Tuesday, November 12, 2013

Somewhat bored

I find many of the moves made in the technology industry frustrating especially when there are obvious plays. Back in 2008, I told Dell / IBM / HP about the threat of AWS, their use of a learning model similar to ILC (see below) and how they could be attacked. 

AWS back then had a constraint in terms of building data centres, by creating an AWS clone and forcing  a price war then you could increase demand (compute infrastructure being elastic) beyond Amazon's ability to supply and naturally fragment the market. Did they do this? No, they fiddled whilst Rome burned.

Ok, I'm not expecting any of these companies to listen but having mapped it out, some advice - whether welcome or not.

Versus Android / Samsung
Android is becoming a market dominant and Samsung is the biggest player in this space. Samsung is also heavily supporting Tizen but this really isn't a challenger to Android, it's simply about Samsung's buyer / supplier relationship and power games. Google is hardly going to pay a great deal of attention and Samsung is vulnerable to product versus product substitution.

Android's weakness is Google, who whilst they are ok at platform / ecosystem plays are hardly the best players. The ecosystem around Android is mainly centred on the App Store but despite all the hype on "Apps will rule the world", these type of ecosystems are incredibly poor learning exercises. This matters.

Take for example Amazon EC2. This is a component ecosystem i.e. Amazon provides components as utility services for others to use. What those companies build varies from applications to other component services. This provides a learning opportunity for Amazon. As new component services diffuse, Amazon can leverage the ecosystem by examining consumption information (i.e. core consumption data on underlying APIs) to identify new successful components which they can commoditise themselves. This is the heart of ILC -  (get others to) Innovate, Leverage (the ecosystem) and Commoditise (to components). App stores don't have this as the App tends to be the end state i.e. Apps are rarely used as components. They also tend to be domain specific i.e. fixed to a device. App Stores are hence very weak ecosystems compared to component ecosystems.

So, you have one company which is vulnerable to product vs product substitution and a weak ecosystem play. This can be attacked.

I won't go through the details of how but I'll shoot to the end.

Microsoft / Nokia, Lenovo, HTC, China Telecom, Ericsson (after buying BlackBerry) and others in Canonical's Carrier Advisory Group should make a play around Ubuntu Touch. Forget the past, Ubuntu has a large development ecosystem, they're positioned strongly, there's ample opportunity for intelligent software agents and this route is viable - even for Microsoft.

Versus AWS
Forget the IaaS play or the transitional private cloud play - you've lost. Lick your wounds and leave the whole infrastructure battle to a later substitution play. It's far better to accept losing this one battle, conserve your resources and try to win the overall war. You're up against a well established player - Amazon - who knows how to play the game and use ecosystems. You need to change this to your advantage.

Again, I'll shoot to the end, ignoring the details.

IBM / HP / Dell et al need to make a massive play around Cloud Foundry and by that I mean building large public PaaS built on AWS. You need to drive AWS to an invisible component, grab the ecosystem through a common market and then over time look to substitute AWS at the infrastructure level and hence balance supplier / buyer relationship. You can exploit your position on building on AWS to prevent AWS playing games against you whilst you build the substitution play.

On Ubuntu
In both the examples, Ubuntu is prominent. Before you ask "why not RedHat?", well they're poorly positioned on both fronts - great for the past, weak for the future. As for Ubuntu, the above companies should make the plays and create a JV to buy out Ubuntu.

Canonical is the wedge to achieve both plays, you don't have much time to do this - Google is building components, AWS could make a strong platform play by buying Salesforce though fortunately Amazon needs to invest so much due to AWS growth that they may be unable to do this. Hence, fast action using Ubuntu as the wedge to create a market which favours you should be the order of the day.

I can go through the game play in more details, some of the nuances, how you build competing ecosystems through co-opetition etc but that's not the point. My point is AWS and Android will only win if others let them and there is time for this game to be changed if you play smart and work together.