The power of the big IaaS players – Amazon, Google, Facebook, Azure (AGFA) – constitutes a shadow IT industry. It is a shadow because its operations are outside the transparency we take for granted with legacy IT vendors like IBM, HP, Cisco and Oracle.

AGFA announces new services, but the tech behind the services is usually secret. We can see some of the effects – the inexplicable investments in high capacity optical or the emergence of SMR drives– but the configurations and economics remain opaque.

To get a sense of AGFA’s importance in IT, StorageMojo compared the R&D spend of AGFA and the legacy vendors. The numbers are roughly from 2013, but have a little slop because of different fiscal year start dates. All numbers in billions.

Shadow IT table
AGFA R&D spend is almost 28% higher than the legacy firms.

Update: A commenter on Twitter questioned whether Microsoft’s 10 billion should be on the list. As of 2011 a Microsoft exec said that 90%of their R&D spending was for cloud. Given their continuing cloud push, Nadella’s elevation and the competitive fireworks among Google, Amazon and Microsoft, I’d expect today’s number to be in that ballpark. After all, how much can they spend updating Windows or Office? End update.

The StorageMojo take
Trickle-down economics doesn’t work but trickle down technology does. The AGFAs build something great for massive scale and then a few years later the engineers strike out on their own. Nutanix is one example.

In the bad old days – 5 years ago – the legacy vendors controlled enterprise architecture because they were the only game in town. No more.

Advanced architectures and technologies are being developed for in-house use and de-bugged in massive-scale 24/7 environments that are way more demanding than any enterprise. The legacy vendors can’t afford to compete with that, even if they weren’t being out spent.

The downside of course, is that AGFA doesn’t care about enterprise problems. Their technology has to be adapted to the enterprise – or the enterprise to their technology.

Get used to it. This won’t change any time soon.

Courteous comments welcome, of course. See parts 2 and III for more on the Shadow IT industry. Yeah, I like both Arabic and Roman numerals.