On market trends
I´ve thought a little bit about prediction of market trends. There is a large plethora of companies making a living out of predicting the next big thing. I find this forecasts of the future a little bit suspicious. Or to ask the question in a different way: Are this predictions good forecasts or just self fulfilling prophecies.
Market trend: Virtualisation
At the moment, i opt for the second one. My favorite example for this is the rise of virtualisation. Okay, i hear the “Oh, no, not a virtualisation rant again” in front of a dozens monitors, but this article is not about the “virtues” of virtualisation. From my view, the hype surrounding virtualisation is a combination of consultancy companies searching for topics, sales peoples searching for hardware business, CIOs seaching for solutions for the sins of the past and the media searching for coverstories. Believe it or not, many customers are in a group we call “blueshifters” at Sun. The don´t want to talk about bigger new systems, they want to talk about opportunities to make their IT much cheaper, as they think about IT as a cost factor, not a competitive weapon. The problem: Servers do not rot away. A decent server will run for years. So when you alredy have reaction times in a dialog software in the subsecond range on a slow and old server, customers think twice about buying a new system. Or better: They won´t think about an update. So you need a reason to sell new hardware, new consultancy services and so on. Thus a new hype topic is created. A trend is born: Virtualisation. And now you have a new opportunity to sell new systems. You calculate an OPEX reduction with the customer and maybe the customer will buy a new server. The natural path for such customers will be the reduction to just two systems. The singularity of OPEX driven system architecture. But thats a problem for the account manager in a few years … The interesting question: Did the need for virtualisation really existed before the industry steped on this idea or did we create the trend? Is the next big thing hyped by analysts really choosen on business needs. Okay, it´s choosen by business needs, but are they choosen on the needs of the end customer or on the business needs of the consultancy companies? And such a predicted market trend can a self fulfilling prophecy very fast: Let´s assume a technical race that´s absolutly undecided. A well known analyst company comes to the conclusion, that the technology A will win this race. The usual suspicious IT media sites report about this. Customers read this articles and talk about this with their vendors. No insult here, there are so many trends out there and not much time . Most salesman won´t try to bet against a market trend. This effect is amplified by regular survey about hot topics for customers. Often you can corelate them to the hot topics in media. The salesman will sell the Technology A to them, technology B doesn´t get sold, thus research on it will be decreased or it will be discontinued. Technolgy A won not because of a real advantage, just because of an avalanche effect. The role of the gut at making decisions
The human being is a horde animal by nature. There are several examples that people walked into a disaster, just because some alpha “animals” choosed to do so. Most decisions are not rational ones, they are gut decisions at a large part. They are made from the stomach. You may say: Those people are professionals. Decisions are made on the basis of comprehensible and adequate critera, not on the basis on market trends. But this is simply not true. The more the differences of products are in the depth of the technology only comprehensible to experts and the more difficult and complex a technology is, the more the gut decides. To get back to the “walking to disaster” example … i should tell a story from the field: We´ve tried to sell a product to a customer. Our proposal was more thought-out and the product superior. The problem: We all had an bad day, thus our presentation wasn´t really a good one, i felt from one dead faint to another at that day. We left with a customer unsure of our capabilty to execute, although we implemented the solution before and after the proposal of this customer. Obviously we lost the deal. A year later the implementation of our competitor ended in a disaster. Project stopped after really a vast amount of money spend, not a single objective fully reached. We knew it before, but our doubts were dismissed as trying to win back the deal. This was a really important experience for me. When you loose gut of the alpha animals at a customer, even an othewrwise extremly professional will decide against you. Even when you decide about a multi-million project, it´s more about the gut feeling than about a rational decision.. When a customer is unsure about an technology, the customer will follow the horde, aka a perceived or real market trend or the salesmens and experts giving him a good feeling about a decision. So what?
This combination of customers searching for guidance at betting their carrer on a technology, analysts searching for the next big thing, salesmens searching for the easier sell, media searching for something to write about to fill the pages between the ads leads to an situation, where i really believe that market trends in IT are just self fulfilling prophecies at a large portion. After all, what should you think about market trends? In my opinion you should ignore them. Completely. Make rational decision make on hard data and proof-of concepts matching on your own needs. And my personal opinion: Vendors should monitor market trends closely, but not obey them slavishly. At the end you stop to act, and start to react only. And this is a safe way to disaster.