Seismic Market Shifts

California is a fast moving place.  When an earthquake strikes, you can
move quite a distance while standing on the same piece of ground.

The same applies to technology markets.  Once in a while, there is a
seismic shift that fundamentally realigns vendors and buyers, creating a new
landscape and toppling some established structures in the process.

The lesson, which I intend to make painfully obvious herein, is that if a

marketing strategy attempts to fight a seismic shift, it will be swallowed
into the rupture and buried forever.  Technology companies today are
experiencing a seismic shift called Open Source that is changing the marketing
landscape along a very visible fault line ( can I stretch an analogy or what? ).

Seismic shifts in the technology market is not a new phenomenon.  A
number of huge shifts, with an equal number of corporate casualties, have been
seen over time:

  • A shift from expensive, centralized mainframes to distributed minicomputers left IBM, Honeywell, Siemens, and others homeless.
  • A shift to personal corporate computing and client/server integration crippled DEC, Wang, and others.
  • The shift from proprietary server operating systems to UNIX left the OS fields littered with names likeMPE, VMS, and BTOS.

The common thread in this graveyard of technology is that many of the
companies suffered temporary or permanent impairment because they failed to see
and respond to a seismic shift.  IBM was the most visible of these firms,
having held firmly to their mainframe focus to the point of near bankruptcy. 
Each of these firms chose to stand their ground, raise their hands, and try to
retard plate tectonics.

Dumb, dumb, dumb!

Now comes Open Source — a seismic shift — and we see various powerhouses
either ignoring the shift (Microsoft), waiting way too long to accept the shift
(Sun), or swiftly profiting from the shift (IBM).  Expect to see new
quarterly reporting carnage from Open Source for the next three years as certain
firms attempt to stop the inevitable.

Which brings me to my belabored point.  Some market situations can be
controlled, spun, and even defeated.  Depending on your size, market
dominance, or bankroll, you can overcome minor market moves and competitive
threats.  Microsoft is a champion at this, using their might and artful
FUD to modify
buyer behavior.

But a seismic shift — one where the very foundation of the earth moves — is
one where a company must change and lead the shift, not fight it.  Open
Source is such a seismic shift, and we already see survivors and casualties
forming:

Survivors:

  • IBM:  They lead the shift to Linux and a lot of Open Source
    infrastructure and development tools, moving their revenue base to services
    and high-volume sales.
  • Oracle: Larry is heading for higher ground, becoming an
    application vendor.
  • HP:  Bill and Dave’s shop has become the Switzerland of
    infrastructure, and is winning the battle by not fighting at all.
  • JBoss, MySQL, SugarCRM, etc.:  These firms base their very existence on Open Source.

Casualties:

  • Sun: They fought the shift hard, delayed changing direction, and
    still have no solid game plan.
  • Microsoft: The growth of Windows Server has been all but halted
    as Linux/Apache dominate new and UNIX replacement buys.

The other seismic shift occurring in IT technology is commodity computing. 
AMD and Intel’s battle, with the help of Linux and Apache, are creating an
entirely new baseline for corporate computing — commodity hardware, running a
commodity operating system, hosting a commodity application server.

Now, ask yourself this: On what side of the fault line are you standing?


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