What’s next for the shadow IT industry? It should be obvious: after blowing up the storage and server business models, what’s left?
Amazon has been working on their own networking software and hardware for several years. While networks aren’t a large part of their cost structure – servers are – it was rapidly growing because network gear wasn’t following Moore’s Law.
AWS can’t predict customer workloads – a low-data web server might be replaced by a data warehouse – so they have to provision for the maximum workload. As low-data apps might need 1% of the bandwidth of high-data apps, that’s an expensive proposition.
They were forced to address the problem.
No doubt Google, Facebook and Azure are seeing the same issue. Then the question is: what is the likely impact on the network market?
The StorageMojo take
The data center network vendors are caught in a classic Innovator’s Dilemma trap. Cutting their prices to meet web-scale competition wouldn’t win them much business but would cost them lots of revenue and margin.
Software-defined networking is obviously driven by web-scale competition and technology. The incumbents want SDN to succeed – to avoid a worse outcome – but only on their terms.
That’s the same problem storage incumbents have with scale-out clusters: embrace, but not too tightly; promote, but not too aggressively.
But the cost differential between on-premise proprietary kit and cloud is too big to ignore – and it’s growing. Worse, the differential will continue to grow, while the capabilities improve.
Historically few companies have survived a shift from 60-70% gross margins to 30%. There are just so many practices that lower margins can’t support baked into company operations.
One thing is certain: datecenter network bandwidth is a commodity and needs to be priced like one. The opportunity is in the upper layers of the stack.
Courteous comments welcome, of course.