And I Yawn Again at NTAP

There have been so many blogs written in just one day about the Network Appliance deal to buy the chunk of LSI called Engenio. Between Steve Duplessie at ESG, Greg Schultz of StorageIO, and Andrew Reichman of Forrester, I figured the deal was pretty much covered. This morning on Twitter I saw another half dozen links to blogs about it. With all this coverage you would think this was a game changer in the industry. It’s as if Google bought Microsoft.

I find myself bored by it.

While I like be a contrarian sometimes, that is not the case here. I don’t think it’s a bad deal. All the points have been made as to why it’s a good deal and I can’t dispute any of them. Controlling one’s technology is a good thing. Increasing gross margins on products is also a good thing. And you can’t complain about adding incremental revenue. All very good.

But not very great. Not very bold, not very exciting, not game changing, and certainly not transformative. It’s a boring move not a bold one.

Look, there are are only a few types of sustainable models for companies. They are:

• Emerging – what every startup is. They don’t know what they will be when they grow up but that’s okay. This is where our most exciting technology comes from. Eventually, however, they will have to grow up and become something else or getting eaten but someone else.
• Parts Supplier – you make parts for other people. Like headlights or NICs. Great work, especially if you spread it out amongst a lot of companies. The goal of a Xyratex. Qlogic, or an Atto for that matter is to be a supplier to as many people as possible and build something of an aftermarket for your components. Think Cummings (they make engines).
• R&D Shop – companies that produce only intellectual property. You see this in Pharma and semiconductors but most computer tech companies want to control their R&D. If a big company sees something it likes in another company, they just buy it.
• Outsourced Services – who doesn’t outsource call centers and manufacturing these days? Most of the services industry falls into this category. It’s the business process equivalent of a parts supplier.
• Specialty Supplier – the big companies can’t make everything. High performance or special purpose products can’t be produced in enough volume for the big companies to be interested. We used to have more of these in the hardware industry. SGI was one and sort of still is. Alienware certainly was but was bought. Software is rife with specialty companies. Software can get away with it because they have almost no recurring costs. It’s all R&D and no inventory. What is important is that these companies have something that is very important to a small number of people but enough people to sustain the company. They are unique but have demand.
• Conglomerate – a set of loosely related companies. Some are completely unrelated like GE (aircraft engines and broadcast media?). EMC looks more like a conglomerate than anything else. You can try and put a “Data Management” wrapper around them but RSA, EMC storage, Documentum, and VmWare are only loosely connected in the marketplace. Conglomerates manage companies or divisions like a portfolio. They diversify to guard against downturns. Storage is down? That’s okay because security is up and so on. Google is looking more like a conglomerate every day. And when the need growth they buy some other company in a different space than where they are now.
• Solution Supplier – soup to nuts in a particular market. HP can provide you everything from mobile devices to laptops to storage to servers. Oracle and IBM can also provide you with almost a whole solution. For these companies, it’s a matter of defining your boundaries. Is is business hardware to business software like Oracle? Maybe it’s all software from infrastructure to desktops to game systems like Microsoft. It’s about delivering a complete end-user solution. When you need more growth, you push out the boundaries.

Then there are the odd ducks. The folks who sell directly but in a narrow non-unique space. They are too big and too old to be Emerging but sell direct rather than to other companies in their market. Not diverse enough to be a conglomerate, they don’t supply enough of the whole system solution to be considered a real solution supplier. And they don’t do anything special enough to be a specialty supplier. This is where I see NTAP now. Basically a one trick pony in a whole herd of mustangs.

NTAP was the specialty supplier when NAS was new. Now, all the solution suppliers and some conglomerates have NAS in their bag of tricks. It’s just not that special anymore. They might have superior technology (don’t know really) but they clearly are at a disadvantage when someone wants to buy a whole system. If I’m putting in a new application, I can buy most of my parts from Oracle, IBM, or HP. No one has everything (well, maybe IBM does) but their services divisions can help me to get whatever I need. Heck, even Dell is better positioned for the IT business.                             

For me to buy from NTAP, I have to only want storage. Just storage. Not servers, not infrastructure software, not desktops, and not mobile devices. If all I need is storage then they have to compete against the conglomerates and all the storage products that the conglomerates and systems suppliers have too. That’s not to say that NTAP is doomed. I believe all those other smart people that say they are a good company and this deal will help them. They can compete effectively in their niche. But their niche is not special enough anymore to drive people to them and them alone. It’s always a bake off for NTAP. They are no longer a specialty supplier but it’s not clear what they are anymore. What I don’t see with this deal is a growth plan. Incremental revenue is not about moving forward. It’s running in place. There is nothing in this deal that will really drive meaningful revenue growth or make them an HP or even an EMC.

