Note to self: Revolving doors work both ways. After several key executive exits, VMware installs Sanjay Poonen to head up its desktop virtualization and other end-user computing efforts.
In what seems to be the next move in a marathon game of musical chairs, EMC’s Chuck Hollis has moved over to the virtualization giant.
With the storage leader now formally aboard the OpenStack Foundation, it’s almost easier to count the IT vendors who have not climbed aboard this open-source cloud bandwagon.
Hewlett Packard‘s new CEO, Léo Apotheker, presented a sweeping vision this week for his company’s plans, one that encompasses cloud, connectivity, hardware, software and more. During the keynote, Apotheker outlined a vision for his company that encompasses “the home, the workplace and on the road.” Connectivity is key, with “seamless, secure and context-aware” access to cloud-based content and services via a range of devices. Much of what he said makes sense, but how will HP differentiate itself in the already crowded enterprise, SME and consumer markets?
Having watched Apotheker’s presentation and read much of the coverage, it’s not entirely clear where that real and lasting differentiation HP needs lies.
At one level, of course, this is simply the Internet he’s talking about. We already access a wealth of public and private content using phones, tablets, laptops, desktops and televisions. We use websites that deliver one version of a page to an iPhone and another to a web browser running on a desktop, smoothly and automatically. We already have email and calendars pushed over the Internet to smartphones, interacting with rich desktop applications or stored securely on servers for access via any web browser.
That aspect of Apotheker’s vision is an attainable reality today for many, from those using Google Apps out in the cloud to those running Microsoft Exchange on a server inside an enterprise data center. HP plays many valuable parts here: It provides the servers, storage and networking infrastructure on which that enterprise Exchange server depends; it sells many of the laptops and desktops on which content from both Google Apps and Microsoft Exchange is accessed; and it even, with webOS devices, is making new inroads into the smartphone market, which the company at one point appeared to have left behind.
As EMC’s Chuck Hollis comments, the new HP that Apotheker describes in the keynote no longer appears content to provide pieces of the whole — that is, servers, storage arrays or laptops that in most cases could easily be swapped out and replaced by very similar products from competitors. While explicitly — and repeatedly — recognizing the important role played by HP’s partners, the new HP appears determined to own whole market segments, and to deliver end-to-end services capable of addressing consumers, SMEs and large enterprise customers. If achieved, this domination makes HP’s position in a market far more defensible, and carries far higher margins. But it’s a risky strategy, too, because it has a tendency to be an all-or-nothing one: Either you completely dominate a market segment, or you have virtually no presence in it at all. Will WebOS, for example, ever really be more than a worthy competitor in a market dominated by Apple, RIM and Android?
Apotheker’s presentation wasn’t long or focused enough to provide many details, and there was no real indication that HP intends to leverage its existing market position in order to do anything new or particularly different. HP is the number one seller of desktops and notebooks. That’s a lot of new computers arriving at desks every day. Rather than simply providing a me-too cloud infrastructure that resembles Amazon or Rackspace or anyone else, why doesn’t HP aggressively market a cloud-based backup and storage solution to consumers and SMEs? Every new machine could ship with a free account for the HP cloud, a few GB of space and a wizard that pops up and simply asks when they’d like the backup to begin. And every new owner might then become an advocate for an HP cloud that fits Apotheker’s vision.
Instead of using market position to copy what others are already doing perfectly well, an HP with a vision of where it’s going should be using its market position to innovate, and to do what others cannot.
Question of the week
Talk of consolidation is all around the Infrastructure space at the moment. If you listen to Gartner, that’s bad. If you listen to EMC, it’s good. Admittedly, both Gartner’s Lydia Leong and EMC’s Chuck Hollis were discussing very specific — and different — cases, but I see some common threads that are worth examining. Technology markets, after all, require consolidation at a level that is “just right,” but there is little consensus as to where this sweet spot may lie.
The week began with news that CouchOne and Membase are merging to form Couchbase. Both companies previously developed products in the NoSQL space. CouchOne used its open-source CouchDB to store and query large volumes of document-like data, particularly in the mobile space. Membase used broadly similar approaches to address mission-critical business applications at scale.
The companies didn’t directly compete before, but their technologies were broadly synergistic. The whole may very well be greater than the sum of its parts, as Couchbase has the size, tools and skills to strengthen its position in existing markets while also pursuing new opportunities at the intersection between its strengths. It’s still too early to judge the success of this merger, but on the surface it appears one case in which consolidation may benefit both the new company and its current customers.
In another example of this week’s apparent consolidation fever, Gartner research vice president Lydia Leong examined examples such as Verizon’s $1.4 Billion purchase of Terremark, and asked, “—is consolidation at this stage of the market good for the progress of the cloud IaaS market?”
She thinks not, arguing (correctly) that some healthy competition in a market is a great way to drive innovation. She’s right, of course, but too many players doing broadly similar things can also lead to diffusion of attention, obfuscation and (perhaps counter-intuitively) a dearth of really competitive pricing. With new entrants (such as HP) continuing to join the cloud-infrastructure space, there are plenty of opportunities for technological innovation from some, while others focus on delivering robust, affordable and increasingly accessible commodity solutions to a growing cohort of enterprise customers.
One company certainly doing its bit to bring consolidation to both hardware and software is storage giant EMC. Company vice president Chuck Hollis responded to a post from earlier this week by The Register‘s Chris Mellor. Mellor noted that big storage vendors such as EMC, HP, HDS and others are increasingly focused on further integrating the products they sell into data centers — servers, software, storage, networking and the rest. He fears that, as these pieces become more tightly controlled, it will be increasingly difficult for competitors to enter the data center space.
Perhaps unsurprisingly, Hollis disagrees, drawing upon consumer technology examples to make his case: “Analogies only go so far, but I think I’ve made my point: converged infrastructure — like their consumer equivalents — can not only shift the focus of innovation, but greatly increase its quantity as well.”
I am inclined to agree more with Mellor than Hollis, but would suggest that customers hold a great deal of power here. Convergence within a product line should lead to efficiencies and cost reductions. Convergence of interface specifications and other standards should make it easier for competitors to enter the ecosystem and target their product offerings to the dominant specifications and formats. Where large vendors overstep the mark and abuse their dominant position in order to actively block new competitors, their customers should express disapproval by voting with their wallets. If choice and competition matter, then purchasers should choose accordingly.
Consolidation and convergence mean many things in this industry, and impact everything from technical minutiae to broad-brush business decisions. Monopolies are undesirable, but the opposite extreme of an unbounded set of companies may also be unhelpful in a maturing market. Contraction, consolidation and alignment of common interests are signs that the exuberance of an unknown new market is settling as suppliers and their customers discover their places.