Egenera Blog

I read with great interest the J.D. Morris blog on the death of independent enterprise hardware and software companies. It’s an interesting and thought provoking read. However, it’s also one that I’ve read many times in my career.  Every time we hit a snag, someone predicts the death of innovative new companies and it usually results in there being “three” remaining players in any given market - IBM, HP, Dell in the server market; EMC, NetApp, HDS in the storage market; etc.

It’s funny, but I remember having these same conversations in the 80’s (yes, the 80’s!) when the mini-computer companies were failing. The industry was going to consolidate down to a few vendors. Then Sun was born and led a new generation of Unix workstations and servers. When that market started to dwindle, a new generation of enterprise companies were formed around Internet computing - Ebay, Amazon, Netscape, AOL. And yes, some of these are no longer powerhouses, but a new generation of enterprise companies were formed  -  VMware was born, among others.

This is the natural cycle of technology. And yes, the straight hardware business is a tough market. Even those “lucky” enough to be in the big 3 struggle with hardware, as it’s difficult to make margin in a commodity space.  You could argue the big 3 hardware vendors are really in Taiwan, as most of the parts are designed and made in large manufacturing shops and not by the hardware vendors.

The reality of today’s market is that you need to marry innovation with commodity. That is what VMware did when they brough server virtualization to the x86 platform. It’s what Netezza did when they brought their innovative data warehousing solution to commodity storage and servers. It’s what Xiotech did when they innovated with their new storage system, bringing the cache and control closer to the commodity storage devices. And it’s what Egenera has done by virtualizing the infrastructure around commodity processors and memory.

See, innovation lives on and enterprise hardware and software companies are formed every year. Some will become major players, some will be acquired, and some will fail, just like every technology cycle. The key for these vendors (and customers) is to use commodity where it makes sense and to innovate around the commodity, adding unique value that allows customers to gain a competitive advantage.