Candidly– I don’t think I did as well in 2011 as I did for 2010. Whereas my 2010 predictions were pretty accurate in my opinion (e.g. 3PAR gets acquired and Oracle becomes a threat to traditional storage companies) – my 2011 results were more mixed but still not bad. Here’s my self-assessment from my 2011 predictions.
#1 – Big data becomes more of an opportunity than a headache. I think it is becoming obvious to most corporations that big data/information is becoming the new competitive advantage. From an industry perspective, it’s no longer software lock-in that determines who will win and lose, rather it’s who gets the most out of their data.
#2 – Little data powers big data – ditto. There’s so much information in smart phones, censors and machines. The world is becoming instrumented and its driving data volumes ever higher. So far so good on my 2011 predictions.
#3 – Sub $100 smartphones power little data. I think the iPhone 4S launch proved that people are more willing to shell out much more than $100 for smartphones and the sub $100 category really didn’t explode the way I expected in 2011. I still think that 2012 will see big adoption, especially in places like China and other growth markets – but this prediction was a bit ahead of its time.
#4 – Apps everywhere fuel the data explosion. It turns out that the killer app is the app! I think this was right on and again is driving data volumes. In 2012 we’ll see the app store come to the enterprise.
#5 – The end of this ridiculous integrated hardware/application/data client model. Here’s what I wrote early last year: New application delivery models and the explosion of smart devices will combine with the continued adoption of virtualization to mean we’ll finally see the light at the end of the tunnel for end users. For nearly three decades we’ve lived with a model of my PC is an island unto itself…with an Internet connection. The notion of virtual desktop infrastructure will evolve to one of the virtual data and application infrastructure where no matter where I am and what device I’m using, my apps and my data will be always on, always available, backed up and secure. I think this became the generally accepted mental model in 2011 and while it’s not the most common deployment model – it’s pretty clear it will be over the next 3-5 years.
#6 – Memory-class flash proves to be the model of the future. Not sure it’s generally accepted as the model of the future but Fusion-io’s successful IPO and the world’s attempt to get a piece of the flash pie (including unbelievably high flash startup valuations) puts this one in the hit category in my view. More to come in 2012 (see below).
#7 – The cloud becomes an integrated storage tier. This was a pipe dream and simply didn’t happen. This prediction was ahead of its time and while I think there’s hope, this forecast may be off base – see #8 below.
#8 – Cloud on-ramp players become the new hot startup play. Well this class of storage was hot early in the year but this prediction, like #7 was a bust in my view. Cirtas choked, Nasuni did a huge pivot mid-year and while TwinStrata raised another $8M I’m seeing more non-announcements in this category than activity that impresses me. It’s unclear to me that this class of system has legs. Is there value in on-ramps or is it marketing fluff that this class of device can co-opt the traditional storage controller market? I just don’t think this will be as disruptive as I initially thought and need to see more use cases and real customers before I’m convinced.
#9 – Rising oil prices will have a ripple effect into IT budgets. While the recent softness in tech has been due to some tightening of IT budgets the energy price cause and effect wasn’t obvious. This prediction was a bust even though the tech market has pulled back recently.
#10 – The backup market gets disrupted. While I still think backup is broken – it was not broken enough for this prediction to come through in 2012. Nothing really changed in backup other than guys like Veeam and Asigra gained some more momentum. It’s largely same old same old but unlike cloud onramps, I’m far more excited about new backup models and believe that in 2012 we’ll see the emerge of cloud backup platforms that have legs.
#10.1 – EMC’s core value (CV) increases. Interesting prediction. It didn’t happen. I defined EMC’s Core Value (CV) last year as the value of EMC minus its holdings of VMware. This value, which was hovering around $20B in early 2010, dropped to $17.9B by late 2010 and closed 2011 at $15.8B. EMC’s core storage business, despite its continued strong market share, growth and ability to throw off free cash, is declining in value. While some of this is softness around the tech market the trend is clear – the market is not buying EMC’s story and is valuing the company as VMware. EMC’s CV has dropped from 53% of EMC’s market cap in March of 2010 to 36% at the close of 2011. It was a major factor in my analysis as to why I felt EMC was undervalued this past year. I still feel that way but the market obviously doesn’t agree. The market is either: 1) Saying that storage is a lousy investment (which I think is ridiculous) or 2) That EMC is going to dramatically tank its share (possible but I doubt it) or 3) Is dead wrong about the stock. In any case – I was wrong.
So with that as a review of 2011…here’s what I expect for this coming year. It’s no surprise that Big Data, flash and cloud dominate the predictions and I have some vendor-specific thoughts as well.
#1 – Big Data is here to stay. The Big Data Fund announced by Accel Partners was just the beginning. We’ll see more Big Data Funds and more big deals in this space. More suppliers will be marketing big data and we’ll start to see substantive solutions coming from traditional enterprise players, which will lend credibility to the market and accelerate adoption.
#2 – Hadoop-based Big Data solutions will intersect with traditional enterprise data warehouse offerings. The big enterprise DW/BI whales will all have solutions for Hadoop where the needles found in the haystack will end up in a traditional data warehouse or emerging platforms (e.g. Vertica). Large corporations aren’t simply going to toss their existing DW/BI infrastructure and move to a world of pure play Hadoop. Rather organizations are going to find ways to leverage the two and bring structure to unstructured data.