LSI was smart here. They know where they are in the food chain. They supply parts. What they do is the computer tech equivalent of making headlights. A good solid business but not one where Engenio fit. They got money for it and can focus on making more of the type of parts they make best. Good move LSI.

What is unclear is what NTAP wants to become. If they stay where they are things will only get harder. If they keep patching the cracks with spackle the house won’t get any bigger or better. Maybe they should buy Brocade or merge with/get bought by Cisco. Doubling down in storage isn’t going to do the trick. To get meaningful growth they will need to do something a bit more risky and bold.

Shaking the Smartphone OS Cocktail

The difference between a mélange and a mess is balance. A mélange mixes together disparate elements into a cohesive combination by carefully balancing each part in relation to the other parts. A mess, by contrast, has no balance. It’s a jumble of confusing elements that fight against each other. It’s why one bartender can make the perfect cocktail and another a horrible brew with the same ingredients.

The smartphone OS market right now is a mess not a mélange. Rather than a handful of operating systems that compliment each other we have too many that do the same thing and fight with each other. While this will eventually shake out, at the moment it is a confusing mess for the consumer.

I’m about to step up to a smartphone. It’s been a long time coming. Truthfully, I wasn’t sure what value these devices had. They had neither the software or power that I crave in a computer nor, in most cases, the sound quality I want in a phone. Both of those situations have changed. The devices and apps have become more powerful and hence, more useful. The sound quality has also increased dramatically. This is a great time to buy these devices too. Prices are dropping and data coverage expanding.

It’s the operating systems that are holding me back. There are too many of them to choose from. Smartphones are not like old school cell phones. In my old mobile phones the operating system really didn’t matter. The carrier and phone did but not the OS. Whether you bought a phone from Nokia, LG, Samsung, or Motorola, the features of the phone and phone company (flip or stick? service in the desert?) decide your experience.

No longer. Now, like a computer, you have to decide on an OS and boy are there a lot of them. Ticking off the major ones in my head I came up with Apple iOS, Android, WebOS, Windows 7 Mobile, and RIM’s BlackBerry 6 OS. That’s five major smartphone operating systems I can come up with using no research. All with incompatible apps, offered on different devices that have different features, on different carriers, and available in different countries. If I was starting from scratch, I would need a matrix of carriers (probably only the major ones like AT&T, Sprint, Verizon, and Nextel), device manufacturers (the ones I’ve mentioned plus HTC and RIM) and five operating systems. All before I got to the features of the phone. At a minimum that’s a 4X6X5. For you math geeks that means as many as 120 combinations. Even if I eliminate some combinations as non-existent, such as Blackberry OS with anything but a RIM device, it’s still a big number before heading out to look at the phones that support my X by Y by Z combination.

Complicating matters is that smartphones are only one slice of the mobile pie. I have to take into account that I might want a pad device someday. That makes the OS choice even more important since I wouldn’t want more than one mobile OS with incompatible apps. It’s bad enough that my laptop and phone will have different applications and operating systems. No need to make it three different operating systems.

It wouldn’t be so bad if there were clear distinctions between any of these operating systems and their apps. Perhaps from the point of view of the folks who design them and the analysts who cover the mobile market there is. To consumers, however, it’s all the same. You have gestures, even if they are different. You have apps, even if they are different. You have buttons and some type of virtual keyboard, even if they are different. At best, ones choice is determined by whimsical personal preferences.

The thing is, the OS matters. Just like any other computer, the smartphone OS determines what applications are available for your platform. Which operating systems a software developer writes for depends less on technical details and much more on market share. My choices will be limited by which OS app developers think will provide them the most exposure in the market. Most software companies don’t want to develop for an operating system that won’t have much market share or be around very long.

I’ve been in this industry long enough to know this won’t continue. Sooner or later there will be a shakeout and half of these operating systems will disappear. Some won’t that should but will be marginalized like Windows CE. Others will become nothing more than user interfaces in much the same way Apple’s OS turned into UNIX under the covers but has kept its Apple GUI. Still others will disappear altogether.

