Enterprise Tech Leaders at a Crossroads – Gregory Ness
Earlier this week VMware (VMW) CEO Pat Gelsinger spoke about “violent shifts” in the tech industry. It may have been an understatement:
At a media roundtable in Toronto last week, Gelsinger said that in his 36 years working in IT, this mobile-cloud era is the most transformative, and that everyone – from vendors to channel partners – will have to adapt.
You might have read my recent blogs Chasm of Disruption or The Trillion Dollar Challenge. They address the violent shifts in IT in more detail and from a CIO perspective. CIO perspectives are important because CIOs drive IT spending and priorities. And IT priorities are shifting on a massive scale.
The traditional leading enterprise tech companies -from Cisco (CSCO) to Microsoft (MSFT) and VMware (VMW)- have for years counted on fairly steady growth with enviable margins, even during periods of economic weakness. That is changing, as a recent CIO survey conducted by JP Morgan indicates.
Cloud, digitalization and mobile are changing the game by accelerating the pace of change, and tech vendors tied to legacy premise hardware will likely face years of unprecedented margin and growth pressures. Some will likely not survive in their current form while others will make the shift.
Contrast the rising fortunes of cloud leader Amazon Web Services, which is generating amazing growth and profitability as reported in: Why Amazon Web Services Is Key to Amazon’s Profitability. The cloud is clearly massively disruptive and profitable at Amazon, even when compared to its core retail business.
That’s a signal to every tech CEO to have a significant cloud play. Yet competing in the brutal Infrastructure as a Service (IaaS) market with AWS has already generated casualties among well-funded tech leaders with massive talent pools. The next great battle will likely be fought in the cloud automation and orchestration space, which has already seen recent M&A activities. See for example, Two Recent M&A Moves worth Watching and recent purchases of ElasticBox and Arkin.
Taken within the context of the chasm of disruption, Gelsinger’s comments are spot on. He’s advising an uncertain industry that change is coming and that VMware is focused on capitalizing on that change. More CEOs are likely to come on board with a similar message in coming months. And we’ll likely see an unprecedented level of M&A around software, cloud, digitalization and mobile. The chasm will require software not more specialized hardware.
Companies to watch: Cisco, Dell, IBM, HP, Oracle and VMWare.
About the Author
Gregory Ness is the Vice President of WorldWide Marketing at CloudVelox. Greg has more than twenty five years of marketing experience including leaders in virtualization security, network management and security, application delivery, VoIP and cloud infrastructure. Before joining CloudVelox Greg was Chief Marketing Officer at Vantage Data Centers, where he helped the company establish itself as a leader in wholesale data centers. He joined Vantage from Infoblox (BLOX) where he was Vice President of Corporate Marketing. Before Infoblox, Greg was Vice President of Marketing at Blue Lane Technologies (acquired by VMware) and Senior Director of Corporate Marketing at Redline Networks (acquired by Juniper Networks). Before Redline Greg had key marketing roles at IntruVert (acquired by McAfee) and ShoreTel (SHOR). Gregory has a BA in Political Science from Reed College and a Master’s Degree in Middle Eastern Studies from The University of Texas at Austin. He has spoken at Cisco Live, Future in Review, Interop, and Cloud Connect on topics related to networking, virtualization and cloud computing.
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