One of the unintended consequences of virtualization is that
it frees the consumer from the lock in of the hardware manufacturer. At first this was just a problem for the
folks making servers as applications and hardware were migrated to the web for
efficiencies of scale. As time went on
the virtualization of ecommerce payment, CRM, and small business accounting all
proved that small business could compete in larger markets by streamlining the
costs of IT and its associated staff.
The online companies that could provide these services used Virtual
Machines built on high quality commodity hardware that they assembled
themselves and deployed quickly. Now storage is moving to the same
commoditized, highly competitive structure.
It often seems like a contradiction at first when I talk to
folks about how market competition increases quality while reducing costs, but
it is true. Over time profitable companies will seek to increase quality while
reducing costs, because customers don’t like the hassles of shoddy
quality. For the manufacturer, the
service call to repair something costs more than it would to build in quality,
so successful companies build quality in as a way of reducing their costs of
service. Their customers that do need a service call receive a better experience
since the best service technicians are available to assist, instead of handling
everyday failures which don’t happen in a quality product.
Recently I read an article in the Wall Street Journal about
how reliable cars are today as compared to those built 20 years ago. This is
partly due to technology within the vehicles, but it also has a lot to do with
the CAD engineering tools and materials science that has been applied to the
manufacturing process. Cars are so
reliable now that the Journal article points out that the dealers are using the
recall process to bring customers back in to their showrooms. This points out
that the automobile dealers and manufacturers have learned what service
companies have know for a long time; quality service builds brand loyalty and
brings back satisfied customers to your store.
Zerowait has grown into an international company because we
have focused on building quality service relationships with our customers.
Consumers can buy from numerous vendors on the Web, but over time they learn
that buying a commodity product from the cheapest vendor on the web may not
provide the best value. As labor costs
go up the value of the service vendor goes up because a good technician can
debug a problem quickly and efficiently.
The big storage vendors are in for a difficult few years,
because in order to maintain their high quality service engineers they need to
sell highly marked up technology to their customers who are already buying
commoditized hardware for their virtualized servers and using open source
software solutions. Low priced commodity
storage solutions are becoming more available, so it will be very hard to
compete at their current high price point level. Will they be able to compete in a deflationary
marketplace?