The problem is guessing which ones will live and which will die. No one wants to buy a device that will have an obsolete and discontinued operating system. It’s like buying a Palm device anywhere between 2000 and 2005. If you knew then what we know now you wouldn’t have. I have a desk draw full of obsolete devices like my old Palm devices.  They are, for all practical purposes, museum pieces.

I generally don’t like to make predictions (since they are frequently wrong) but here’s what I think will happen:

• Apple iOS – keeps going. Apple simply doesn’t care about the wider market. That and the cognoscenti love their Apple crack.
• Android – generous licensing will insure that it continues to evolve. It lives!
• Windows 7 Mobile – another failed attempt. Sorry Microsoft. I actually like Vista and Windows 7 on the desktop. The mobile OS is too little too late. It dies. Microsoft money insures it dies slowly and painfully. Please Mt. Ballmer, do a deal with Google and move to Android while you still can.
• WebOS – really? I get that HP paid good money for Palm but with all the other choices, why would I want this. The tablet market? And this from a company who’s last homegrown OS was HP/UX. It dies and HP switches to Android merging whatever is good about WebOS into it.
• Blackberry OS – this is a tough one. RIM has an enormous and fanatical installed base but it’s slipping. They had the first viable smartphone-like device which helped get them established. At the time you had to rely on their closed system for email. Now, that’s a liability. I’ll bet that they quietly move to something else but with Blackberry extensions so the old guard can feel happy. My guess is that it will be Android too.

Given where the market is going, the basic mobile phone probably has only a few more generations before they are all smartphones. There will be basic versions for the cheap, the Luddite, and the burner phone market. Those will still be smartphones, just lobotomized ones.

In the meantime, there are too many choices and that will hurt the market. Consumers like simplicity. Until recently, mobile phones were fairly simple devices with a small number of functions. As long as the major bases were covered (make and receive calls, SMS, a couple of toys like tip calculators) you were fine. Now they are computing endpoints with all the same problems as a laptop. Too many operating systems makes it overly complicated. It can’t continue like this.

For the smartphone OS folks who I’ve just insulted remember this: This was the same situation in the personal computer/workstation market in 1990. You had DOS, Apple, dozens of UNIX flavors, CP/M in all of it’s variants, as well as proprietary workstation operating systems. Remember IRIS? Ask your kids (huh? what’s that?) and you will feel old. I loved developing for Apollo’s Domain OS but where is it now? Next to the VAX in the Smithsonian. The market demanded simplicity, leaving Microsoft with the lion’s share. It didn’t matter that DOS was inferior to UNIX or Domain OS. Microsoft still ate their lunch. That UNIX, Apple, and a few others still exist is no solace. They are niche players now, not majors.  Windows and Linux make up the majority of the market by fulfilling different needs. They compliment each other.

Since I have to bet, I’m betting on Android. I’m locked into Verizon with no burning need to change which makes the decision easier. Choosing Android eliminates Apple and RIM devices too, further simplifying things. I almost don’t care what the phone is now. I’ll probably decide on price.

An Apple a Day

All the insane attention that Apple gets turns me off. This is especially true of Steve Jobs. No other technology executive gets the type of hype as Jobs, not even Larry Ellison of Oracle. Don’t get me wrong - I don’t hate Apple. I just feel that they are a company not a religion.

That said, the frenzy of angst that emanates from the business and technology press over Steve Jobs’ illness feels a bit hysterical to me. Mr. Jobs is a visionary and a masterful marketeer. He is also just one person in a very large company. All the Cassandras that are predicting the end of life as we know it, simply because Steve is in poor health, don’t understand Apple. Apple is not Jobs. It is a company which, by definition, is a collection of people. A company that just announced outstanding results. A company with depth in their bench.

Apple is successful for a lot of reasons, not just because of it’s present CEO. It did fine without him for awhile when he was sick a couple of times before. Instead, Apple excels at designing, packaging, and branding technology that mostly exists already. Touch screens, music players, smartphones, and graphics workstations all existed before Apple came out with their version. The difference was that their version has so much panache that it could be positioned as a luxury item and not simply gear. None of that will change if Steve Jobs leaves, even if it’s permanent.

The Cult of Jobs does help the company of course. It adds to an already fanatical brand loyalty that is the envy of every company on the planet. But it’s only the cherry on top of the sundae, not the ice cream. The Culture of Apple is much stronger.

I admit that I hate technology driven by little more than decent design and awesome marketing. It seems shallow to me. But then again, I’m a computer geek. I view technology differently, in an almost minimalist and functional way. For most people, Apple products are much more exciting, much more fun, much more memorable than the average geek gadget. This is the success of Apple.

