Advances in Computers, Vol. 28 by Marshall C. Yovits

By Marshall C. Yovits

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How we build products, how we drive revenue, what services we offer, what we must do to succeed are all on the table. It is the rise of Consumption Economics, and it has new rules. Here is how we think they might play out . . 2 Shifting Clouds and Changing Rules THE CLOUD HAS BUZZ. THE MEDIA IS CITING IT AS THE NEXT “BIG thing” in tech. Traditional tech companies are running around figuring out who to acquire to stake their claim in the next big gold rush. But wait! What, exactly, is the big deal?

Every corporate customer was making decisions about what products to use at every layer of every stack they owned. Sales organizations had to be big because the number of deals was big. Occasionally, sales could find deals where there was very little competition. Exciting margins could be had since no one else was around to undercut prices or point out the weaknesses in your offer. Other times, all your competitors were present, and making money was tough due to high sales costs and discount pressures.

Second, they will be pressing their component providers for exclusive access to differentiating capability—maybe even to the exclusion of the component provider’s own direct customers! And finally, they will be taking all your best technology and trying to develop their own differentiating R&D that they can include in their offer. They will act monopolistically—and if you are in the infrastructure component business, you will play ball. In short, these IaaS mega-transactions will be tough business: huge revenue volume, but tough to win and very low margins.

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