IT Industry Undergoing an Epic Transition

CEO Michael Friedenberg reads the signs of an enterprise tech industry that is unraveling before our eyes. But as one computing era ends, a new one (which IDC calls the third platform) is just beginning.

Maybe the Mayans were on to something after all. Not that the whole world would come to an end in 2012, but rather that the tech world of the past 20-25 years would unravel before our eyes. Look at recent developments in enterprise tech and tell me that these aren't cataclysmic events:

  • Gartner says second-quarter server revenue declined 3.8 percent from the year-earlier period. IDC puts the drop at 6.2 percent.
  • Cisco plans to lay off more than 4,000 people next year. CEO John Chambers, speaking at the North Carolina CEO Summit, said that laying off 5 percent of the company's workforce is necessary because Cisco needs to race to keep up with changes in the technology market. "[W]e have to transition in this inconsistent market," he said. "If I did it the old-world way, our company would miss these opportunities and we would become roadkill." Chambers said that he expects one in three tech companies "won't exist in a meaningful way" in just a few years because buyers are adopting technologies like mobile, virtualization and software-defined networking.
  • HP says revenue dropped more than 8 percent in the third quarter of its fiscal year due to problems in PCs, servers and other businesses.
  • Microsoft CEO Steve Ballmer plans to resign in the next 12 months.

But, as we well know, the circle of life exists for technology, too. As one computing era ends, another is just beginning. IDC calls it the "third platform," and it consists of IT architectures that leverage mobile devices, cloud services, social technologies and big data analytics. If you don't think this change is real, then look at recent news in the cloud market alone:

  • Amazon Web Services (AWS) continued its heady growth--at least according to what can be gleaned from Amazon's second-quarter earnings report. The "other" North America category, where AWS is lumped in with some other businesses, hit $844 million, up 64 percent from $515 million a year ago.
  • Box, a cloud storage company, claims to have 180,000 business customers and expects 100 percent revenue growth this year.
  • ServiceNow, a cloud-based software vendor, has posted revenue growth of at least 80 percent year over year for 28 consecutive quarters.

I think Chambers captured the sense of urgency when he said: "We don't compete against competitors, we compete against market transitions." Well, this market transition is one for the ages. Welcome to the third platform.

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