No matter what happens, the Culture of Apple not the Cult of Jobs will be the driving force in the company’s success. Personally, if I were Steve Jobs, I would retire. I would harness my considerable talent and hoard of money to get well again. I’d spend time with my family and enjoy life. Steve, you’ve earned it. You have already passed on your business DNA to others at Apple. It will do fine.

So consider this a get well card to Steve Jobs. It doesn’t matter if he ever comes back to Apple. Getting well is what matters.

Different Strokes for Different Folks

Apps are changing the way we use computing devices in a number of ways. One significant effect of Apps is a return to the “right tool for the job” mentality in computing. For the past 20 years or so, computing has been based on a single platform for all. There were big versions (servers), little versions (notebooks), and an in-between size (developer workstations). Still,  it basically was all same computer. For a brief while it looked like a specialty application platform might emerge (namely the PDA) but, alas, it stayed a relatively small market and merged into our phones.

The Cius, iPad, smartphones, and all things Android point to a different future for consumer and business computing. As these devices gain traction, the market will split into platforms that match the software they host. Tablets, smartphones, or hybrid devices like the Air will be the software platform of choice for mobile sales and marketing professionals. These users do not need, in fact have never needed, the full power of a PC. Most of their work consists of communications such as voice, email, video conferencing, and document sharing. Word processing needs are minimal. Most sales people do not right books on the road. They do need access to corporate applications such as CRM and ERP but only in a limited fashion. A bigger format device such as a tablet will give them better access to corporate applications and documents. A smartphone/pad device hybrid like Cius will provide what they need to get the job done.

Consumers will also like the tablet/smartphone device – one can argue they already do. Most home applications are pretty simple and, again, it’s about communication. Sharing pictures with Grandma, contacting the kids via SMS, and keeping up with Facebook. These are the typical uses for computer at home. That and entertainment like music, books, and movies. Except for hard core gamers people don’t need a full blown PC at home.

Where will the PC continue to dominate? Business for one. Web-enabled applications, even internally hosted ones, delivered via a PC device will be the most popular. This will do well for people in accounting, human resources, legal, and administration. It is likely to be a thin client but still more than a tablet running Apps. Developers for sure will need powerful workstations as will most technical folks. And we will only get the powerful Macs away from the graphic artists and video editing people by prying it from their cold dead hands.

The PC will not be going away anytime soon. It will have to share it’s space with a bunch of new devices. These devices will not just be smaller versions of the PC, like netbooks. They will be entirely new devices running different operating systems, using Apps instead of full applications and have very different purposes. The Internet and networking in general makes it possible to have a all sorts of devices work together. This, in turn, allows for devices tailors for different needs.

The era of the one-size-fits-all hardware and software is coming to a close.

Computer Industry Goes Zoom Zoom

You would think that last week’s announcement that Dell was acquiring 3Par for US$1.15B was news enough. Ha! Intel then raised eyebrows by announcing the acquisition of McAfee for US$7.6B. Now, comes Monday morning and HP raises the stakes against Dell by sending in their own and bigger bid for 3Par. It’s nice to be loved. Somewhere in all this, Hitachi Data Systems announced that they had acquired the Intellectual Property and core engineering team of Parascale, a cloud software company. Too bad for them. What should have been a sweet announcement was lost in all the noise.

So, what the heck is going on here? On the one hand, this is actually not that surprising. Computer tech companies tend to throw off lots of cash so they have a lot sitting around for acquisitions. Most of these big companies can thus afford to buy expertise or market share. This is especially true when you are coming out from the bottom of the market. Best to build up the arsenal before the economy really picks up.

This is an industry with a tradition of letting smaller companies trail blaze new technology and markets then get their payoff from a big company. In the long run this is cheaper and less risky for big companies but profitable for small ones. More unusual are the Googles and Microsofts who start in a garage and end up a behemoth. That’s the myth of computer tech but not the reality. What is not a myth is that deal making gives folks like me something to talk about. So here’s the talking about part.

