Back to the “Stack”

It’s funny how cyclic this industry is. Not that long ago, during the early 1990s we discussed how the vertically integrated computer vendors’ days were coming to an end. There were just a handful of vendors like IBM, Digital Equipment, HP, Sun, etc who supplied the entire “stack” – microprocessor,  hardware, operating system, subsystems like DBMS, and applications. The joke used to be –  “you don’t get fired by picking IBM” which meant the CIO made a safe choice buying everything from IBM. Customer support was the best and CIO’s slept well at night.

Then came Moore’s law (microprocessors capacity doubled every 18 months for the same price) and the era of the personal computer started. The stack went through democratization – many players appeared in each layer. You want microprocessors?  Pick from Intel, Sun, AMD, etc. You want hardware? Pick from Compaq, Dell, IBM, HP, etc. You need an operating system? There were a few besides Windows. The advantage of such “horizontal” structure was the lowering of price and provision of  “best of breed” for each layer of the stack. Customers did not feel “locked-in” to one vendor. The downside was the challenge of “systems integration”, as vendors did not provide testing for all permutation and combination.  The task of making every component work with each other fell on the shoulders of the customer. Of course this was a big opportunity for “service providers” like Accenture, Infosys and the like. Someone said for every dollar of software license spent, consulting services cost seven dollars. Customers started complaining of too many vendors to deal with. The rule then became – 8 is better than 20, and 3 is better than 8. The less the number of vendors, the easier it is to manage.

Now we are back full circle. With cloud computing as the new big trend, we are back to centralized computing model (anti-thesis of “lots of little” model of PC’s & Microsoft). Then we see consolidation and a few vendors suggesting to provide the full stack, as an integrated solution. IBM offers that. HP is trying to fill up the stack with components. Oracle which supplied only the subsystem  (database & middleware) and application layers, is moving down to systems hardware and operating system, with its intended acquisition of Sun. Once done, they can claim to provide a full stack – sparc chip, hardware, solaris, dbms, middleware, and application. Here comes great profitability for the vendors with “lock-in”.

This is a true Back to the Future story.

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