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Is Facebook Business 2.0 Killing IT Business 1.0?
By Steve Duplessie
Expert Author
Article Date: 2009-05-05
Most social networking sites with a zillion users don't come close to making money. Eventually, even dinosaurs such as myself succumb to the inevitable old school question - "how long can it continue?" The answer, it appears, is not much longer.
When Amazon and Google entered the fray, they actually had a plan (eventually) that showed a path to making money - as uncool as that might have been to the nuveau tech hipsters. In both cases, the Web 2.0 poster children planned on using IT resources to support their REAL business - not to "Be" their businesses. Neither of them could simply go out and buy IT 1.0 infrastructure - it simply didn't work for their new world models. This is not to say that both these entities run ALL of their systems on equipment built in shoeboxes with tin foil and empty tuna cans - far from it. They use real IT 1.0 business systems to make sure they are collecting real business 1.0 MONEY, trust me. However, the overwhelming majority of the data that they manage is NOT on such monolithic, grown-up infrastructure. Most of it is running on el-cheapo extraordinaire boxes with heavy duty file systems enabling heavy duty operational scale (which eventually will come all the way back around and create their next corporate scale problems, but more on that later).
The MySpace, FaceBook, Twitter, YouTube, etc. generation is at a distinct disadvantage. The only money they seem to have in their plans is one way - out. "If you build it they will come" is a great movie mantra, but "If they come what the hell do we do then?" seems more in line with reality.
You Tube is losing piles of dough for Google, who thankfully is making much larger piles of dough elsewhere which covers up those losses nicely. FaceBook simply HAS to be losing piles and piles of dough. Why? Neither has a model that makes money, but both have infrastructure requirements that cost huge dough - especially when supported in IT 1.0 ways. All these sites have been a boondoggle for the likes of NetApp and HP etc., but the end has to be near. Even Google can't lose piles of dough forever. Sooner or later something will have to give.
FaceBook just posted this link stating that they are going to move towards their own homegrown stuff to deal with Photo's. Why? Because they don't want to pay NetApp royalties anymore, since they have absolutely no clear way to ever get the money back from the consumer (yet anyhow). Bummer for NetApp, but kudos for making them give you all that dough for this long.
We all know that IT NEEDS to be able to use true scale-out, maintenance free, super intelligent, self-healing, self-actualizing gear in order to really remain (or become) relevant to the business moving forward - and we know that that is about the last thing the traditional incumbent IT vendor wants to happen - so we have been at a crossroads. Is this a sign that things are going to start changing? I'm not sure - but I do know that traditional IT shops in traditional businesses don't WANT to build their own stuff any more than Amazon or Google wanted to in the beginning. They WANT to buy stuff that works like this from people they trust, at a price that makes sense for the times we live in - but if those people continue to refuse to bring it, they will look elsewhere.
I see this not as another independent event. I see this building. It is cumulative. I see people like Nexenta and StorMagic (and a dozen others) getting ridiculous levels of attention from REAL IT 1.0 types - who I just know would rather eat their own eyeball instead of having to hunt down another vendor to deal with. It tells me that the time for upheaval is soon to be upon us.
I knew this day would come. It had too. I don't know if this is the beginning of the end, or the end of the beginning. Regardless, I'm digging the upheaval potential. There will be a new industrial world order in IT, and which of the brilliant 1.0 players will make the leap successfully is anyone's guess. In turbulent market times such as these, there are ALWAYS new players who emerge and shine. Who will it be this time?
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About the Author:
Steve Duplessie is the author of the "Steve's IT Rants" blog, and the founder and Sr. Analyst of the Enterprise Strategy Group.
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