frankovsky says its most active project focuses on making cheaper network gear.”
Rock on open hardware! What are the impacts of these changes on the established IT infrastructure companies? Creative destruction!
The article continues: “This new openness reduces the influence and profitability of massive sales teams assembled by the big IT companies.”
It isn’t just open hardware designs that are overturning the apple cart in IT infrastructure. It is also software.
Lew Cirne, the CEO of cloud software company New Relic, offers this quote in the article: “Given that customers can switch cloud providers with a few clicks, the only reliable way to compete is to have the best product.”
What a horrifying thought! When vendor lock-in and monopolies fail, the only way to compete is to bring better value to your customers with a great product! (How I wish this would happen the the big 3 traditional survey equipment/software vendors, Trimble, Leica, and Topcon.)
There are big companies in the IT industry that recognize this trend and are trying to adapt to a more open, collaborative world. The article mentions Microsoft, which is producing versions of its office software for Android and iOs, and also Dell, which is working with outside makers of networking equipment instead of always pushing its own stuff.
Let the walled gardens crumble! Although this trend of openness is bad for big IT companies, its only good news for companies that consume IT infrastructure, for their customers, and for innovation in general. Lowering the cost of IT also makes it easier to start new businesses and non-profit organizations, which we need for a healthy and vibrant economy.