Geoffrey Moore [gglist] RE: Software, Hardware, and storage
Gang,
We may have a category problem creeping into our discussion of Net Appliances, EMC, and Veritas. The issue is not hardware versus software. All systems these days get the bulk of their value-add from software. The issue is software linked to proprietary hardware versus cross-platform software that is hardware independent. The former is a "hardware" business model even though software makes up most of the differentiation. The latter is a "software" business model in that it seeks to commoditize the underlying hardware. Classically, proprietary hardware/software marriages generate substantial
gains in performance, in part counter-balanced by increased price and gated access to service and support. In performance-critical operations this model shines. As the market expands, and the performance vectors overshoot
the needs of the mainstream market, the advantage shifts to a software-only model running on top of standardized computer platforms. There is nothing to prevent a gorilla in the first model from porting their software at some point to extend their gorilla franchise into the second
model. There is a revenue hit they take during the transition, but savvy investors look through this to a margin model that has only bits, not atoms, in its cost of goods.
Hope to this helps,
Geoff
Geoffrey Moore
Chairman, The Chasm Group
411 Borel Avenue, Suite 550
San Mateo, CA 94402 |
