Tech is Boring Again
This post is not intended to be a rant and it is quite plausible that I am just missing where the action is, but 2020 feels to me like 2006/2007 and that is kind of boring. Perhaps I should clarify that statement.
There are booming stories going on in the tech world such as the JAMF IPO, one could point to TSLA, SpaceX and we are waiting on IPOs from Snowflake, Palantir, Databricks and many others, but feels like we are in an era of large scale tech companies and that is all cool, but kind of boring. Maybe it is the pandemic, maybe it is just the cyclical aspect of tech, but the more people I talk to in the tech world, the more I hear people are bored doing the same stuff over and over. That does not mean people are not happy in their jobs, it is just not as exciting as the 1990s or even the last ten years.
I remember being in SF in 2012-2013 and the place was alive. Growth and energy were everywhere. The same was true of Boston and New York and Austin. I know there are some cool startups out there, but it feels like many are just working on features to fit into the existing world and not working on new paradigms, new approaches and solving hard problems.
Features rather than paradigms might be a good strategy for the present market conditions as market share is not dynamic at the moment. The pandemic has lengthened buying cycles and made it harder for buyers to consider alternatives to what they have. In 2003 Carlota Perez completed a book entitled Technological Revolutions and Financial Capital. Perez notes that the fixed structure of market share is a reflection of “…the main industries of the revolution reaching their basic structures in terms of leadership, forms of competition, relative size and production facilities and other defining features,” [see Perez, pages 124-135]. I think this adequately sums the compute, storage and networking.
From my perspective, it feels like we are in what Perez defines as “Deployment.” One observation I would make 16 years after reading her book, is that there is not one cycle or passage through the phases she defined, but many cycles for various technology clusters. Tech seems to be cycling through a third bubble (1990s, 2000s, 2010s) and we are beginning the transition from Synergy to Maturity for social media, digitalization, wireless, broadband, yet Cloud is exiting the Frenzy state moving into Synergy. “Growth during Synergy, in the first phase of full deployment period, takes place in the midst of increasing externalities. One of the effects of the bubble economy is to have enough to enable massive use at decreasing costs. During the whole installation period, the diffusion of the technology revolution was wide and deep enough to have allowed the paradigm to become fully visible. Consequently, when Deployment arrives, growth takes place provided with a set of widely shared principles for most effective and profitable practice as well as an implicit understanding of the various technological trajectories to exploit,” [see Perez, page 134.]
The challenge for the old-line technology companies is that the traditional pillars of IT: compute, storage and networking are relatively unchanged for a couple of decades. There is a fourth pillar and that is software, but I think the innovation cycle in software (AI, ML, etc) is much faster than other areas. Now is the time to begin the work to break the legacy paradigms and this will in time be a threat to large cap tech, but for now they will not see the threat as they will be busy navigating the global pandemic, supply chain shifts and maturing markets.
As always, my thoughts on these matters might be completely wrong.
I assume you’re familiar with the work of Simon Wardley? Here’s one of his pieces that touches on what (I think) you’re talking about:
I have not read that post, but giving it a quick read I think I should give it some attention and maybe write a second post expanding on the first. Tks…
Don’t think its your imagination Bill, it appears very real to me too. I think the answer is pretty simple too – we’ve run out of Silicon runway. The humble MOS transistor has driven our industry since the late 60’s. The Silicon atom, we used to say, was God’s gift to mankind. A simple piece of Silicon crystal will naturally form a transistor just by holding in air and oxidising the surface – speaking with some artistic license 🙂 . The surface wants to create a transistor. It was customary all lithography shrank every two years and allowed totally new product architectures. New architectures were mandatory or be left in obsolescence. The iPhone was just one architectural step on that path, we went through ATM switches, IP Routers, Packet Processors and so much more. Now the lithography scaling engine has started to grind to a halt. At 3nm we have full on quantum tunneling, i.e. no transistor. Next gen processes are about 5nm so yep there’s a train coming down the track. The other thing happening, in my view, as a result of all this is a comeback of vertical integration and monopolization. Just have to look at the Cloud vendors. Make everything from silicon, boards, switches, servers and software and squeeze margin out at all layers. Its the end game. We’ve come full circle and kinda recognize as where we started.