Four disruptive factors will force dramatic changes in the data center (DC) market by year-end 2016.
According to research firm Gartner, highly disruptive competition, big cloud provider dominance, economic warfare and nationalism will occur with different intensities over different time frames.
However, at least two of these factors will drive significant disruption within the next three years, and elements of all four will drive the opportunities and risks in the DC market during the next three to four years.
Joe Skorupa, VP and analyst at Gartner said “There are four market disruptions in play in the DC infrastructure market. Elements of them are already in play, and will become visible no later than early 2016. However, radical action by just one significant player could accelerate the market disruption of any of the factors.”
Although, on the surface, the DC market is poised for growth, existing assumptions regarding the ongoing growth of the DC market are unlikely to be realized. They rely heavily on the current base of traditional enterprise IT end users, and a vendor community that is more likely to support the status quo, rather than introduce risk and break the enterprise IT mold.
Gartner believes that vendor behaviors will fall into one of three categories: Protectors who aggressively defend their market share, revenue, profit margins and large installed base during periods of transition; Evolutionary Disrupters who strike a balance between disrupting the existing business model of protectors, while protecting their own business from other disrupters; and Revolutionary Disrupters who challenge the status quo, with more-nimble business models and less-complex go-to-market strategies adopting radical new approaches to selling.
Incumbents
An uneasy peace exists among the incumbents (Protectors and Evolutionary Disrupters). While there is some heightened tension as former partners now compete, no one wants an all-out slugfest because everyone is addicted to the high 50 percent or more gross margins in storage and networking hardware and DC infrastructure software.
New workloads may be going to external IT providers, and these buyers are not interested in high-price/high-margin commercial off-the-shelf (COTS) products as they shift toward open-source software (OSS) and embedded manageability; however, vendors are focused on maintaining the status quo for as long as possible.
Should a powerful Protector aggressively enter an adjacent market with its new offering, it would trigger severe shockwaves throughout the industry. A Protector might decide it has more to gain by forcing a major disruption. It might be one that sees no way to win, and triggers a massive price war in the hope that first-mover advantage will give it the upper hand. Or an Evolutionary Disrupter recognizes an all-out battle is inevitable, and that it is as strong as it ever will be, so it throws the first punch to maximize its advantage and quickly cripples its competition.