Judith Hurwitz Comments on Cloud Impact on HW Biz

My longtime friend and colleague Judith Hurwitz and I have decided to cross-post on one another’s blogs (hers is at jshurwitz.wordpress.com). I’m delighted to have her here. For me, this is another step in the continuing evolution of the loosely coupled independent analyst collaborations I find myself participating in more and more, and a very exciting development. Welcome, Judith!

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I am thrilled to be contributing my “cloudy” observations to your blog. I have been an analyst and consultant focusing on distributed software. I look at everything from service oriented architectures, service management, and even information management. My philosophy is that cloud computing, in all its iterations, is the future of a significant portion of enterprise software.  Judith Hurwitz, President, Hurwitz & Associates

I thought I would provide my thoughts on the future of hardware in the context of where software is headed.

It is easy to assume that with the excitement around cloud computing would put a damper on the hardware market. But I have news for you. I am predicting that over the next few years hardware will be front and center.  Why would I make such a wild prediction? Here are my three reasons:

1. Hardware is front and center in almost all aspects of the computer industry. It is no wonder that Oracle wants to become a hardware company. Hardware is tangible. It’s revenue hits the bottom line right away. Hardware can envelop software and keep customers pinned down for many, many years. New generation platforms in the form of hardware appliances are a convenient delivery platform that helps the sales cycle. It is no wonder that Oracle wants a hardware platform. It completes the equation and allows Oracle to position itself as a fully integrated computing company. Likewise, IBM and HP are focused on building up their war chest full of strong hardware platforms. If you believe that customers want to deal with one large brand..or two, then the winners want to control the entire computing ecosystem.

2. The cloud looms. Companies like Amazon.com and Google do not buy hardware from the big iron providers and never will. For economic reasons, these companies go directly to component providers and purchase custom designed chips, board, etc. This approach means that for a very low price, these cloud providers can reduce their power consumption by making sure that the components are optimize for massively scaled clouds.  These cloud vendors are focused on undercutting the opportunity and power of the big systems providers. Therefore, cloud providers care a lot about hardware — it is through optimization of the hardware that they can threaten the power equilibrium in the computer market.

3. The clash between cloud and on premise environments. It is clear that the computer marketplace is at a transition point. The cloud vendors are betting that they can get the costs based on optimization of everything so low that they win. The large Systems vendors are betting that their sophisticated systems combining hardware, software, and service will win because of their ability to better protect the integrity of the customer’s business. These vendors will all provide their own version of the public and private cloud to ensure that they maintain power.

So, in my view there will be an incredible focus on hardware over the next two years. This will actually be good for customers because the level of sophistication, cost/performance metrics will be impressive. This hardware renaissance will not last. In the long run, hardware will be commoditized. The end game will be interesting because of the cloud. It will not a zero sum game. No, the data center doesn’t go away. But the difference is that purpose built hardware will be optimized for workloads to support the massively scaled environments that will be the heart of the future of computing. And then, it will be all about the software, the data, and the integration.

About Judith
I have been a strategy consultant, industry analyst and author focused on distributed enterprise infrastructure for more than 20 years. I even programmed in Cobol once or twice. Now I focus my time on cloud computing with a pragmatic and holistic perspective. I have unique access into the software industry and the customer benefit of technology.

4 Responses to Judith Hurwitz Comments on Cloud Impact on HW Biz

  1. Merv, good stuff… to have a cloud, you have to have an environment…

    Yeah, more clouds, internal / external… gee, all the HW vendors will be jumping on the band wagon to build appliances to be clouds, which IBM has been packaging everything from HW (like the new Power 7), Virtual Plane, Distributions, and of course the software (middle ware, database, applications)… I am seeing Oracle doing the same thing here really soon, since the acquisition of SUN.

    Thanks for allowing me to participate in your blog 🙂 keep it up.

  2. Merv,
    Thanks for being thought provoking again. But there are other considerations about the hardware part of the cloud. As long as service providers are creating their own “purpose-built” hardware with commodity pieces, they will keep the cost down, but they may miss out on the innovation and expertise coming from companies devoted to the infrastructure business. The other approach to consider is that vendors with large supply chain can provide the same cost value with added innovation. When you get a chance, take a look at our “converged infrastructure” strategy. It’s real and it’s already being used by customers. And by the way, it’s more than servers, storage, network, and management. http://www.hp.com/go/convergedinfrastructure

  3. Merv Adrian says:

    John, I am delighted to have your comments here (Garnie, you too!) I’m learning that the mechanics of responding to cross-posted pieces is tricky, so I deleted my first reply and am writing again to be (hopefully) more meaningful.

    Your points are well taken – and best addressed by Judith. I think I’ll not attempt to answer comments on her pieces – at least unless I’m part of the comment stream myself and someone is addressing me. Hope that makes sense. In this case, I think I will say at least this much: the link you provided is one that anyone reading this should follow, to see the scope that is provided when a full stack player – which Judith describes well – leverages the power of the full portfolio on behalf of their customers. As useful as purpose-built appliances are (and I’m a huge fan, especially in my favorite turf around BI and analytics), they will be of less value if they are not effectively integrated into the full-fledged fabric of the kind HP’s vision proposes. That kind of integration will remain a challenge for a long time to come, in my view. The endgame is a long way off.

  4. Judith says:

    John,
    You are correct that companies like HP provide a lot of value added services for customers and service providers. However, vendors such as Google and Amazon are taking a very different approach approach. They do not care about value added hardware services. They view hardware as a means to an end: providing commodity cloud based services to huge numbers of customers. Companies that are offering a different level of service and innovation will have to work hard to differentiate. I don’t think that it will be easy.

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