What about the data center investments of Yahoo, Google and Microsoft? Microsoft has commited to spend over $2.5B on capital and acquisitions – much of it to compete with Google. Yahoo will also likely spend about $1B just on computers and equipment. Google will spend over $1.5B this year year on plant and equipment – more than their past three years spending combined! Call it $4 billion+ in greenfield IT spend from just these three companies. In one year.
Big numbers. Maybe a million new servers. Hundreds of petabytes of storage.
Enormous economies of scale.
Finally Someone Asks The Obvious Question:
Ray Ozzie, Microsoft’s CTO, dropped the other shoe at a recent Microsoft conference when he asked listeners to consider
“How might IT organizations ultimately take advantage of these data center investments? Might they be used to augment your infrastructure to take advantage of our scale?” he asked. He also asked . . . how the infrastructure investments could help IT departments decrease the complexity and increase the agility of their own organizations.
Here’s another question Ray could have asked:
“Storage vendors – since you are such a big piece of IT spending – how will you respond to this threat to your business model?”
Remember, Microsoft, Google and Yahoo aren’t spending a nickel of that $5B on EMC, Hitachi, IBM or Sun storage (NetApp has Yahoo, but for how long?). You’ve already lost that business.
Now, What About the F1000 business?
Willful obliviousness will be in style this fall in Hopkinton, Santa Clara, and San Jose. At your next CIO confab, ask if, given the security issues of accessing and storing critical corporate data on third party systems, who will be moving apps off the big iron to the storage cloud in the sky. Nod sagely at their horrified reaction. Tell yourself and everyone else just how wonderful business will be.
There are several scenarios on how this may play out. But of this much I am certain. Security issues will either get solved or get managed. Business units, not CIOs, drive corporate IT spending. Infrastructure with huge cost advantages is fertile ground for new killer apps. Millions of smart people are working late into the night trying to do cool things. Billions in advertising dollars are moving to the web.
Money, technology, competition, innovation – this very yeasty mix will rise, and a big element will be their cost advantage over traditional IT. Right now some soon-to-be dropout or a couple of PhD candidates could be putting the finishing touches on the Next Big Thing, something that will also finish the storage business as we know it.
Vendors, if you have any strategic thinkers worthy of the name, they better get cracking.
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