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The IT Industry's Red Shift Theory
Stony Stevenson writes "Sun Microsystems' CTO, Greg Papadopoulos has come out with a Red Shift Theory for IT which posits that an 'elite group of companies are consuming inordinate amounts of IT infrastructure, well beyond most other businesses, and that their demand is growing exponentially. This trend, Papadopoulos maintains, has implications not just for IT's most insatiable consumers, but for the structure of the computing industry itself. It's not just about how many CPU cycles a company uses. Papadopoulos argues that red-shift companies will enjoy exponential business growth in the coming years. Blue-shift companies — those whose processing needs aren't exploding — will grow at about the same rate as GDP, he says.'"
A hardware company says that buying more hardware is a good thing for your company. News at eleven.
(Yawn).
Qxe4
Every week, yet another IT business-man / manager /columnist which fondly remembers the Internet Bubble comes up with yet another theory on how IT/Internet/Networking is causing/will cause an infinite boom of growth and properity and those which do not jump onto the train of [fill in something he's trying to sell] will be left behind in the dust.
I thought the Bursting of the Bubble had cured people of falling for this kind of arguments (which were used over and over again during the Bubble to justify insane valuations for companies which never made a cent).
Guess the leeches didn't gave up on trying to suck the fools dry yet.
This is backwards. Companies which are buying hardware are buying hardware because they already have a successful business model (or one they expect to be successful). The differentiator between successful and unsuccessful companies isn't how much hardware they buy, it's the viability of their business plan/product.
Exponential growth for a business isn't even possible, unless maybe you start out really, really small, and for a short amount of time.
Exponential business growth is not possible simply because the number of customers is finite. Even if you make something that all 6 billion people will buy, you're still not going to be able to maintain exponential growth very long before everybody is a customer.
paintball
I cannot seem to understand why people cannot see this flaw as easily as I do. Success of a company is often measured by its growth rate and indeed by its rate of increase on the growth rate (acceleration). There is a limit for EVERY market. There is a saturation point for every market. And when the health of a company is measured not by its stability or state in the market place but by "growth and acceleration" I have to wonder what drives the mentality that it's actually a good idea outside of what it does for those who buy and sell stocks on the market. (So yes, that's exactly what it's all about... duh)
So when did we all lose sight of what is good for a company? Matters like quality and customer satisfaction are no longer a consideration? And every time I hear "this company is buying that company" or "we're on a growth surge" or some other such nonsense, I have to wonder why anyone would think this sort of institutional business instability is a good idea for anyone except those who play the stock market?
Will we have to suffer another great depression before people realize that the cause of so many of our business, labor and national monetary health problems are rooted deeply in the short-sighted notion that whatever a business does it should be as a means to provide value for shareholders? I think the answer is yes because short of a disaster, people will have little motivation to see where this all leads and turn around before it's too late. And unfortunately, while one person might catch a glimpse of the future and become more sane, the people who are still insane will consume him as a means of satisfying their growth strategy. I get the mental image of a bunch of cannibals strategizing their own growth and acceleration success plans in how to consume their environment. The logic is rather unsettling to me.
There is no correlation between IT spending and productivity or profitability.
This is the same old saw that hardware firms used in the 1980s-1990s. Gartner used to say you should spend on IT as a proportion of your revenue.
But numerous studies, based on publicly available data, debunk that view as bullshit.
It's not that IT is bad -- it's just that you have to blame or praise management for the proper application of it. Which is just another way of saying "you can't spend your way through problems without thought".
NOW, there's a valid argument here, but it's a lot more subtle than the bylines. One has to dig into Papadopoulos' quotes to get the jist of this as: "you should have the management insight to take advantage of the inherent cost savings that are due to Moore's law." This has been hampered for decades due to inflexibility with the software -- something that virtualization and utility computing is seeking to fix, and an area that Sun wants to compete in. Indeed, this is a big deal.
But it doesn't mean your computing needs will skyrocket, unless your management has an insightful, productive application for all of that power. Google does (selling advertisements along side day-to-day networked computing needs), but I'm not sure the rest of the Fortune 500 has turned to apply that level of creativity to their situation.
