About the “iron” boys…the gear providers…
The big iron boys , companies who sell the boxes required for computing, storage, networks – The IBM/HP/Dell/CISCO/EMCs of the world don’t have it any easier….
As their software brothers get hit by open source, SaaS and third party support models, the “big iron” boys are hit by 2 big trends, virtualisation and the cloud. Enterprises were used to buying servers whenever they needed it, and if the utilisation across the board was 10-15% only per server, tough luck.
Virtualisation changed that a couple of years back and rapid advent of cloud is making it harder. 90% of CIOs have gone on record in surveys to say that they want to move 80-90% of their assets from their data centres to the hosting vendors/Cloud vendors in next 3-5 years.
Datacentre vendors and cloud providers are volume buyers and though they buy big numbers, those sales also mean lower margins. Some of the larger cloud providers are going for large numbers of cheap commodity servers as against high end specialised servers.
The scenario on desktop computing side is no less brutal. Desktop Virtualisation and move of non critical Apps to cloud will change the enterprise game, reducing the number of full fledged desktops being bought by enterprises. The entertainment devices like ipad, kindle, and smartphones will change the consumer PC business.
So the big iron boys are equally on defensive and they are going to turn in all directions for solutions. They will acquire service providers (aka Dell or Xerox)) or form tight alliances for new opportunities (CISCO-EMC-VMWare) or get into areas which were not their charter before ( HP acquires 3COM/CISCO launches UCS servers).
The fun has started…