Intel-McAfee Makes for Secure Communications

The Intel-McAfee deal has a lot of pundits scratching their heads. It’s a lot of money for a company with a big consumer business. McAfee’s revenue would barely be a rounding error for Intel. In 2009 Intel’s revenue was 18.5 times McAfee’s (~US$35B vs. US$1.9B). $1.9B is nothing to sneeze at but it will be a long time before a McAfee revenue stream makes up for the money Intel paid for it. What McAfee has going for it is lots of core security technology. More importantly, it’s spread across all aspects of the digital world – web, mobile, desktop, and server. Combined with Intel hardware and chips and you have a much higher revenue generating business than McAfee alone. It’s like having your cereal with fruit and milk. It’s part of a complete breakfast. It also well positions Intel for the long term. This is an example of the Gestalt principle – the whole is way better than the sum of the parts.  Besides, people said similar things about EMC’s RSA acquisition and that has worked out well for them, right?

3Par Bid Up by HP

I wasn’t that thrilled about Dell’s acquisition of 3Par, except insofar as it worked well for the 3Par folks (nice folks). I’m both more and less thrilled about the HP bid along the same lines. It’s better for 3Par financially, so I’m more thrilled. It’s makes less sense for HP though. Unlike Dell they have a coherent storage story, reputation and brand going back decades, as well as an extensive product line. Do they need 3Par? At least with Dell, 3Par would be a prominent part of the line up. They might have even kept their name, like Equalogic did. With HP, they will be absorbed. It’s hard to see what this deal adds to the HP product mix that they can’t get or build more cheaply. I doubt they need 3Par’s customer base really. Perhaps it’s just a way to keep Dell from becoming a serious competitor in storage. Perhaps. Generally, I don’t like this for HP but do for 3Par investors. It will be interesting to see how high this one gets bid up. There could be crazy amounts of money tossed around here.

HDS Goes Parascaling Up In The Clouds

The cloud is about software. It sells hardware but doesn’t exist without software.  Parascale provides software that makes storage and servers into clouds. I don’t know enough about Parascale to say if it worked or was particularly good software. Assuming it worked just fine, then this is the kind of technology play that I like. It adds immediate value, helps move hardware, has broad, future potential in an emerging market, and is a deal that is easy to do. It’s kind of conservative but conservative often pays the bills.

Bye Bye to OpenSolaris

There were also a bunch of other, smaller announcements too. One that is significant was that Oracle will be dropping support for the OpenSolaris project. This is sad since there was a vibrant community around OpenSolaris. It was not, however, unexpected. Oracle has nothing to gain by supporting an open Unix product. In the end, this will be good for the Open Source community. There are already too many Linux and Unix projects and variants diluting the talent pool. Do we really need OpenSolaris and FreeBSD and OpenBSD and NetBSD and Darwin and so on and so on. Not really. So, while I understand how this bothers some people and generates a lot of “what else will Oracle kill?” questions (Don’t worry it won’t be Java or MySql. They generate revenue) it’s really for the better. Time to move on.

I must admit, all this activity is exciting. It’s rare that this industry gets a week like this. Deals are usually more evenly spaced out. It’s like NASCAR for computer geeks.

HP and Cisco Square Off

I love a good dust up in the computer industry. The latest WWF style bout comes to us courtesy of HP and Cisco. In one corner of the ring is Cisco who won't be renewing a system integrator contract with HP. In the other corner is HP who plans to bail from the Cisco Certified Channel and Global Service Alliance Partner programs.

Two giants of the industry beating on each other is so much better than David and Goliath match ups. Those make us feel sorry for the little guy and angry at the mean old big company beating down on the poor entrepreneur who's just trying to make the world a better place.

These bare knuckle brawls are both good and bad for the industry. First, it brings to light the farcical nature of big company alliances. Let's face it, they are marriages of convenience. These folks really want to be on top and there can only be one top dog. It's good that they occasionally remind us not to get too vested in them.

Competition is also good. It drives down prices and ratchets up innovation. When things get too cozy, the industry tends to stagnate. We need another round of wow! inducing products at woo hoo! low prices about now.

It is bad though for those caught in the wake of these two battleships as they try to sink each other. In this case, the indirect channel partners of both companies could become collateral damage. It may well become more difficult to integrate products from both companies and channel partner customers are not likely to want to pay extra for that added effort. It's not their problem that HP and Cisco went from lovers to bitter rivals practically overnight. There will be costs that someone has to absorb and the channel looks like the dry sponge here. Hopefully a hardware price war will ensue that give a little more margin to channel service providers.