-Stu
You know, it was annoying when marketing goons made up jargon. But it's more annoying now that they steal technical words from other fields and misapply them.
I believe he is comparing them to the GDP.
Well, that's insightful in its own way, but you have to remember that bubbles are caused slightly differently.
Bubbles are based on greed. Pure, distilled, unadulterated greed. At some point the prospect of making lots of undeserved money, is causing people's brains to switch to the wishful thinking that some greater dope will take the fall. People keep dumping money into a bubble precisely _because_ it's a bubble and keeps expanding, so any bubble-goods (shares, tulip bulbs, etc) you buy now, can hopefully be sold more expensive later.
The Dutch tulip craze, for example, was based on the idea that if you buy a tulip bulb for 100 guldens (a huge sum at the time), some other idiot will later buy it from you for 1000 (a king's ransom.)
The dot-com bubble, for example was a 1-2 punch of greed:
1. The idea that you can defraud the advertisers for as much money as you want to. Advertising rates were originally calculated for sites with exactly 1 banner on the front page, and it tended to be relevant too, so people actually clicked on it. Then someone came with the idea that you can make sites with wall-to-wall banners and the advertisers will pay you hundreds of thousands per month for just having a homepage. And surely the advertisers won't catch on. (And when advertisers were slow to react, some waiting to see if more ads actually mean more clicks and sales, it just "confirmed" the idea that it's free money for anyone who wants to take them.)
A lot of companies were bought for a lot of money or made huge profits, apparently for no other reason than having a web server with lots of ads. Others were bought for other reasons, such as actually having a service and a share of the users that someone else was willing to subsidize as part of their empire (e.g., ICQ or Hotmail), but it fit in the same general picture: make a high-tech company, get bought for hundreds of millions.
This helped "bootstrap" the bubble.
2. As I was saying before, it kept going precisely _because_ it was a bubble. A lot of companies were formed not because they believed there was a valid business plan in just having an "I love cats" web page, but to get a lot of money in an IPO. (I actually worked for a company whose _sole_ business plan was "we'll have an IPO and people will give us hundreds of millions!") And a lot of VCs invested in those companies, not because they genuinely believed that they'll work great in the long term, but because they hoped they can wait until right before they peak, and sell every share before it crashes and burned. And stock advisors were known to even directly manipulate that mechanism, e.g., by advising people to buy the shares of some imploding dot-com just as they were selling their shares in it.
Even the absurd unsustainable structure of a dot-com in that bubble wasn't genuine stupidity in most cases, but deliberately trying to have the same image as the dot-coms that got millions in IPO before or got bought. If the ones that peaked sky high before consisted of hundreds of programmers and tens of millions of dollars worth of servers just for a web site that sold nothing, the new ones tried to look exactly the same. It was a "pick me" marker, if you will, rather than just believing that lots of expensive hardware equals growth.
At one point, some even lost sight of the goal to get and retain lots of users, which was (A) the original way to get lots of advertising money, and (B) later the dot-com bubble's excuse: "see, we'll get millions of users first, and sometime later actually figure out a way to sell them stuff." (E.g., the dot-com I worked for, had such memorable management quotes as, "no, we don't want a forum, we don't want users to post all sorts of crap on our servers" and "no, chatrooms are just for cybersex and other crap, we don't need one" and so on for all the proposed ways to g
A polar bear is a cartesian bear after a coordinate transform.
I was recently approached by a neighbor who run a small mid-term rental company, meaning that they rent things for 1-30 weeks). His business is growing and he is having a hard time tracking and billing for all his assets. He thinks a little computer program could really bail him out of his grwoing problems. According to sun, his business will be saved if he buys some hardware.
I don't think hardware or software will save his business. He needs to hire someone who can manage his assets. They could write every asset on its own 3x5 card and record a rental on each line of the card. Every week, they just go through each 3x5 and generate their billings.
I personally would use software, but if you can't think of how to do it with pencil and paper, you have a problem that is more fundamental to your business than the software can solve.