AT&T is buying up the remaining piece of Alltel still in operation for $780 million. Though the deal gives AT&T 585,000 new subscribers, judging by the price Ma Bell seems more interested in its airwaves.
There’s a common assumption that the Cloud’s destiny is to be a public utility. Mark Thiele, of data center operator Switch, argues that would kill competition and innovation, and that IT can be a better option.
By buying NextWave, AT&T removes the biggest obstacle to its plan to convert the Wireless Communications Services band from a worthless patch of airwaves to highly valuable 4G spectrum. The deal will cost AT&T $600 million but would pay dividends in new LTE capacity.
T-Mobile USA is consolidating its customer service call centers, shutting down seven facilities in six states by the end of June but hiring new staff in its remaining 17 call hubs. The reorganization will result in T-Mobile’s workforce shrinking by 1900 staff, or 5 percent.
Even with a new cash infusion from Sprint, Clearwire’s LTE plans remain conservative. Given their combined spectrum resources, the two operators could build the biggest, baddest 4G network in the industry. The question is do they have the ambition — and the cash — to do it?
There has been a lot of talk about consolidation lately because federal agencies have until Oct. 7 to present their plans for slashing data center footprints by 38 percent by 2015. But how exactly the government will pull this off is still up for debate.
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.