According to a Reuters article the other day, blockchain is a “shiny mirage”. The administrator of LinkedIn’s Carrier Ethernet group asked in a post on 5G “Who (which customer) exactly is clamoring for this And, how does it make sense, when 4G itself hasn’t been adequately monetized yet?” Why is it that over the last 30 years, over 85% of telecom projects have failed to generate any significant deployment? In many cases, the ones that have failed the most spectacularly have been the ones that led the news cycle.
We clearly have a problem in our industry, and many would argue it’s not confined to technology. I pointed out a couple weeks ago that as technology gets more complicated, it becomes more difficult for buyers to acquire the skills needed to make even a basic assessment of value. Without such an assessment, it’s hard to get a project going, and in particular hard to get one going the right way. I’ve also pointed out that in the age of click bait, the value of something lies in its ability to generate ad revenue, which has more to do with its novelty than its objective business case. I’ve also pointed out that we have a history of doing things the wrong way, propagating the limits of the past into the future to reduce everything’s potential to drive incremental benefit. Which of these is the real problem, or is it all of them?
I’ve lived through the IT revolution, in a very real sense. I can still read Hollerith card punch code and I could struggle through paper tape. I remember when a top-end IBM PC had two 128 kb floppy drives and 128 kb of RAM, and when even “mainframes” had only 160 kb, when network connections at 1200 bps were fast, and when everyone wrote programs in assembler (machine) language. Our industry has generated some profound changes, some dazzling innovations.
It’s that incredible past that makes all the over-hype and under-shoot experiences of today so difficult to understand. We had three waves of IT investment explosion in my career, each of which corresponded to a revolution in computing. The last one ended in 2001, and nothing has come along since. I submit that the period around 2001 is where we need to look to understand what’s happening now in the industry, what changed for the worse.
The thing that had been propelling successive waves of IT spending growth (averaging 40% versus the “average” rate of growth over five decades) was the simple paradigm of moving IT closer to the worker to improve productivity. I did a presentation on this to Wall Street in the early 2000s, and the biggest brokerage firm flew its strategists in from all over the world to hear it. Moving from punch-card batch to personal computer real-time raised productivity, and that justifies IT spending growth. And by the late ‘90s, we’d given more computing power to a worker, on the desktop, than we had in the data centers four decades earlier. And that was where our problems started, not with the power but with the question “What now?”
By 1998, we had started a NASDAQ boom when the objective tech spending couldn’t justify it. The third wave of IT spending boom was, by then, on the wane. Many of you remember that this was when we started to hear all the high-flying networking stories, the era of wholesale bandwidth and how Internet users were worth fifty thousand dollars each in valuing your stock. If you can’t drive stocks with the truth, then fables will serve. This, of course, resulted in the NASDAQ dump, which decisively ended the last of our waves of tech-spending boom.
It also brought in Sarbanes-Oxley, designed to keep Street analysts from creating fiction to boost stock bubbles. The problem was that SOX meant the industry that had previously been pushing us into the future with revolutions now found that nothing beyond the current quarter did anything for their stocks. Strategy gave way to tactics, to sales. Forget the future because we can’t wait for it.
This is when media started to change, before the online pub era ever really got going. Instead of having subscriptions we had ad-sponsored publications. Ad sponsorship means sales-focused, because what the companies pushing the ad dollars wanted, remember, was sales in their current quarter. In the year 2000, the most influential source of information for tech buyers, outside the experience of a trusted peer, was the content of five key tech publications. Five years later, after those publications had been absorbed into the ad-and-sales swamp, the influence score of publications overall had declined by almost a third.
At about this time, we saw a major change in IT spending. Until 2005, the annual tech spending of enterprises was roughly 50% budgetary modernization and incremental improvement and 50% new-project-new-benefits. In 2005, the new-project contribution began to decline, and by 2012 it was only 20% of total IT spending. This project stuff had driven our past waves of IT spending growth, and we no longer had it.
Online information resources, and dependence on them, were already growing in 2005, and by 2010 online pubs dominated the industry. The difference with online publications is that you can see what’s interesting to readers right down to the article. Knowing what gets clicked on and who’s clicking lets you target ads, but it also lets you target material. People used to “get” a magazine; now they got a list of URLs and clicked on what was interesting. Thus, you get more clicking if you make everything interesting, and once a click has been made you’ve reaped the ad value no matter whether the story is 200 words or 2,000, or whether it’s even read. Remember the joke story “Man Bites Dog?” “News”, as I’ve often said, means “novelty”, not “truth”.
I could see the change in ad-sales mindset in my own consulting practice. Startups were once my major customer base, because they wanted to know what strategy to follow to make them a success. By 2010, the goal of “consulting” was to get consultants to say a company’s strategies were a success instead, regardless of what they were doing. I had a vendor VP say in a meeting “Why should I do what you say just to get the market to accept my products when I can buy reports telling them to accept them?”
This is why blockchain was overhyped, why NFV was overhyped, why 5G was overhyped. It’s also why part of the overhype excess was too much promotion for market reality, but a part was also a failure to realize what could have been. That failure was caused in large part by the failure to assess and address reality, and that in turn by the conviction that reality would have taken longer than an earnings quarter in any event, so why bother with it.
We see the news others pay for us to see. Should we be surprised that it serves the interest of the payer and not the reader? We buy things that can make the numbers of vendors for the current quarter, so should we be surprised that revolutions all seem to be falling short? Operators are always telling me that vendors are “dragging their feet” to address operator problems. True, but that’s because they’re hurrying to address their own, and they’ll keep doing that until operators take charge in a meaningful way, not just beat their breasts and cry.
We’ve had progress in the industry, both before that critical year-2000 point and after. Before 2000, it was created by a culture of innovation, and now it’s created by a few insightful innovators like Steve Jobs, so good they could break out of the overall stifling cotton-ball of near-term sales and clicks on URLs. But asking for a Steve Jobs to come along drive something forward is like asking to win the lottery as a personal finance plan. Innovation has to be systematized or you can’t depend on it.
There is one area where things are still working, and working well. The cloud, and its associated development tools and techniques, are thriving. Kubernetes and containers are rapidly becoming the de facto architecture for application deployment in the cloud, which makes them the de facto model for application development. It’s not that Kubernetes has been immune from hype or that the open-source community has a spotless record of doing the right thing while ignoring the cynical market pressures everyone else seems to be succumbing to. It’s that a market collective has grown up around the cloud, and that collective is collectively doing the right thing, albeit among other things. Not as fast, perhaps, as a clever vendor might have, but certainly fast enough to meet market needs. We are getting a cloud-native framework for the future, despite all the problems I’ve cited here, through our collective.
Could this work in other areas, other hype magnets like 5G or IoT? The concept of collectivism would certainly be applicable, but there’s a barrier here in the buy-in price. Cloud-native doesn’t have what operators would call a high first cost, a big investment needed just to get something going at a credible scale. IoT and 5G, at least in the form we’ve been discussing them, do. So, we need to discuss them in different forms. We need to creep into a collective for both by addressing not the things themselves, but some things that could drive 5G and IoT. That’s going to be the topic of some future blogs.
