Adventures In Utility Computing

The business of utility computing.

Saturday, June 10, 2006

The Sisyphus Problem - The Net Defect



Meeting the quarterly revenue goals selling computer hardware is a Sisyphean task in itself. The technology trends associated with computer system development makes the task more difficult.

Selling a certain amount of computer equipment represents a certain amount of CPU, memory, disk and in some cases bandwidth. Given that cost of all of these components is decreasing makes it more difficult to acheive flat quarterly revenues. IDC reported in their February 2006 Worldwide Quarterly Server Tracker:
Volume systems grew 7.3% year over year and the segment continue to be the catalyst for growth for the server market overall, gaining favor with SMB and enterprise customers alike. After four consecutive quarterly increases, revenue for midrange enterprise servers declined 11.5% year over year and the high-end enterprise server market showed a 1.7% decline year over year, the fifth consecutive quarter of declining revenue for high-end enterprise servers.
Basically, customers are buying more processing, storage, memory and bandwidth than ever, yet traditional hardware manufacturer's revenues are in a tail-spin. The question is how can these manufacturers take advantage of the technology trends instead of being a slave to them.

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