This move is just one act in an ongoing drama in the computer industry. Over the past ten years we have seen the growth of the full service, full product line computer company. There are now only half a dozen (if that) companies that sell solutions to customers and they want to sell whole solutions. Servers, networking, storage, software, the whole system plus services. This is what is behind the Cisco Unified Computing initiative and HP's acquisition strategy. Everyone is trying to be IBM. Even software companies are getting into the act. Just look at Oracle and their purchase of Sun and other investments in hardware. It will get harder and harder for independent hardware companies to continue to exist unless they are making OEM equipment for one of the big, full service companies. A few will survive to provide niche products whose revenue stream is too small for the big guns to care about. A few others will get by on overservicing specialty markets. It's like grocery shopping. Most everyone buys from a big supermarket. Sure, you occasionally go out to the specialty market or “all local foods” shop but that's not for everyday purchases.

Next up: Exclusive channel partner programs. Want to sell our stuff? Then you can't sell anyone else's stuff. It's been done in the past and will likely happen again.

Of Paperweights and Doorstops

I have quite the collection of paperweights and doorstops. They didn't start out that way of course. They all began life as usable electronics like cell phones and networking gear. All were the victims of upgrades to newer gear such as Wireless-B to Wireless-G. My cell phone upgrades every two years per the plan, leaving a graveyard of old phones. Some devices were on their way to the trash and I couldn't help but save them from becoming toxic waste. Don't kid yourself. Even the most innocuous electronic devices have heavy metals, plastics, and other materials that will continue to pollute for centuries to come.

What annoys me is not the proliferation of electronic gear but the fact that they can't easily be reused or upgraded. Why? Because they are designed to be tossed away, use closed architectures or, and this really galls me, are purposefully locked.

For example, I decided to upgrade my cell phone this year. My old one worked fine but was lousy for texting. So I took the old one to a Verizon store and asked if they could convert it to a Tracfone. Tracfone is a pay-as-you-go cellular service provider which is great for the kids. The no-contract, phone card type system keeps teenagers from running up massive phone bills. I was told, quite emphatically, “No!” What's so ironic about this is that Verizon owns Tracfone. I was offering to spend more money with them but they didn't want it. So the phone sits in my desk draw waiting for its day of liberation.

I could attempt to jailbreak it. Jailbreaking consists of hacking the hardware and firmware to remove whatever is tying the device to the service provider. Why should I have to do that though? Besides the fact that I might brick the device, it's also likely that Tracfone/Verizon still won't let me use it.

There are alternatives. I could donate the phones to various groups that re-purpose them for soldiers in Iraq or victims of domestic violence. Worthy use but I wanted to get more out these myself. And I'm pretty sure they don't want an old DSL Modem.

The sheer waste is incredible. Millions of these devices get tossed in landfills or, hopefully, sent to a recycler. All could be given a new lease on life if only they could be opened up, added to, and tinkered with. I'm not suggesting that vendors open up the phones when the are active. That would be nice but unnecessary. It's great that Cisco opened up their Linksys Routers. Lots of hackers enjoy extending their WRT54 devices, adding new features and sometime using them for entirely different purposes. I'm not that ambitious. I only want my devices to have a longer lifespan.

One of the great things about computers is that they can be used nearly forever. I know a lot of folks that still use DOS era computers for useful purposes. Some are hobbyists and others use them for a single purpose like voice mail. I still use a nine year old 40GB disk. I stuck it in a USB drive case and use it for email backup. Why can't we do that with all of these devices? Okay, it's big company greed but it's stupid greed. They could sell me a cheap retrofit kit and make a couple of bucks that they wouldn't have.

Reuse is the ultimate recycle. Let my devices go!

Rollups In Our Lunchbox

There's been a lot of chatter about the acquisition of Perot Systems by Dell this week. It's not surprising that in a slow news week so much attention is being given to a deal that is only one of many that have happened in the past few months. Most of the commentary is the typical stuff such as “This will (or will not) help Dell compete against IBM and HP.” or “Dell service partners will (or will not) be mad as hell.”

I'm more interested in what the Perot acquisition says about the state of the computer industry. Since 2000 the computer industry has been consolidating, coalescing into a handful of companies that directly deliver solutions to customers. The rest of the industry exists to serve these mega companies. It's like the car industry. There are only a half dozen companies that sell cars and services to the vast majority of consumers. The rest supply parts such as headlights and seats.

You can easily tick off the number of computer companies that sell the majority of equipment to both business and consumers. Dell, HP, IBM, Cisco, and EMC are delivering complete solution sets in all segments including enterprise computing of all types, consulting services, and consumer products (through brands like Linksys and Iomega). Microsoft is a special case. It is a major, first tier company that sells mostly software (mice and Xbox systems aside). I wonder how long it will be before Ballmer buys a large or specialty hardware company like Acer. I wonder about the same for EMC. How long before they buy a specialty server company or small networking company.

