The buzz over the weekend after Google and HP’s announcements and plans brings into play the idea that the tech market is restructuring. When the leading player in one sector announces that it is thinking of selling its operations and abandoning its offerings in the fastest growing market, you have to ask – what gives? The Saturday Wall Street Journal was full of speculation, including an article from Marc Andreessen entitled “Why Software is Eating the World.”
All of this speculation generates some speculation on my own about an alternative way to look at the technology marketplace. A way that would take recent events and deeper currents related to lightweight technologies, innovation and consumerization into account. Surely the power of these forces, the more than 20 million iPads, the billions generated in Android, Apple and other app stores, the open deliberations of major vendors to pull out of leading and fast growing market segments all begs the question — Is there another way we should be looking at all of this?
WARNING: this hypothesis is an idea that I am putting out there on my own. It reflects a personal observation and DOES NOT represent a Gartner’s position or potential position in any way, shape, or form.
See the following published Gartner Research on these development: (This is the research that was published as of August 21st, 2011. I will try to add other research postings to here. Some links may require registration.
The IP implications of Google’s announcement are considerable. But I would like to put an idea out there to see if it makes any sense, and to ask you for your thoughts and comments to improve it, as we all need a better way of seeing how things are changing tech.
A Hypothesis about creating a different view of the tech marketplace
I would like to advance a hypothesis, that High Tech’s market structure is turning form an orientation around the ‘technology stack’ toward a ‘multi-dimensional technology spectrum’.
Here is what I mean.
Technology markets have organized themselves around where they fit in the ‘stack’
Technology markets have been described as a multi-layer industry with companies competing within relatively well defined vertical spaces. Substructure and Infrastructure companies dominate the bottom of the stack. These are the server companies, communications companies, and system’s software firms. The infrastructure and substructure rests on device layer, where the PC dominated and now a range of consumer oriented devices are coming up. Finally, there is the application that run on the hardware and communicates through the infrastructure and substructure. This is the domain of personal productivity software (e.g.: MS-Word, Excel, etc.) and corporate systems like the management suites (CRM, SCM, ERP, PLM, HRM, etc.). The tech marketplace was defined by where you played in the stack. The stack defined who your competitors were, and how investors, consumers and the industry thought about you.
Consumers and the Internet are slicing the stack right down the middle
Consumers no longer make a distinction between the technology they use in the office and the technology they use in the office. Consumerization has been a topic discussed frequently by Gartner from the perspective of the challenge consumer devices pose to an IT organization. Sure, but what is the challenge consumerization poses to what we think of as tech?
Consumerization has already obliterated the traditional definition of Consumer Electronics. Turning that multi-billion dollar industry into an information technology industry. The result is that stalwart consumer electronic companies are on their heels, they have not known what hit them and still have issues trying to punch back. They are fighting at shadows because they are not part of the traditional technology stack.
The Internet and internet enabled services (aka cloud) is creating a series of lightweight technologies that shatter the notion of the ‘stack’ and your need to own/control the stack in order to get quality services.
Taken together, these forces are splitting the technology stack down the middle, as shown in the figure below, creating a world where the ‘stack’ is increasingly meaningless. Consider location-based services that have rely on the collaboration of multiple levels of the stack that are owned and controlled by different people. In a world where control of a layer means less, the value of thinking of your self in a stack loses its meaning.
If the tech market is getting split down the seams, then what is an alternative hypothesis for thinking about tech? Good question and the hypothesis I would like to propose is that rather than thinking of tech as a ‘stack’ with well-defined boundaries, what we think about it as a multi-dimensional spectrum.
A proposed market model, shown in the figure below reflects a spectrum in the sense that there appears to market players coalescing around a consumer and a corporate view of the market. This gives us a two-dimensional traditional spectrum, but there is a whole other part of the tech market that is concentrating on infrastructure, the storage vendors, server vendors, etc. Infrastructure products and services could be used for either consumer or corporate solutions.
The tech spectrum is shown as multi-dimensional to reflect the complexity of technology. It is too simple to see tech as a choice of consumer vs. corporate extremes. It is not so simple as declaring technology as ‘converging’. Convergence is a technical reality that demonstrates that the ‘technology stack’ is losing its meaning. The result of convergence is not an amorphous mass that has no structure. Rather the hypothesis proposes that at the top of the market there exists a horizon of internet based services that reflect a scatter gram of solutions that span boundaries described by their appeal (broad or narrow) and their approach (corporate or consumer)
I am sure that there are many things wrong with this hypothesis, but you can test it. You can put current categories of what we think of as tech into this model and see their relative position. A simple example is shown below naming types of technology rather than specific vendors. Such a placement and movement over time across the spectrum can help describe what is going on and why.
As I mentioned at the beginning, the model above is just a hypothesis. It’s an idea that I am floating as a way to think about what is going on now in tech and as a framework for thinking about possible future actions.
This hypothesis is mine and mine alone, and it does not reflect an existing or emerging position of view of Gartner.
I hope this is a good hypothesis. Good in the sense that it starts a discussion, debate and exchange regarding how we should look, think about, invest in and develop tech products and services. Clearly a model that tries to fit Google and HP’s recent actions into a vertical stack has its limitations. This raises the question, is there a better way of thinking about the market?
Another important question is, what do you think?