The tech industry is undergoing a fundamental shift. Proprietary hardware, once essential to protecting a company’s innovations, now hinders – or even destroys – a manufacturer’s ability to compete. Companies who hold onto their proprietary mindset will fall by the wayside as they increasingly lag behind the pace of industry-wide innovations.
The Rise of Consumers
The foremost reason for this shift is the rise of consumerization. Since the start of the industrial age, technological advances have been adopted by industry first, then business, then consumers.
The digital revolution turned this sequence on its head. As the Internet became popular, consumer devices, and the imaginative ways people use them, started leading the marketplace. This trend has become the norm; consumer experience now drives enterprise IT.
Laptops, tablets, mobile, file sharing, web conferencing and collaboration tools are all technologies that moved from consumers to the enterprise level. And the largest cloud company started as a book reseller.
Economies of Scale in IT
The enabler of this shift is economies of scale. As users across the globe adopt a technology, they help dramatically accelerate the pace of innovation which in turn enforces new standards of design and usability. Look at the smart phone in your hand as an example.
The larger the number of consumers, the more manufacturers are attracted to the market and the faster the technology iterations. Performance and capabilities improve while cost falls.
This process provides a virtuous circle of innovation, and it drives tremendous advances in enterprise IT. But it’s not always great for hardware manufacturers; here’s why.
Take the case of Sun Microsystems. Sun bet on proprietary hardware while the industry shifted to commodity servers utilizing the low-cost Intel-compatible microprocessors popularized in personal computers. Sun lost 80% of its value before being acquired by Oracle in a fire sale.
Violin Memory is another example. Violin was one of the first companies to introduce all-flash memory solutions to the marketplace. This was very cool and fast tech, with great engineering, when they launched a decade ago.
But consumers had another idea. They loved the speed and reliability of solid-state drives (SSDs), which can now be found in almost every laptop, desktop and memory array. In the space of a few years, SSD prices plummeted, and speeds improved exponentially to meet consumer demand.
Violin never adopted SSDs; it preferred to design its own field-programmable gate arrays (FPGAs) to do low-level code. A sophisticated solution, perhaps, but no match for the rapid improvement of SSDs; Violin’s proprietary technology quickly fell behind. Now Violin is in danger of being delisted. (As of December 2016, Violin has filed for Chapter 11.)
Even a large-scale manufacturer like Cisco Systems will ultimately struggle to compete with the innovations enjoyed by producers of commodity-level servers, such as Dell, Lenovo and Quanta, who can adopt the latest chips from Intel and Samsung as soon as they leave the factory. And as the entire datacenter becomes increasingly software-defined, UCS compute-silo centric capabilities such as FCoE, services profiles and UCS Manager add unnecessary complexity.
Differentiate the Right Way
Differentiation is still essential for the survival of a company in any competitive industry, such as IT. But this differentiation can’t take the form of proprietary hardware-defined solutions as this bucks the industry trends as is made so clear with Sun and Violin.
This is one reason why storage manufacturers are in trouble. Even makers of all-flash arrays risk disruption if technological leaps leave customers with obsolete products, facing forklift upgrades the next time they need more capacity.
Alternatively, we have software-defined stars such as Palo Alto Networks with their VM-Series Virtualized Next-Generation Firewall, Citrix and F5 with their software-based load-balancers, FireEye APT for security and malware protection, Amazon Elastic Load Balancing, Arista for many of their products, vArmour, Avi Networks, and so on.
The Nutanix Software-Defined Approach
Nutanix’s solution is to add innovation completely through software. This includes one-click, non-disruptive upgrades, multi-hypervisor support, our own next-generation hypervisor, as well as mobile app support and cloud connectivity.
We also incorporate a lot of open-source software which enables us to move extremely quickly and ensure that our product is never a roadblock to technology advancement. Nutanix’s innovation cycle from feedback to implementation in code is exceptionally fast.
The Bottom Line
The bottom line is that in today’s fast-paced technology environment, it’s the companies who leverage global economies of scale that will succeed. In essence, they get other companies to innovate for them – because the larger the number of hardware manufacturers around the world who are working on a problem, the faster it will be solved, and the more, and better, options will emerge.
As a manufacturer, you want as many people as possible innovating for you. As a customer, are you choosing a manufacturer that is emphasizing the hardware aspects of its solution or one that is harnessing the speed of consumerization and the associated innovation engine behind it?
See Also: Software-Defined Storage for Dummies