Is there a more exciting industry to be a part of than information technology? Name another industry that has to adapt to so many paradigm shifts as frequently as IT has over the past 50 years. And the most noticeable transformation is just beginning.
During my gruelling tenure as an engineering student we often looked at the holistic state of the chemical process industry. An industry largely dominated by multinational monoliths built on the back of the industrial and petroleum revolutions of the late nineteenth and early twentieth centuries, the chemical process industry began to exhibit rapid diversification in response to demand for more specialised materials, take the Teflon on our frying pans as an example.
As the desire for specialty chemicals burgeoned more opportunities arose for fresh entrants into the chemical process industry. By concentrating on a niche material, or process, companies had less of a barrier to entry into the industry (albeit still relatively high compared with other industries) and an alternative to relying on the astronomical investments required to go head-to-head with a multi-billion incumbent. This phenomenon has been most apparent within the engineering sector since the eighties.
Specialty materials producers are playing their part in the paradigm shift away from what has traditionally been provided by largely single-focused, multinational incumbents to a more distributed and intense requirement for alternative or novel materials. Ethanol as an alternative to octane and photovoltaic cells as an alternative to coal are two examples.
My point here is that as technology advances and market requirements change, new entrants bring with them alternatives that fundamentally change the dynamics of the industry. No longer must one purchase batteries from a multinational incumbent for their portable radio when solar, or even wind-up, powered alternatives are available thanks to the work of specialty materials producers and engineering efforts.
The same diversification phenomenon happened in the automobile industry and is being played out in the information technology sector right before our eyes.
Consider the x86 server space. Over the past 20-odd years PCs built with commodity AMD and Intel processors have established a market for entry-level servers. Although quite high-end x86-based systems are available today, the x86 box now almost exclusively owns the â€œour first serverâ€ market. And the box droppers that carved out this market â€“ Compaq, Dell, HP, and IBM â€“ fought largely amongst themselves for the largest slice of the rapidly-growing x86 server pie.
As a result, weâ€™ve heard a lot of noise about the dramatic cost reductions experienced by customers kicking out proprietary Unix machines for cheaper (read: lower barrier to entry) x86 servers running an independent operating system. But thatâ€™s really just one phase of an ongoing, and quite possibly more dramatic, server paradigm shift.
Take a look at IDCâ€™s worldwide server tracker. The most interesting entry is the company known as â€œOthersâ€. Others now has a healthy 15 percent of the worldwide server market â€“ an indication that the barrier to entry into the server market has reduced to the extent that is possible, and appealing enough, for smaller companies to take on the incumbents. Local vendors like Optima compete less on technology and more on price, customer service, and support. As such, the reasons for customers choosing an x86 server from the incumbents are becoming less compelling.
In addition to the services and support enhancements the new wave of x86 server vendors bring to the market, there is also more product engineering innovation. Blade and other small form-factor computers are good examples of this type of product engineering around readily available components.
Who knows how much more market share Others will eventually take, put the fact that server computing is now available to more businesses from local, competitive, suppliers is better for the economy as a whole. Then, of course, thereâ€™s the opportunity to build businesses on the back of Otherâ€™s commodity computers. Thatâ€™s how the real revolution is brewing. Stay tuned to read about it here soonâ€¦
Anyone running a Teflon-based, non-stick surfacing company?