People think that big companies are too big to fail and thats why you should buy from big companies. Except that this is no longer true. To whit:
- HPE just divested all of its software assets. While HPE maintains a substantial interest in the new owner, I’m confident that HPE will walk away from those “safe products” in shortest possible time.
- EMC was losing sales momentum in the storage market as it changed to a lower cost structure. It was late to market with new products and in spite of successful attempts at entering new markets with VMware, Pivotal etc they weren’t enough to offset the shrinking core business.
- Cisco is moving away from Enterprise Networking into IOT, Cloud and SaaS products. Like storage, lower cost options exist and enough customers are changing their strategy away from Cisco to impact the bottom line. Hyperconverged rack scale systems (like Cisco UCS) reduce the need for DC networking with integrated switches. At the same time, switch hardware has more than enough ports and performance to last customers for a decade. Branch networking is under threat from SD-WAN, wireless is the last area of networking innovation and growth.
The big companies are making enormous changes with massive staff reductions, product lines discontinued and support being scaled back. Oracle, IBM, SAP are all struggling to map out a future that they are happy with and its questionable that they will survive.
Professor Foster estimates that by 2020, more than three-quarters of the S&P 500 will be companies that we have not heard of yet. [LINK]
What about Startups
Startups, really mid-size companies, don’t have the vast overheads and legacy costs of big IT vendors. Software-only companies can maintain good at $100MM revenue with a 100-200 staff to develop and support. They don’t have hardware, warehousing or production that bulks up their costs.
Startups are tightly focussed. They, usually, aren’t chasing the next big thing. They provide a good service because they aren’t trying to solve every problem in the world.
They don’t have vast sales teams wearing out airline seats to go face-to-face because the deal is overpriced. They won’t waste your time with a new “strategic initiative” every quarter.
Change Your View
Its my view that for the next 5 years all the “big” vendors be as risky as startups as they change their business into “cloud ready”. Big companies have to make BIG changes. Competition from public cloud, commoditised hardware and low cost bank finance mean that startups have equal business footing with big companies for at least the next five years. And they will have products, support and sales that might be suit your company best.
Big was better in technology. Today, small companies compete equally.