Hardware-Defined IT is About to End- Not with a Bang but a Whimper

After completing Security Paradox the idea of death by maintenance really sunk in. The following is a “song of vapor and iron” that has been echoing through my mind like an earworm:

The Golden Age of IT

As organizations grew they made wise investments in IT infrastructure (productivity) so that employees and partners and customers could interact more easily. From mainframes to personal computers, networks to the Internet, virtualization to clouds, waves of transformation swept through the enterprise and drove unprecedented productivity gains.

The vendors selling infrastructure achieved billion-dollar market caps because they sold even more gear into the rising tide and made themselves indispensable to the new CIOs influencing massive IT budgets. The vendors then designed their gear to be self-serving. That is, productivity was enabled by complexity, which includes certifications, training, dedicated channels and specialized hardware which you couldn’t buy anywhere else. It was a timely, brilliant move that produced billions in shareholder value.

Specialization and innovation combined with accelerated throughput helped network and security vendors accelerate growth and profits to such an extent that the cities where they were based experience housing shortages on unimaginable scales. Those were the halcyon days of Interop packed with multi-story booths and the obnoxious scantily-clad babes hawking switches, routers and firewalls like those tool girls you used to see in your mechanic’s garage. Then something quite remarkable happened yet again.

Virtualization Crushes Server Margins

Just like Microsoft and Intel destroyed mainframe growth (and much more including high end graphics workstations), VMware came along and disrupted the high-flying server hardware industry. Both shifted the paradigm from complexity and cost to power and simplicity. Then came AWS, Azure and Google. They amped up power and simplicity to a new level, but with much of the focus on greenfield and development environments.

Re-Invent in 2012: A Public Cloud Club of a Few Thousand

You can read my lamentations about the AWS preoccupation with public cloud in my 2012 blog Two Weeks in Vegas and others posted in 2013. The first re-Invent was a fraction of the size of Interop which was getting dwarfed by the VMworld leviathan. “Forget Interop, you have to be at VMworld,” a very smart and connected venture capitalist told me repeatedly as we discussed market planning.

AWS then Azure and Google disrupted cumbersome, high cost and high maintenance dev/test environments with agility and low cost and offered cloud-first infrastructure for new apps. This started peeling away opportunities that once went to the hardware vendors as gravy add-on sales for hardware, service and support.

A Song of Vapor and Iron

The traditional infrastructure (and virtualization) vendors and their dedicated army of channel and IT experts then voraciously attacked the cloud for being insecure. Those attacks often stuck until AWS and others announced a wave of new capabilities, and wins from some of the world’s most discerning security buyers. Then came announcement after announcement from enterprises with varying levels of cloud adoption for their existing apps, much of which was more vapor than iron. But the momentum with cloud-first more than offset the slowness of brownfield cloud migration, which is likely to be addressed in the next 12-36 months.

The Unlikely Alliance

Then something quite remarkable happened. AWS and VMware agreed to partner. The promise: AWS extends its reach into existing data centers, and VMware survives as a new kind of hybrid cloud migration and orchestration middleware.

I’ve frankly been amazed by how little attention this development has received. It threatens the pillars of “traditional” IT: billions in hardware-based empires and the powerful synergy of interests between IT pros, channels and vendors.

Death by Maintenance and Process Creep: “I Couldn’t Let Go”

If properly executed this unlikely alliance of former enemies can crush the infrastructure hardware business in years, not decades. Perhaps in a few years.1 Notice has been served.

Why so soon? The complexity and throughput strategy that brought billions to the hardware-centric infrastructure players now stands in the way of “modern IT”, as a kind of albatross of cost and delay: the IT guy with his head nodding sideways.

Modern IT is about the ability to deploy, manage and secure vast complex networks in days (or even hours) instead of months. And for the CIO and CISO, it promises innovation and impact at a fraction of the cost of simply maintaining and upgrading these amalgamated layers of network layer configurations and anachronisms.

All of the tedious LAN by LAN maintenance and support processes (and costs) that skyrocketed in the last five years (and slowed innovation to speeds and feeds and new ASICs and tuning/updating processes) will be replaced by faster, cheaper and more powerful software and services. See, for example, the new software-defined perimeter and the maturing software-defined network or my previous blog about the shift to software-defined IT.

Welcome to the new age of modern IT, defined by software and services… and speed.

Disclosure: I work for Vidder.

1) Infrastructure hardware companies won’t cease to exist, but will instead probably end up in SGI-like stasis (see recent $275M HPE acquisition – remember them?) with limited growth prospects and increasing margin pressure that will squeeze harder every year in cities where standard of living costs are unmerciful. Imagine change faster than before and in pockets of downsizing or M&A that are not quite fast enough to adjust to the rate of change.