Take a look how the strategic structure of the IT industry significantly changed the past few months and years.
While in the past, horizontal layering of solutions is the norm -- Application company stacking horizontally on top of Database company; Database company stacking horizontally on top of Operating System company; OS system company stacking horizontally on top of Hardware company; Hardware company stacking horizontally on top of Microprocessor company -- seems such structure increasingly vanished.
Oracle recent acquisition of Sun Microsystems, HP on going acquisition of Palm, Apple acquisition of NEXT Computer (in the past), and most recently: SAP acquisition of Sybase, all these indicate a strong trend forward that "verticalization" of the industry would surely happen.
While at a glance the overall structure of the entire stack looks the same, what really happen beneath the surface is this: the ownership of the stack itself become totally different. While in the past, every company focuses on their own layer and create their differetiation by being 'horizontally flat' across the stack and shared everything else beneath or above them, nowadays seems many major player area consolidating. buying or start owning the critical stack that reside beneath or above their stack as well. This is being done to create unique/exclusive advantage and uncomparable (and un-copy-able) differentation.
- That's why probably soon (within 6 months or 1 year) we'll see Oracle database running exclusively on Oracle Sun hardware, Oracle application running exclusively (or most optimumly) on top of Oracle own database, on top of Oracle own Sun Hardware.
- That's why probably soon we'll see HP producing a new HP Tablet running HP's own Palm WebOS -- which exclusively available from and to HP only.
- That's why probably soon we'll see SAP releasing SAP next generation, which runs exclusively (or optimumly, whatever) on top of Sybase database -- along with database licensing and pricing scheme that make purchasing separate Oracle database license irrelevant.
I conclude these as
"the verticalization of the IT industry". In such scheme, the industry is verticalizing in the sense that every single company -- which was collaborating and co-creating through their shareable horizontal layer in the past, now transform their game by creating (and exclusively owning) critical stack that is major to their business, and in the process create a unique and exclusive differentiation that produces a 'lock in' which can not be gained (nor emulated) by any other stack nor company which doesn't have similar capability.
As a result of that, the structure and pattern of competition might also change in the future.
- People, consumer and buyer might eventually need to choose "solution stack" that really fits their needs. Commoditization of hardware, commoditization of software might no longer happen, because now suddenly the 'complete vertical stack' is the new norm.
- Into that picture, brand and consumer loyalty might increase once more. People might not too 'quickly' switching from one brand to another, because now one brand has a totally different style and flavor from the other.
Such emerging 'vertical structure' might bring a new competitive scheme to the entire IT landscape. And as the result of that: innovation and competition might flourish and reborn in a totally different style from the past.
Some companies might fail and vanish in the process, some companies might flourish and dominate even more. But one thing for sure: the level of innovation, competition and competitiveness in the industry would be probably increased to a new level and height we probably never seen before.
People say that IT business landscape and competitiveness keep swinging like a pendulum. We transform from the era of IBM mainframes, to the era of Mini, to the era of PC, to the era of mobile devices, to the era of the internet, to the era of 'everything and everybody connected'. Yet while innovation progresses at exponential rate in the eyes of the consumer; it is truly fascinating to see and realize that beneath the underlying structure of the IT industry itself we fascinatingly see something that is on the surfae moving and innovating forward so fast, yet at the same time, quickly consolidating into something which eventually might resemble something that we (already) have seen and experience in the past.
-arv
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