Is hardware back? Mobile and Cloud technology offer clues

Is hardware back? Mobile and Cloud technology offer clues

The stalling out of traditional desktops and laptops doesn't necessarily mean that hardware is dead

If you haven't been living under a rock, you've heard pundits proclaim the death of the PC. As consumers move to tablets and stop buying laptops and desktops, and as companies pinch IT budgets even harder than they have in the past, it's easy to paint a doomsday scenario for hardware. Even the hardware companies play into this myth look no further than AMD to see weakness portrayed. For many, it seems, hardware has lost its sexiness.

Not so fast. Hardware is back. There are two clear catalysts for hardware in this era: Mobile devices as well as the explosion of Cloud computing as a way to host applications, infrastructure and services.

Let's unpack the promise of hardware from these two perspectives a little more.

The Cloud and Hardware: Servers Are the Lifeblood

It takes massive amounts of hardware to run cloud services at a scale. That's what astute folks call an F-A-C-T fact. Interestingly, though, saving on hardware costs began the whole cloud wave.

Cloud services began as a natural offshoot to virtualidation which, ironically, was a way to squeeze more from existing hardware and buy less in the future. Abstract away the physical complexity and irregularity of the bare metal that make up servers and you could deploy virtual machines across physical machines and generally orchestrate data center operations without really having to put Dell Server A in rack P connected to switch W.

The next logical action, once you have these orchestration capabilities, is to scale up capacity and offer services to paying customers, either within your own organization through a chargeback scheme or to the general public as a public cloud service. Enter Amazon Web Services, Microsoft Azure and, recently, Google.

So how important is hardware to the cloud? It's essential. It's the lifeblood of these services. To continue innovating and offering high-quality, reliable services, you have to buy enormous amounts of hardware to the point where the market threatens small and boutique cloud services firms.

Rackspace, a Cloud computing company with a market capitalization of $US4.4 billion, recently hired the investment banking firm Morgan Stanley to help it seek "strategic alternatives," which essentially means it's looking for a partner. Why? You need deep, deep pockets a huge war chest to compete at the same scale as Microsoft, Amazon and Google.

These interesting statistics put this resource issue into perspective:

Various Microsoft sources confirmed (on the condition of anonymity) that the scale of Microsoft Azure, the company's cloud computing service, exceeds 1 million physical servers. Moreover, the company's on the path to grow the service's capacity by 200 per cent within a few years. That's a lot of hardware.

Many of these same sources also cite a mind-boggling statistic: More than 17 per cent of the server hardware produced on the planet is ordered by and put into production by Microsoft for its cloud services, including Azure and Office 365. That, too, is a lot of hardware.

Others may well have even more hardware than that. Gartner estimates that Amazon Web Services has five times more cloud infrastructure including servers, networking gear and other hardware than its next 14 competitors combined. Indeed, Amazon adds as much new cloud infrastructure every single day as it used to run their entire Amazon business (including the bookselling) when it was a $7 billion business.

Netflix, which runs its streaming video service on the AWS cloud, accounts for up to 33 percent of all Internet traffic during its peak times. That's one-third of all Internet activity on the entire planet.

A reasonably sized datacentre costs about $US1 billion. Only a handful of companies generate that kind of free cash flow to develop multiple datacentres without realizing a complete return on their investment. It's a capital-intensive business.

So is hardware back, from a cloud perspective? Absolutely.

Yes, the savings and the efficiency that we realized from deploying virtualisation in our own server closets and datacentres caused a temporary "softness" in the market for server hardware. Yes, we wrung more efficiency from the investments we'd already made. Yes, we'll likely buy less hardware for our own resource pools as the public cloud continues to mature. But the scale at which Microsoft, Amazon, Google and even the more minor players in the industry deploy new servers and purchase hardware should more than make up for that deficiency.

Mobility and Hardware: Only the Beginning

Many experts predict the demise of the corporate desktop or laptop PCs. It's clear that, at least in the corporate world, these hardware refresh cycles are being lengthened to three to five years, primarily because the pace of hardware capability innovation has outpaced the innovation of software such that we simply don't need more powerful processors and faster memory to run, Microsoft Office or a line-of-business application acceptably well. In the consumer world, meanwhile, consumers buy bottom-priced PCs or Macs but also invest rather heavily in Android and Apple smartphones and tablets.

Put simply, the stalling out of traditional desktops and laptops doesn't necessarily mean that hardware is dead.

For example, industry giant Microsoft has converted itself rather successfully, even in these early stages, into a company centered on a strategy that involves devices both its own and what it depends on third-party hardware ecosystem partners to manufacture linked to all-encompassing services that Microsoft offers to both enterprises and consumers. The Windows 8 and Windows 8.1 ecosystem is designed around tablets that function as content consumption devices as well as traditional desktop productivity machines.

Apple, of course, launched the iPad juggernaut, propelling the entire industry into its current "post-PC" state. But smartphones and tablets are made of hardware, of course, and increasingly powerful hardware at that. Now we also hear about the Internet of Things, where everything from your car tires to your refrigerator contain Internet-connected hardware sensors that give data to a variety of services. That's hardware connected to the cloud and we've already discussed how cloud hosting is hardware-intensive.

So is hardware back, from a mobile perspective? The question is whether hardware was actually ever on the "outs" in this space. Smartphones will only get more powerful and cheaper, particularly now that we have Android and, now, Windows Phone available for free without licensing cost to original equipment manufacturers. It will be possible to get an Internet-connected smartphone for $10-20 within a couple of years and there's plenty of potential for penetration still remaining for tablets and smartphones alike in emerging markets.

Jonathan Hassell runs 82 Ventures, a consulting firm based out of Charlotte.

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags hardware systems



Educating from the epicentre - Why distributors are the pulse checkers of the channel

Educating from the epicentre - Why distributors are the pulse checkers of the channel

​As the channel changes and industry voices deepen, the need for clarity and insight heightens. Market misconceptions talk of an “under pressure” distribution space, with competitors in that fateful “race for relevance” across New Zealand. Amidst the cliched assumptions however, distribution is once again showing its strength, as a force to be listened to, rather than questioned. Traditionally, the role was born out of a need for vendors and resellers to find one another, acting as a bridge between the testing lab and the marketplace. Yet despite new technologies and business approaches shaking the channel to its very core, distributors remain tied to the epicentre - providing the voice of reason amidst a seismic industry shift. In looking across both sides of the vendor and partner fences, the middle concept of the three-tier chain remains centrally placed to understand the metrics of two differing worlds, as the continual pulse checkers of the local channel. This exclusive Reseller News Roundtable, in association with Dicker Data and rhipe, examined the pivotal role of distribution in understanding the health of the channel, educating from the epicentre as the market transforms at a rapid rate.

Educating from the epicentre - Why distributors are the pulse checkers of the channel
Kiwi channel reunites as After Hours kicks off 2017

Kiwi channel reunites as After Hours kicks off 2017

After Hours made a welcome return to the channel social calendar last night, with a bumper crowd of distributors, vendors and resellers descending on The Jefferson in Auckland to kickstart 2017. Photos by Maria Stefina.

Kiwi channel reunites as After Hours kicks off 2017
Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow exclusively introduces Tenable Network Security to A/NZ channel

Arrow Electronics introduced Tenable Network Security to local resellers in Sydney last week, officially launching the distributor's latest security partnership across Australia and New Zealand. Representing the first direct distribution agreement locally for Tenable specifically, the deal sees Arrow deliver security solutions directly to mid-market and enterprise channel partners on both sides of the Tasman.

Arrow exclusively introduces Tenable Network Security to A/NZ channel
Show Comments