Tuesday Jul 07, 2009

Congestion, Creativity, Capital and Competition

Despite the global economic downturn some businesses are aggressively spending for the opportunities of the future.  However the spending of today has conflicting objectives that some would argue are necessary.  Let's take wireless mobile providers throughout the world.  In this market, competition is fierce and beneficial to consumers.  The services offered to subscribers are plentiful and rich but they do come at a high cost for the providers.  Subsidizing the phones from the likes of Nokia, Apple, Samsung and Blackberry is one big cost to get the customer's subscription.

It's great that technology has enabled GSM phones to work almost everywhere in the world except Japan "where you'll need a special phone that either supports CDMA or uses the 3G standard UMTS in the 2100 MHz frequency band. Sony Ericsson, Nokia, and a few other phone manufacturers now offer multi-band GSM phones that also include support for UMTS 2100. Coverage also extends to some cruise ships." There is a crowded group of companies looking for the opportunity to connect to individuals to provide any and all content. It's as if companies have discovered another Gold Rush.

I'm excited to see wireless and cable providers compete and innovate for delivering services to all of us around the world.  Watching cable providers offering land line service over IP and phone companies offering internet connectivity is a good example of the competitiveness out there.  The days of just delivery of service or being only the data pipe are long gone.  Providers want to delivery the data but more importantly they want to create the applications that produce the data.  The telco, cable provider and handset manufacturer all want to own as much of the subscriber stack as possible.  Now that's competition!  Here in the U.S. Comcast and Verizon are aggressively competing to win one subscriber at a time for internet, phone and HD television service.  As a result both companies are making massive investments in capital expenditures.

In fact, despite the global recession, capital spending continues throughout the world by some companies as a competitive advantage for the rebounding economy in the future.  Having spent the past few weeks talking to customers in New Zealand, Australia, Germany and reading newspapers such as the Financial Times, I've collected a group of random data.  This data can be basically summarized into Charles Darwin's theory of natural selection and applies to business as well as nature.

  • world airlines have 866 Boeing 787 Dreamliners on order.  Each 787 averages ~$200M U.S. each!
  • new cargo ships ordered or under construction is ~50% \*more\* than anticipated need
  • telcos are making huge capital investments but they understand they cannot be sustained
  • will energy become so expensive that transporting it becomes prohibitive?
  • will multiple countries practice protectionism such that localization becomes attractive again?

I'm excited that new technology will be able to help address the above as well as new economic problems we will all face in the future.


Blog is available also at: http://bobporras.wordpress.com/

Wednesday Dec 19, 2007

FOSS = Low Exit Barrier as well as Low Entry Hurdle

FOSS is a check box item for new startup companies as well as enterprise corporations who are consolidating, upgrading or issuing new application deployments.  The high tech industry will continue to have companies acquire other's technology as part of alignment and pure business economics.  Some companies acquire open source software and their intent is to continue to FOSter the community with this software, while being able to monetize the asset.   Counter to this strategy some proprietary companies may be inclined to purchase an open source software stack simply to eliminate its growing popularity by customers.  The software industry should embrace, as have universities, that more and more new deployments require solutions based on open source software code bases.  The following table shows very large deployments of storage assets based on proprietary and open source models. Open source software does create a low exit barrier for unhappy customers, but it does enable a low hurdle for a company that wants to take advantage of the opportunity to engage.  If you have built your business model around open source software you have probably listened to your customers and have realized strategically where the software industry is headed.  On the other side of the coin if your business model is to stay proprietary you may be inclined to believe that open source software is a trend and you will be able to continue to differentiate in a commodity market.  The debate continues but customers vote with their purchases.  It is my opinion that os virtualization solutions both proprietay and open sourced will shed some light on the momentum or trend of open source software.  A robust, stable, enterprise OS that can virtualize other OSes as guests has an opportunity.  The market will embrace multiple choices for OS virtualization rather than have a single choice.  With the amount of vendors who have announced OS virtualization solutions that are both proprietary and open sourced the end results are still open for debate.  Who has the momentum?  I remember the VHS and Betamax debate and who tried to dictate rather than listen to customers.

About

The blog of Bob Porras - Vice President, Data, Availability, Scalability & HPC for Sun Microsystems, Inc.

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