There are a few companies overseas that are part of the mix as well such as Hitachi in Japan, the aforementioned Acer in Taiwan, Lenovo and Huawei in China and Groupe Bull in Europe but their sales, product depth, and international reach pale in comparison to the biggest five or six American companies. Don't kid yourself though. Any of those could be the next Toyota. Or a great acquisition. These folks compare to Fiat. Not GM or Ford but certainly an important company.

Apple is important but still small in comparison. They are like Porsche - a well-known, high-end luxury brand that people pay more for because they want something they perceive of as special. They are technology trailblazers with a great sense of style. More taste maker than mainstream sales giant.

Unlike the auto industry, there is still a healthy second tier that is trying to move up. NetApp comes to mind. Brocade and Juniper too. These companies are centered around being best of breed in one area of the industry such as data storage or optical network equipment. This segment keeps getting smaller though. How much longer can Brocade or Quantum remain independent? Sooner or later the combination of size and narrow focus will make competing against the top tier impossible. They won't be able to offer anything unique enough or broad enough. They will either sell out in some face saving “merger” or go the way of SGI, becoming mere shadows of themselves. Perot Systems is a great example of a second tier player (IBM GS and HP Consulting they are not) being absorbed by the first tier. Second tier players provide entry into a whole new segment for a big company.

There is also a whole host of small companies that supply specialty equipment or develop new technologies for big companies. These small companies are technology Spackle. They fill holes in a big company's product line. A few will grow independently but most will be gobbled up by bigger companies. Some will fail altogether. A great many will stay small, too small to acquire. They will continue to survive by supplying critical parts to the big boys. There are lots of small companies that make specialty chip designs or cores, RAID controllers, and software libraries.

This year has been a banner year for rolling up small companies. With credit tight and VC money still not flowing free a great many small companies are realizing that, despite current success, they won't find the money to grow. Really, how many computer technology IPOs are going to happen over the next two years? For many small companies it's grow or die... or sell out. For the big companies this is a boon if they have cash on hand. They can buy out the smaller players for much less money then they can in good times.

So, what's next. I think the majors will continue to buy companies. Dlink is a good acquisition target. They have a great consumer and SOHO line that would help out HP or Dell. The macro trend will continue for awhile. Tight credit and investor wariness will make life difficult on the companies exiting the startup phase. The biggest companies will take this opportunity to reinforce or extend their product lines, perhaps even get into new segments.

So, if you aren't selling cars to millions of people, you are probably selling headlights to the guys who make the cars. Don't feel bad. There's opportunity in that.

Tweeted by Well Meaning EMC People

The problem with expressing oneself in 140 characters or less is that it doesn't provide an opportunity for clarity. This is why Twitter can be frustrating at times. Folks can't quite get your message. Not because there is something wrong with them but because of the limitations of the media. You have to learn how to operate within the restrictions of the form and still get across what you mean. It's like Haiku. You have to learn how to do it and I'm still learning.

So it was when I commented on the announcements for EMC's newest Symmetrix V-Max. I received a number of replies to my Tweets that defended the new architecture. Looking back, I'm sure that I was not clear nor that we could have a meaningful dialog about the technical aspects of V-Max. It was my bad for trying to make this type of point in the Twitter medium.

See, my problem wasn't with V-Max at all but the way it was announced. I complained about the video of the EMC executives, I complained about the web site description, I complained about the datasheet, and I complained about the blogs that pretty much reiterated what was on the other three. Here's why.

They said almost nothing of value.

I get that the V-Max architecture is somehow great for virtual server environments. The name alone told me that (good name by the way – huzzah to product management). So what? Lots of folks claim that. How does it do that? Even if you could tell me how (which is what most of the EMCers want to do), it still doesn't tell me why I should care. I'm left to ponder the Why.

That is, in nutshell, the core problem. All products and marketing have to pass the “Who Cares?” test. What serious problem do I have that this solves? What is so compelling about this product that I need to run out and buy it? Given my ever shrinking budget and staff, why does this doo hickey deserve a precious slice of my time and money? I don't get that from the EMC marketing.

The other thing marketing has to do is grab my attention so you want to listen to the “Who cares” message. This is not a gentle tap on the shoulder but a grabbing by the ears and shaking kind of thing. It doesn't have to be cute or loud or include music by nearly dead old rock stars. It has to be compelling. Even if you want to turn away, somehow you can't. Like an accident on the highway.

