Is the enterprise hardware business doomed?

Enterprise hardware has never been a tougher sell. Recent financial reports from the giant companies that once dominated enterprise computing, IBM, Oracle, HP among others, do not make for pretty reading.

While there is still a demand for mainframe scale hardware in some niches, the overall picture is grim. Sales  continue to spiral down.
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Game over for small business servers

Cloud computing - if you're not doing it, you're doing things wrong

Cloud computing – if you’re not doing it, you’re doing things wrong

If you are still buying servers, you are doing it wrong. They no longer make business sense. Large companies already get this, small businesses need to climb on the clue train. 

Cloud servers beat physical servers in every respect. There are no longer any valid reasons for buying and maintaining in-office servers to manage email, store files, run shared applications or back-up databases.

The battle was over some time ago.

Technology professionals know this, they just haven’t convinced small business owners yet.

Cloud computing is much cheaper than running an office server. Over time you can expect to spend between a quarter and a half on cloud servers when compared to office servers.

Less downtime

You’ll see less downtime. Cloud servers have built-in redundancy, so they typically offline for a few hours over a year. Office servers are nothing like as reliable.

Setting-up and managing systems is infinitely easier in the cloud. And cloud servers are flexible. If you need more capacity tomorrow, You can switch it on as quickly as making a credit card payment.

Upgrading an office server is disruptive and expensive. That’s if the hardware configuration allows upgrades. Many server makers deliberately make upgrading hard so they can sell you a bigger box.

Backing-up is instant. When the Christchurch earthquakes hit, businesses using cloud services could get back in operation within hours. Some never managed to recover their office servers. Those who did often took weeks or months to get back to normal.

Cloud safety

Security fears are often the greatest psychological barrier stopping small businesses from moving to the cloud. Frankly the fears don’t add up.

An office server is as safe as your office. How safe is that? Someone determined to steal data can break-in or otherwise enter your building. Hackers may steal it remotely – you almost certainly aren’t spending enough on enterprise-grade security. Then there’s the risk of fire, flooding or earthquakes. Power lines can go down.

Cloud servers live in large, well-guarded data centres. If someone manages to get past the guards they’ve still got to find your data – that’s far from easy. Security professionals monitor the systems and there are emergency back-up power supplies. first class fire systems and so on.

If cloud computing is safe enough for the region’s largest banks and corporations, it ought to be safe enough for your business.

Technology stacks – Apple then Google or Microsoft?

They don't make stacks like they used to - The Tower of Babel by Bruegel

They don’t make stacks like they used to – The Tower of Babel by Bruegel

One reason Apple succeeds where other tech companies struggle is that it owns all its technology.

Apple designs the hardware and the core software on the devices it sells. It owns the technology stack – what some call the ecosystem.

This is important for two reasons. First, from a consumer point of view, the Apple experience is seamless. Second, Apple isn’t hostage to any other technology company. It is master of its own destiny.

In industry jargon, Apple is ‘vertical’. No other hardware company is vertical in this way. Nor are software companies.

Google, Microsoft going vertical?

Most large technology companies would like to follow Apple to become vertical. They see it as a route to Apple-like profit margins.

Software giant Oracle is aiming to go vertical in business computing buying Sun Microsystems to get a handle on hardware and build an enterprise computing technology stack.

Google and Microsoft are doing much the same at a personal technology level. That’s why both software companies now have hardware product lines. Both are busy building vertical stacks.

Google bought Motorola to go vertical in smartphones and now makes its own Chromebooks taking it vertical in the PC space. Presumably it will extend these projects into tablets.

Microsoft is vertical in tablets with its Surface range. The Surface is so PC-like it isn’t hard to imagine this product line extending into laptops. And there is talk of a Microsoft-branded smartphone, or perhaps Microsoft buying Nokia.

Back to the future

This is what personal computing was like in the early days when brands like Commodore, Apple, Atari and Tandy made hardware and had proprietary software. The enterprise computing market was the same before the rise of Unix and open systems.

No-one knows if the world has room for multiple vertical technology companies. Possibly only Apple can pull it off. This week I’ll look at whether Google and Microsoft can go vertical.