In his annual letter to shareholders, Amazon CEO Jeff Bezos writes “I’ve been reminding people that it’s Day 1 for a couple of decades.”
“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death…..To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.”
His words are certainly coming true in large chunks of retail where 2017 promises to herald a new high in physical store closings. With AWS and Amazon’s device businesses gathering steam could he also be heralding Day 2 for technology vendors?
In many ways, their Day 2 is lasting decades. IBM may be turning things around with a huge variety of use cases around Watson and machine learning. SAP’s bet on in-memory computing is slowly paying off. Oracle has not broken a sweat as its cloud revenues make up for gradually shrinking on-premise revenues. Even HP and Dell in different ways are surviving.
But you can see how vulnerable they would be if other Amazons came after them. All of them have benefited from Moore’s Law, yet they mostly pay lip service to it. Imagine if they had competitors which voluntarily cut prices over 50 times in a decade like AWS has.
They brag about spending 15% on R&D when most of it goes to update decades-old code and services. Imagine if they had a competitor which like Amazon publishing does with authors pays out 70% in royalties (compared to old line publishers who barely pay 15%).
Imagine further if they had competitors which kept their partners in line. Amazon drops its royalties if authors price their books above $ 9.99. In enterprise world, vendors brag about the size of their ecosystems forgetting that bill is being paid by customers
Enterprise vendors honestly believe their customers are happy when many of them increasingly tell analysts like me they feel abused by the frequent audits on software and lack of continuous improvement in outsourcing, MPLS and other contracts. Bezos on the other hand is constantly paranoid as he writes “ customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great.”
Many enterprise customers are truly dissatisfied. It’s showing in the difficulty many enterprise vendors are having as they sell their next-gen products. Customers are warming up to the products, they just cannot forget their poor Day 1 experiences.