The product marketing for the launch of V-Max fails in this capacity. It is the same old formula. Have the executives get up there and make grand but vague statements followed up by bland and vague marketing literature. This doesn't even work for Steve Jobs anymore and he is as close to a rock star as this industry has. The EMC video, for example, almost looks like a parody of a computer commercial. The white background with the executive talking head is too much like a Mac vs. PC commercial but without the Mac. Actually, if they had made a parody, like the Microsoft parody of the Volkswagen commercial some time back, it would have been much more effective.

Check out the data sheet. It is a nine page white paper full of more hyperbole than this blog. Other than the claim to be able to scale to petabytes (an old claim that everyone makes) and that it supports a variety of disk types (like everyone), it's hard to pick out anything concrete from the first few pages.

I am sure that none of this matters to the EMC faithful. Current customers will bypass all this and get the message direct from their sales rep. EMC sales reps do a great job of connecting technology and features to real world problems. Potential customers on the other hand will see little here that makes them pick up the phone and call EMC. They will say to themselves “So what?” not “Holy storage problems Batman, we need one of those for the Batcave computer!”

So, before all the technical folks tweet me to death, it's not about the technology, it's about the marketing. It's tired. I know you don't want to hear that, especially when your best customers are going out of business, but you need to hear it. You can choose to chalk it up to one cranky, uninformed, blogger. On the other hand, you can see it as a wake up call to find better ways to market your products in tough times. Hopefully to find new customers to replace the ones that have evaporated in the recession.

Start with “The new V-Max will allow you to cut costs and operate with reduced staff by....” You can finish off that line. Then I will care.

Fatal Attraction from Cisco

Finally, Cisco announced what had been about the worst kept secret in the tech industry – that they would be making servers. They put a wrapper around it that they called the Unified Computing System which packages together everything you want in your data center and uses virtualization to make it “simple” (their word not mine). The name is not very imaginative (how many Unified somethings do we have any way) but at least it describes their ambition.

Thirty seconds after the announcement, both the Cisco haters and Cisco apologists launched their offensives into the skies of the blogsphere and the beaches of the social networks. Cisco's own press release sounded down right militaristic claiming “Cisco Unleashes the Power of Virtualization with Industry's First Unified Computing System”. You can still smell the burning wiring from the initial volleys.

The issue at stake is whether this is just a thinly veiled blade server launch (big snore everyone) or a radical new way to approach computing. As is always the case, the truth is somewhere in between. Still, I'm leaning to the YABS (yet another blade server) side of the argument. There is little that Cisco is offering that others have not offered before. By others I mean every major IT equipment company. We used to call it end-to-end solutions but I guess everyone will say Unified something or other from now on. I'm waiting for the Unified Unity of the Universe of Computing before I build my next data center. I want it to do everything I have yet to dream of including wash my car.

I'm not against Cisco by the way. I like their network equipment, a lot of nice people work there, and they help fund my son's Cisco networking class in high school. Okay the last one is probably a bit self serving on their part. I have no doubt they are helping to create the next generation of Cisco apologist zombies but the kid likes it so who am to complain.

What I am willing to rail against is monoculture. Buying everything from one company opens you up to a world of pain. Monoculture is like a jealous lover. It demand undying loyalty and only gives to you what it wants you to have when it thinks you deserve it. Given enough time, monoculture turns into Fatal Attraction.

It starts innocently enough. “ Baby, don't you want only one place to go to for support? I know you do.” And “I can give you everything you want and it will all work together. You don't need those other systems.” And of course “ Honey, I can make it so easy for you, so easy.” Then, it turns ugly. Want that new feature that the other companies already have? Sorry. You'll get it when your lover wants you to have it. Found a rather disturbing flaw? It's might be everywhere. Thinking of leaving? Well don't. With it's claws in you this deep, the pain won't be worth it. Instead, you will continue to take the abuse until, one day, your monoculture system company decides it will leave you. They don't call it End of Life for nothing.

I won't beat on Cisco for making this move. It's kind of gutsy in a recession. I won't embrace it either. Buying a unified anything has enormous risks. Buying a unified data center is asking for trouble.

If Cisco wants to slug it out in the server wars against its own partners, that's their business. Don't know if it's smart but I don't care. They have money to throw at initiatives like this and the storage switch play worked. Just don't expect me to invite it to my house where it can kill my pets.