The IT industry’s sordid orgies

A series of unholy alliances are sweeping the IT industry and the need to make friends with enemies might be coming to your industry next.

As the winds of change sweep across the IT industry, once bitter enemies find themselves in bed with each other. It’s a situation that’s going to become even more common as the pace of change accelerates across all industries.

“Sometimes I think this industry is a particularly sordid orgy,” one analyst said at last month's VM World conference in San Francisco after the software company announced another range of industry alliances to counter the growing threat of cloud computing.

One of the new products launched, an off the shelf hardware system called EVO:Rails, will almost certainly compete with VMWare’s VCE joint venture, an alliance with its majority shareholder EMC and networking company Cisco. This was the announcement that prompted the analyst’s muttering.

Tectonic changes

VMWare CEO Pat Gelsinger is unapologetic about the need to make alliances with competitors and do deals that might hurt friends in face of massive industry change.

“The idea of frenemies – or co-competition – isn’t new to the IT industry,” Gelsinger told Technology Spectator during the conference while flagging even more alliances in an industry going through what he describes as ‘tectonic changes’.

“All of us need to be somewhat careful about who’s our friend and who’s our enemy as we go through that period and be as nice as we can to everybody because who’s our friend and who’s our enemy in six months or twelve months time could change a whole lot," Gelsinger said.

“I always quip that ten years ago or fifteen years ago Sun would have been buying Oracle. Those shifts can occur quite rapidly.”

Disrupting the disruptors

This is certainly true for VMWare’s industry as the once disruptive force of the company’s server virtualisation products now faces its own disruption as customers move to cloud computing services like Amazon and Google.

VMWare and the rest of the server industry have struck back with the idea of hybrid computing where a mix of cloud and onsite – ‘on premise’ is the industry term – technologies are used. The idea offers customers the best of both worlds while conveniently keeping some revenue flowing into the coffers of VMWare and the thousands of other businesses that rely on organisations maintaining their own hardware.

The hybrid cloud view is looked at in disdain by the purists; Rod Drury, the CEO of cloud computing accounting company Xero last year told Technology Spectator, “hybrid technologies are cumbersome and add far more complexity into software. Cloud technologies are the right technologies.”

Despite the competing claims of different technologies, these industry shifts see interesting bedfellows as once bitter rivals bury the hatchet.

When Bill met Steve

Possibly the most breathtaking alliance was announced to a bemused Mac World audience in 1997 when Steve Jobs said that Apple would be joining forces with Microsoft. Jobs robbed salt into the wounds of the booing Mac faithful by then asking Bill Gates to address the crowd on the big screen.

Microsoft themselves have probably been the most promiscuous over the years with their alliances. At the same time Gates was doing deals with Steve Jobs he and his management team were undermining an earlier deal they had done with IBM to build a new operating system.

IBM and Microsoft had come together to build a new desktop operating system as it was clear the PC industry was going to dominate computing for the next decade. Unfortunately the relationship soured, IBM split with the ill fated OS/2 while Windows NT still underpins Microsoft's operating systems.

Filling a standards vacuum

The key driver for unholy alliances between once fierce competitors is the lack of standards in new technologies, as Steve Jobs said at the time of the Apple and Microsoft deal the two companies controlled almost 100 per cent of the desktop which gave them the opportunity to set the industry’s benchmarks.

A lack of standards is driving probably the unholiest IT industry alliance of all in the Internet of Things (IoT) industry as concerns about security and interoperability are turning into the biggest barriers for this set of technologies.

One of the biggest groups is the Industrial Internet Alliance where the biggest players including GE, Cisco, IBM and Intel have banded together. A particularly interesting one though is the Open Automotive alliance set up by rival car makers and software companies around Google's Android operating system.

The Open Automotive Alliance itself is set up to deliberately to counter the threat of Apple’s moves into the smartcar market – sometimes the orgies are a defensive act.

Apple’s being seen as the biggest threat to an industry is ironic given the company itself was forced into its 1997 alliance with Microsoft because of its inability to understand the changing market dynamics at the time. That Steve Jobs turned the company around to ‘be’ the industry dynamic is a business lesson in itself.

That car manufacturers are being forced into alliances with computer companies shows how deeply changes are affecting industries around the world. We’re going to see many more sordid orgies in the business world.

Paul Wallbank travelled to VM World as a guest of VMWare.

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