Caution: Makes assumption that you are familiar with few theories associated with Innovators Dilemma.
So, this is just for fun and would love to hear your thoughts on each key question below and if my assessment is correct.
I did a quick 2 minute read of ‘Management Discussion’ of quarterly results for VMW and RAX. I did not do the same for AWS, as Amazon does not pay enough attention to AWS in their quarterly discussion, so I had based it on my impression of them.
Here are the key questions to ask when determining who has an advantage with disruptive innovation – can the incumbent co-opt the innovation or does the disrupter has the advantage.
|What are industry players’ business models?||Low margin||High Margin||High Margin|
|What are their motivations?||sell infrastructure to broad base||Sell ELAs||sell infrastructure to broad base of customers|
|What are their skills?||Build infrastructure for retail||Software||Build server infrastructure|
|How do industry players compare to one another?||Seen as cloud leader||Seen as Virtualization leader||Seen as leaders of Hybrid computing|
|How do they compare to the needs of the market? Where are there symmetries?||Appeals to dev that wants to avoid IT control, smaller shops, Departments looking for efficiencies.||Appeals to large IT to optimize their physical server resources using virtualization software.||Appeals to IT that wants to host their servers – does not have dev experience|
|Where are there asymmetries?||Does not sell software or does not sell physical infrastructure||Primarily sells software – lacks experience selling service||Primarily sells space and IT services – does have experience selling services|
|Do the asymmetries tilt in favor of the attacker or the incumbent?||Favors AWS||Disadvantaged||Unclear|
|Does the innovation naturally fit its target market?||Yes||No ( vCHS is cramming )||No ( OpenStack is not comparative to AWS)|
|Is there evidence of cramming?||No||Yes||Yes|
|Are there signs that a company is ceding a low-end market and trying to move up?||No||Yes||No|
|Is there an “up” to move to?||Yes ( build custom private clouds )||Yes ( ELAs )||Yes ( Enterprises )|
|For how long?||??||Next 10 years?||Next 10 years?|
Based on this, I think VMW is ripe for disruption, their vCHS effort is Cramming. AWS vs. VMW is an asymmetric fight that favors AWS.
RAX from a strategic perspective does not look too bad, but they need seem to be in need of better execution. AWS vs. RAX does not appear to be too asymmetric, but I am thinking I am missing a thing or two here.
Post your thoughts in comments.