Henry Newman's Farewell Advice on Picking Technology Winners and Losers - Page 2
LTO manufacturers (media, drives and libraries) today are likely to face significant financial pressure to provide the cost recovery of the necessary R&D for future tape generations, and disk vendor density is growing faster than LTO density, at least currently. Also, remember the size of the disk market today is over $35 billion. The size of the entire tape market is unclear, as figures for enterprise tape are not published, but it was estimated to be $2.2 billion in 2011 based on data from IDC and others. Using the above figures, the estimated size of the market today is 16 percentless, or $1.85 billion, assuming the loss in the whole tape market is consistent with the LTO media market size drop.
Folks, this does not mean that tape is going away tomorrow or next year or even by 2020. I know people that still have 7-track tapes in storage. What it does mean is that innovation will slow and it already has. Look at LTO tape and nearline disk density changes:
- 2008: 800 GB LTO compared to 4 1 TB disk
- 2014: 2.5 TB LTO compared to 6 6 TB disk (note 8 TB announced)
If LTO-7 does come out in 2015 and does come out at 6.4 TB, disk will still have a commanding lead with plans for 2015 disk density improvements. But again, tape will not just disappear overnight as it has been in the market too long and has been embedded in workflows for decades.
Example 2: De-investment
Following the money also requires looking at the flip side and following the de-investment in a technology. If customers are reducing their purchases of a technology, how can companies justify increasing their spending on R&D? Companies do not throw good money after bad forever, and at some point they just stop investing.
That is my concern about the cloud. Whether or not a technology has characteristics as good as other competing technologies (such as better hard error rates, lower costs per byte, lower costs per byte for power) doesn’t matter, as the investment in R&D is what will drive long-term density and performance improvements. That is what the market cares about.
Back in the 1990s, the same thing happened to magneto-optical drives, and the list goes on and on. Watching what a company or industry does with their money and the technology bets that are made is important to understand who the winners will be long term. Most engineering problems can be solved with smart people and enough money, and the big technology companies have both.
Just because a technology does not have large investment money behind it today doesn’t mean you are going to wake up one morning and find it gone. If there was a long-term investment in the product or technology at one point, it will take years or decades before the technology is finally replaced. So, repeat after me, "don’t panic."
On the other hand, if a new technology with limited market presence no longer has a large investment behind it, then it is time to worry, and in buying that technology you are taking a big risk. Take, for example, the 12-inch glass platters that were produced in the late 1990s and early 2000s by one company, Plasmon. If I had purchased that technology, I would worry, as it was a single vendor and no one else jumped onto the bandwagon.
I think this follow-the-money approach can be used to evaluate all parts of the storage stack for today and the future. The future suggests that we are going to have non-volatile memories. For a hint of the future, just look at what Intel is doing.
The follow-the-money principle likely applies to far more than just IT storage technology. I was driving down the street this morning and saw a sign at a gas station that the price of unleaded regular was $2.89 per gallon while diesel was $4.19 at the same station. How many cars today use diesel and how many will in the future? I remember that when diesel and gas were closer in price, a number of cars and small trucks moved to diesel engines. But diesel cars and trucks never really caught on, and diesel vehicles never really challenged the market for gas vehicles no matter what the advantages were.
The same is true for almost all things that impact our lives, from food to technology and everything in between. The best technology, products or ideas do not always win. It is about how people invest in those ideas and market the products and technology.
Yahoo, Microsoft, Google, Amazon and Facebook could and do invest in technology, but they do not make hardware. If Yahoo, Microsoft, Google, Amazon and Facebook use some technology, it does not mean that manufacturers are going to invest in the same technologies for the broad market. Like it or not, even all of these five big players investing in something does not mean that they can create a market unless others start using the same technology. There are a number of storage examples to back this up. For example, Facebook has invested in optical, but it has not caught on in the broad market. It will be up to the optical vendors, not Facebook, to make optical useful in the broad market with the eco-system needed for the broad market. Cloud technology is not any different because services are basically products today, and clouds will depend on the same investments and profit requirements that every other technology faces.
My advice is to look at the investments today in storage technology for everything from the application interface to the storage devices and pick and choose the technologies that make the most sense in the short term while planning for the long term. Follow the money that is being invested, not your heart. If multiple vendors invest in a technology, it has a good chance of winning over the long haul. If multiple vendors have a technology they’re not investing in, it will eventually lose over time. Of course, over time market requirements can change. It is these interactions that I fear that are playing out in the tape market.
Last, but certainly not least, I want to thank Drew Byrd, who brought me to Internet.com; Forrest Stroud, who edited my columns in the early years; my long time editor and good friend Paul Shread; and James Maguire, my current editor, all of whom have made me look like a far better writer than I am over these many years. Thanks, Guys!
And thanks to my wife for reading my early columns and last column and allowing me the time to write. Thanks, Lisa!
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