Everyone who hasn’t been living under a rock recently knows about HP’s impending exit from the consumer PC and tablet market. HP has come to the shocking conclusion that playing in a purely commodity market just isn’t much fun. In fact in a recent Wall Street Journal article, they were quoted as saying, “facing low margins and low growth in the PC businesses.”
HP’s Consumer Quandary
Many might say that it’s a natural progression of a mature market, this march toward pure commoditization. Some might also argue that such scenarios reward companies for doing things leaner, meaner, and more efficiently. Look, Wal-Mart has clearly been successful doing just that right? Well, that might be true, but I think that even Wal-Mart would admit if backed in the corner that it sees the storm clouds on the horizon. They are rapidly searching for profit expansion, new markets, and higher margins throughout their business. The reason for this dire search is fairly simple, and it’s what caused HP to want to exit the consumer market… The reason is, “once you finish the price/efficiency/speed race to the bottom and you look around and see others still alive…what then?” Well, you get stagnabusiness – (a state of business with faltering stock performance, uninteresting and uninspiring business growth, and a brain drain from the departure of more radical thinkers from the company)
Why would I write an article about this, with me being a virtualization geek? Well, it’s because I see VMware pushing hosting and service providers down this road at a rapid pace. Here at VMworld 2011, I’m hearing and seeing a lot written, spoke, and demoed about how end-users and stand-alone companies can freely move their resources in and out and between and with both Public and Private cloud infrastructures. This is a tremendous win for these consumers, but I also hear a great deal of troubling things about the technologies that will be forced upon service providers to allow for this ease of migration for these end users/companies. I can’t help but feel that this will be forcing an unprecedented level of commoditization among providers. I’m extremely concerned that the only differentiator between most providers will eventually become solely based upon pricing. I don’t want to participate or compete in such a market. There are no “real” winners in such a market…only various levels of starving survivors. I sort of feel that what VMware is doing is something akin to the following scenario:
“A fictitious state doesn’t want to build its own highway system so it sells a bond to a private company that allows the company to construct a highway and allow that company to then have the right to levy tolls against the users of the highway. Later after the road becomes increasingly popular and the company becomes profitable, the state decides that they want to encourage more users and grow the areas around the highway, so they force the company to construct on and off ramps that allow drivers to avoid the company’s tolled exits.”
This is close to my opinion about the direction that VMware is moving…and I don’t like it.
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Commodity Sux
28 08 2011Everyone who hasn’t been living under a rock recently knows about HP’s impending exit from the consumer PC and tablet market. HP has come to the shocking conclusion that playing in a purely commodity market just isn’t much fun. In fact in a recent Wall Street Journal article, they were quoted as saying, “facing low margins and low growth in the PC businesses.”
HP’s Consumer Quandary
Many might say that it’s a natural progression of a mature market, this march toward pure commoditization. Some might also argue that such scenarios reward companies for doing things leaner, meaner, and more efficiently. Look, Wal-Mart has clearly been successful doing just that right? Well, that might be true, but I think that even Wal-Mart would admit if backed in the corner that it sees the storm clouds on the horizon. They are rapidly searching for profit expansion, new markets, and higher margins throughout their business. The reason for this dire search is fairly simple, and it’s what caused HP to want to exit the consumer market… The reason is, “once you finish the price/efficiency/speed race to the bottom and you look around and see others still alive…what then?” Well, you get stagnabusiness – (a state of business with faltering stock performance, uninteresting and uninspiring business growth, and a brain drain from the departure of more radical thinkers from the company)
Why would I write an article about this, with me being a virtualization geek? Well, it’s because I see VMware pushing hosting and service providers down this road at a rapid pace. Here at VMworld 2011, I’m hearing and seeing a lot written, spoke, and demoed about how end-users and stand-alone companies can freely move their resources in and out and between and with both Public and Private cloud infrastructures. This is a tremendous win for these consumers, but I also hear a great deal of troubling things about the technologies that will be forced upon service providers to allow for this ease of migration for these end users/companies. I can’t help but feel that this will be forcing an unprecedented level of commoditization among providers. I’m extremely concerned that the only differentiator between most providers will eventually become solely based upon pricing. I don’t want to participate or compete in such a market. There are no “real” winners in such a market…only various levels of starving survivors. I sort of feel that what VMware is doing is something akin to the following scenario:
“A fictitious state doesn’t want to build its own highway system so it sells a bond to a private company that allows the company to construct a highway and allow that company to then have the right to levy tolls against the users of the highway. Later after the road becomes increasingly popular and the company becomes profitable, the state decides that they want to encourage more users and grow the areas around the highway, so they force the company to construct on and off ramps that allow drivers to avoid the company’s tolled exits.”
This is close to my opinion about the direction that VMware is moving…and I don’t like it.
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Tags: Opinions, Rants, thoughts
Categories : General Commentary and Opinions