Nick Carr has a delightful commentary on George Gilder’s article (in Wired on Information Factories) where he talks of the shift that is talking place in the industry…
Many of the most exciting advances in IT today, from virtualization to grid computing to autonomous computing to data encryption to fiber-optic networking to software-as-a-service, share one thing in common: They make corporate computing much more efficient. They allow us to move from the inflexible single-purpose and “single-tenant” systems of client-server computing, with their poor capacity utilization, to flexible, shared “multi-tenant” systems, which can achieve capacity utilization rates of 80% or higher - rates reminiscent of the mainframe era.
… and characterizes this as the “era of frugal computing”.
While I think frugal computing is an evocative name (that appeals to our concern about global warming), it doesn’t do justice to the industry transformation that is taking place.
There is a historical precedent for what we now see happening in IT with the emergence of on-demand services, in which the emphasis passes from those who sell software and the tools to run software (Microsoft, Oracle, IBM) to those who sell new views on data and information (Google, Amazon.com, Salesforce.com and hundreds of other on-demand providers). Go back to 1455 to the start of the printing revolution. Initially the printers flourished. Indeed they were the stars of that era and were courted by kings, princes, the pope and rich merchant cities, and were showered with money and honors. But, by 1580 or so, the printers, with their focus on technology, had become ordinary craftsmen. Their place was soon taken by what we now call publishers, people and firms whose focus was no longer on the technology itself but on the media business that it enabled.
To me the coming era is not so much about the new architecture of IT infrastructure and its efficiency as it is about enabling and catalyzing new applications. The real story is about consumption, not production. It’s about the deeper penetration of IT among SMBs and the impact that this will have on the sector. It’s, as JP Rangaswami contends, about the revamping of traditional enterprise software into “only four types of applications: publishing, search, fulfillment and conversation”.
Nick is right in pointing out that the industry winners will be companies “creating multi-tenant utility systems, such as Amazon.com’s web services unit and Deutsche Telekom’s T-Systems division, which allow companies to avoid buying, running and powering their own hardware” and others in the SaaS application space. We live in interesting times of orbit change!
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