Last week I wrote about "disruption of disruption"
With its storage in the cloud, amazon has for a while offered storage at prices almost 1/10th of what large outsourcers charge their clients.
Now it disrupts its own storage costs.
"We've often told you that one of our goals is to drive down costs
continuously and to pass those savings on to you. We have been able to
reduce our costs for data transfer, so we're pleased to announce that
we're lowering our pricing for data transfer, effective May 1, 2008."
Voluntarily lowering prices? Another disruption to the traditional outsourcing market where the general attitude is Moore's Law does not apply to their sector.
Redux: What if the Red Cross only spent 10% in charity?
Much as I love the tech industry, I dislike the fact that it spends so little in R&D - and in contrast spends 3,4,5X in SG&A. When you question it, the typical response is more R&D would be wasted. In that case, why not give it back to consumers and let them spend it more efficiently? If your favorite charity only contributed 10% towards needy causes, you would not send them much the next year. If your local government did that, there would be impeachments galore.
CIOZone lists R&D spend by large vendors - on average 9.7% of revenue. Measly as that is, outsourcers and telecom vendors spend even lower (You do not see a Verizon or an Accenture on the list. IBM and HP show in this list because of their R&D spend in software, chips and printers. Their outsourcing groups invest only 1-2% of revenues). And since they make up over 50% of many IT budgets you can see how poor the innovation quotient is in most IT budgets. And with software vendors, quite a bit of the R&D actually goes towards fixes, patches, localizations - not really innovation.
It brings out even more clearly that if CIOs want more fiber/less fat in their IT diet they need to move dollars from larger vendors to smaller, startups which typically spend much more in R&D and innovation or to their own innovation "tiger teams."
April 24, 2008 in Industry Commentary | Permalink | Comments (4) | TrackBack (0)