Monday, November 17, 2008

Between A Rock And Hardware

This week’s announcement of layoffs by Sun Microsystems took me to a place I had long forgotten about – the development of enterprise applications for blue chip companies which used to be the mainstay of the company I formed in 1997 (three back..).

Over the past few years, despite being up to my neck in the tech industry, I’d forgotten that Sun existed. Now, this is a company still making $3bn in revenues a quarter. In a world where most people who can afford to have servers, already have servers I wonder where these sales come from...and what happens to the old servers...

Indeed, the Suns, Microsoft and Ciscos of this world have probably made more money than anyone else from Internet TV since, at the moment, they sit at the head of the food chain, which looks something like this:

Internet TV Channel

VMS Provider

CDN

ISP

Carrier - Platforms - Hardware

With the money trickling down, the VCs have once again being contributing to the bottom lines of the major players. A similar model occurred during Web 1.0 when the superior sales teams at the blue chip hardware and software vendors persuaded everyone to invest heavily in infrastructure.

The only difference now is that there are a number of hugely disruptive factors such as Flash hardware from companies like Edgeware and virtual server offerings from the likes of Amazon.

Of course, none of the computing dinosaurs are one trick ponies, but I suspect that this recession will do in a few more of the oldest names in the game, just as the dot com crash did for the likes of 3Com and Nortel.

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