#3 – The Hadoop Wars Continue in 2012. Cloudera, Hortonworks and EMC/MapR are in a ‘death match’ for mindshare. None of these vendors will admit this publicly but the reality is each is aiming to generate tens of billions of dollars in market value. Cloudera was the early darling child (and still is by the way) but both EMC and Hortonworks decided not to let Cloudera run away with the market untested. This competition will ultimately prove good for the market although it will initially confuse buyers and the ecosystem. As with previous battles that matter, the winner will take home the biggest prize by far. The guy who comes in second will make a few bucks and do okay and the third place finisher will barely break even long term.
#4 – In 2012 Big Data will be all about the Apps. I stole this one from Jeff Kelly but it’s too obvious to pass up. With any emerging market, applications will drive adoption. Hadoop infrastructure has been built out for the past few years and the action is heating up where the rubber meets the road for users…applications. Many of these applications will be vertically oriented and solve specific industry problems in health care, financial services, energy, pharmaceutical, etc. Some will be cross industry but like most application spaces this one will be highly fragmented with lots of niche opportunities. While there’s plenty of money to be made on infrastructure, unless applications evolve and become easier to use the market won’t explode as expected. My prediction—it will.
#5 – The flash hierarchy gets more granular. For two decades we’ve seen function move from server to storage and bring a rich texture of diverse capabilities to the market. The pendulum is swinging back and the flash space will continue to evolve from memory-class extensions to all-flash arrays to hybrid systems that optimize data placement and media characteristics. As well, in-memory architectures are here to stay in my view. Management both within segments of the stack and across the stack will ultimately become the differentiators and those suppliers that can deliver the most robust management software will gain competitive advantage. I think you’ll begin to see flash acquisitions in 2012 that will continue in 2013.
#6 – New cloud-based applications will emerge as a result of flash. We’ve already seen this (think Facebook/Fusion-io) and this trend will accelerate in 2012. Fusion’s VSL technology is a catalyst as are all-flash arrays coming from the likes of SolidFire and others. Cloud service providers will become an increasingly important channel of distribution as more enterprise critical applications are enabled by flash.
#7 – More IT shops become profit centers. We’ve seen this trend with the likes of USC, NYSE Euronext and Cerner. Not only will the Cloud become the archiving platform of choice but cloud service providers ranging from Amazon to established players such as IBM (with Nirvanix) to CSC and others are proving that they can do security and availability well enough to entice small, medium and large customers to put their data in the cloud. This trend will accelerate in 2012.
#8 – Storage is no longer a two horse race. For years it’s been EMC and NetApp going head-to-head. In 2012, 3PAR will rapidly gain share again and it will become obvious how effective Dell can be. HP’s acquisition of 3PAR and Dell’s move to acquire Compellent has created a two-headed monster and the technologies promoted by these once innovative startups will see continued rapid adoption in 2012. I predict that 3PAR will continue to grow at close to triple digit rates through 2012 and become increasingly competitive in the high end and midrange segments of the market. Dell will use its vast supply chain and distribution channel to compete effectively. For its part, 3PAR will attempt to change the commonly accepted definition of Tier 1 storage and will leverage cloud-like simplicity to affect a change in mindset. Dell will begin to integrate its ever-increasing portfolio. 3PAR and Dell will have a great deal of success in my view and will begin to ‘move the needle’ in a meaningful way. The question for HP is will this be enough to offset declines in its traditional business? I think generally yes but HP will continue to be in transition in 2012. For Dell, the issue will be how fast it can integrate and does it matter? Wither IBM? I think more tuning its model and more acquisitions in 2012 to make the company more competitive.
#9 – Oracle – the first disappointment won’t be the last. On Oracle’s last earnings call the company blamed softness on longer sales cycles due to slowness in ‘up the chain’ approval processes at its customers. Observers also took this to be the harbinger of an across-the-board softness in tech. It’s all BS in my opinion. Here’s what’s really happening. Oracle is arrogant. It starts at the top with Ellison, Catz and Hurd and trickles down throughout the organization. Oracle is like a giant slumlord, extracting exorbitant rents from its customers. Customers are fed up with monopoly pricing, an unwillingness to be flexible, convoluted contracts and threatening software audits. During the downturn, Oracle was one of the few if not the only company to raise prices and customers haven’t forgotten. Many CIOs have been on a quest to dump Oracle and alternatives are everywhere from enterprise whales like Microsoft and IBM to SaaS specialists such as Salesforce and Workday. Oracle is rapidly becoming the CA of the 21st century and customers will push back in 2012.
#10 – The Facebook IPO will be a boon for tech. Facebook will go public in 2012 and like the big tech IPOs before it, Netscape in the late 1990’s and Google in the mid-2000’s, Facebook will catalyze huge tech momentum in 2012. The rising Facebook tide will lift all tech ships in 2012 and startups as well as established players will see increased valuations as a result. Will it lead to bubble status? I’m not sure but there will be billions made as for tech investors, this trend will be your friend.
Please let me know if I’ve missed some major trends as I’m sure there’s more ground to be covered in 2012. Thanks for reading everyone and thanks for supporting Wikibon over the past few years. Here’s wishing you a productive, happy and healthy 2012.