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Bringing Sexy Back to Hardware

Bringing Sexy Back to Hardware

Why this newfound emphasis on gear? It's not just that everyone is trying to make a better tablet and cash in on the Apple juggernaut; Oracle's flirtation with big iron puts the whole spectrum of gear into play. Perhaps the simplest answer is the cloud. Cloud computing is turning all or most of the client-server era gear into museum pieces. Where we once carried heavy-ish laptops, we now want lighter devices.

By Denis Pombriant CRM Buyer ECT News Network
07/18/12 5:00 AM PT

Is hardware becoming sexy again? Why? I noticed an article in The New York Times the other day covering Eric Schmidt's announcement of Google's new gadgets, including a home entertainment device and a tablet. There's history here.

Schmidt was CEO of Google, of course, before turning over that job to cofounder Larry Page, but he was also a longtime confidant of Steve Jobs when Schmidt was a board member at Apple. Let's just say Schmidt learned a thing or two about hardware and introductions from the master. But there's more.

Oracle CEO and another Friend of Jobs (FOJ?), Larry Ellison, has been pushing gear for several years already, and his company is introducing more software for its line of X-gear this quarter.

But according to analyst titans Gartner and IDC, hardware sales, especially for the critical desktop and laptop devices, are beginning a swoon. Some hope this will be temporary and economy-oriented, but others -- myself included -- see it as a secular reordering of end-user computing by the tablet. Net/net, hardware has commoditized, and it hasn't been sexy since emerging companies quit finding new ways to incorporate the word "tech" and "soft" into their names.

All Eyes on Cloud

So why the emphasis on gear? It's not just that everyone is trying to make a better tablet and cash in on the Apple juggernaut; Oracle's flirtation with big iron puts the whole spectrum of gear into play. Perhaps the simplest answer is the cloud. Cloud computing is turning all or most of the client-server era gear into museum pieces. Where we once carried heavy-ish laptops, we now want lighter devices.

And not just any devices, the Gartner-IDC article showed that even ultra-light conventional folding book type devices are not catching on. People are demanding slates to show how in-touch and competent they are. Error-prone typing on Gorilla Glass is just the price of admission.

But hardware is hard, hard, hard to do well. You have to make it and fix it if it breaks -- and please god don't let it break under warranty. We've gotten it to the point of a commodity on purpose so that when (not if) one breaks we can slide another one into the slot. When Oracle bought Sun, the computer maker was making its servers in three colors to give customers an illusion of choice, which may have been good competitively, but it was an inventory nightmare. Today the company follows Henry Ford's Tin-Lizzy, any-color-you-want dictum, heh heh.

So this move to hardware must have some strong drivers and, as I say, it does. It's the cloud. Oracle is deploying big-big iron to serve the cloud and offering a US$10 million benchmarking prize for showdowns with IBM, which knows a thing or two about the big-iron business. Very simply put, companies are scrambling to produce a world infrastructure that can power ubiquitous access and cheap -- as in, emerging world cheap -- user experiences, hence the move away from things with "top" in their category names.

The Power Problem

I can understand the rush to repopulate the server farm. Newer devices, especially the Oracle variety, are more fault tolerant, the company says, and in a ubiquity era, five nines of reliability (99.999 percent) is quaint. Seven nines (99.99999 percent, yikes!) is barely adequate (I think it's six seconds of down time per year), and you don't get there by simply stringing together a few thousand commodity servers with some nifty programming.

I can even understand the allure of selling a few hundred million handheld devices and what it does to a CEO's mindset. But the ship has sailed, Oracle bought Sun and Google bought Motorola largely for culture and expertise so they could get into the game. But Google could afford the $12.5 billion price tag that Motorola came with, and there's no guarantee that Google will ever recover that sizable investment.

My quibble with these strategies where rich companies enter the hardware business can be summarized with a re-engineered joke: How do you make a small fortune in the hardware business? You start with a bigger one.

The issue with hardware is that someone had to do it, but it's not a Blue Ocean Strategy, a way to carve out a niche, make it your own and dominate. You could argue that Oracle is in a better position than Google, but that's relative, not absolute. Hardware is mature and not a good place to land if you're a tenderfoot. Rich, successful companies are always looking for ways to efficiently deploy and re-deploy assets. But a better strategy to me, and one that more closely adheres to Blue Ocean thinking, would be to tackle the power problem.

The iPad has a 10-hour battery, which is getting us close to the always-on approach the cloud demands, but that does nothing for the inevitable need for recharging. Power is a huge problem -- like taxes, rent and alimony -- from many perspectives, including increasing battery life without relying on expensive, exotic rare earth elements and providing current from alternatives on the cheap so that people in non-first-world countries can enjoy the benefits of the cloud.

Those are semi-hard problems and they are worthy of investment. Better still, power markets lack big leadership, which a company like Google could provide with less risk than it takes to buy Motorola. Google and several others still have a shot at Blue Ocean strategies, but so far they all look like they want to hug the shore like ancient sailors who thought there was security in being in sight of land -- even though they didn't know how to swim.


Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and website. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.


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