Here it is — an annual un-tradition — my annual un-predictions. While gasbags around the world are making predictions about things that will happen in the New Year, I am predicting things that won’t happen.
That’s because in the technology world, it’s easier to predict things that won’t happen than it is to predict things that will happen. With all sorts of movement in the world of cloud and communications, there are lots of fun topics to mine, ranging from multinational business alliances to the growth and death of unicorns.
So here they are:
1. The Cisco-Ericsson Bond Will Not Jell
Of course, there are more questions than answers. This awkward partnership is ripe for disappointment.
Let’s count the issues:
- A peppy rah-rah Silicon Valley company and a stoic Nordic name — culture conflict, anybody?
- Sales — How do you elegantly divvy up the sales force, split up product portfolios, and decide who gets what commissions?
- Wireless portfolio — Ericsson is a leader in wireless, but does that mean Cisco throws away billions in investment in its own wireless portfolio? Who owns wireless?
- SDN and NFV — Cisco has spent much effort and money building its Application Centric Infrastructure (ACI) strategy, which touches most of its networking products from the data center to the WAN. But ACI is a Cisco-centric approach that requires big commitment. Will Ericsson embrace ACI as its own?
The more I think about this, the more I think it’s going to be hard to make work. I still stick to my opinion, that if they were really committed, they would have just merged. Long-distance relationships rarely work out. Especially when the two dates are 8,646 km away.
2. OpenStack Will Not Solve Telco Woes
There is an underlying malaise in the telco world, where technology leaders are constantly fretting that we’re nearing the dreaded “crossover” of price-per-bit, in which telecom networks can’t profitably serve the demand for Internet traffic.
Network functions virtualization (NFV) has arrived on the scene as the messiah that will save telecom by lowering costs. The expectations are too high. The Silicon Valley VC machine has created 50 startups pursuing various flavors of OpenStack. Meanwhile, there are only three or four startups pursuing the promising market for next-gen operations support systems (OSSs), which we are calling lifecycle service orchestration (LSO).
OpenStack is a standardized, open source way of orchestrating cloud computing resources, using an infrastructure-as-a-service (IaaS) model. But having a cheap, open source way to deliver infrastructure doesn’t solve all your business problems. These hot buzzwords and acronyms — OpenStack, OPNFV, and IaaS — miss a lot of the point, whereby you need a lot of different tools and integration to deliver successful cloud services. Amazon and Google use some open source technologies, but they have also built the world’s most efficient proprietary cloud platforms, using home-grown technology. And they’ve put a lot of thought into the services they launch.
The cloud requires a whole strategy, from business to technology platform, to deliver the best services. Plugging in some OpenStack boxes to replace legacy services is not a magic bullet.
3. That Unicorn Will Not Make You Rich
I’m amazed at how many people still buy into the Silicon Valley myth of getting rich along the exits of Highway 101. If you think hitching your lot to a unicorn is the path to glory, you’d be better off on the Vegas roulette table. The odds are terrible.
And the odds are getting worse. Initial valuations for employees are higher, the companies are going public later, and the insiders have more ways to cash out before the rank-and-file employees. The VCs discover more esoteric, clever ways to dilute you or cut you out altogether.
So if you work for a unicorn, it should be because you really like the mission and the product and the work, not because your CEO drives a Tesla and promises that you’ll get rich. You may not be adequately compensated for the lifestyle cost: Read this article from Bloomberg, called “Big IPO, Tiny Payout,” to see what I mean. In the meantime, there are signs that the cloud and communications unicorns are starting to lose their horns. Just look at the story of Good Technology (bad exit).
So what’s the answer? If you’re in technology, communications, or the cloud, work on something that you’re really interested in and that matches your skills. Ignore the talk of riches and fabulous valuations from executives and VCs. If the money comes, it’ll be a byproduct of you working hard on something you are passionate about.
4. Containers Won’t Make VMs Extinct
Yes, surveys and marketing mavens indicate that the container hype is growing. You can find out more in our Container Infrastructure report, which will be released next month.
But let’s keep in mind that containers have been around for just a bit more than a decade. Virtual machines took a decade or more to mature, and the container market is still somewhat raw and undeveloped. They’re just starting on the networking story.
In addition, whether a virtual machine or container infrastructure is used to deliver a cloud application or services may depend on the scale. As Metaswitch CTO Martin Taylor says, it’s “horses for courses.” Containers are good for supporting some sorts of applications — where thousands or millions of virtual machines would be inefficient. But some apps, such as IP multimedia subsystem (IMS), scale fine using a few virtual machines.
Bottom Line: VMs won’t disappear tomorrow.
5. Amazon Stock Won’t Hit a New High
This is my riskiest un-prediction. Going back to 1999, when stock analyst-turned-media-mogul Henry Blodget predicted that Amazon stock would soar to amazing heights — $400! (he turned out to be right) — there’s been a long tradition of trying to make outrageous predictions about Amazon stock.
Amazon, the ultimate bet on the cloud, has been the teflon stock of this bull market. Never mind that its profit margin is under 5 percent. The forward price/earnings ratio of the stock is 110. Until the latest market turbulence, Amazon didn’t seem to have a care in the world, hitting an all-time high of $696 as recently as Dec. 26 while the rest of the market struggled.
That appears to have changed in the last week, as the re-emerging financial crisis in China and fears about a global recession weigh on markets. Amazon shares have fallen 10 percent in a week.
Amazon’s share boom has been fueled by its investment in cloud infrastructure and the concept that it would become the dominant cloud provider in the world — for just about anything you want to do, whether it’s video downloads, shipping books, or having a futuristic robot assistant. But it has a target painted on its back, and Microsoft, Google, and IBM are ramping up cloud infrastructure offerings to compete. This might be the year that Amazon shares crack under the weight of competitive pressure and global contagion.
(Disclosure: The author does not own and has no intention of trading Amazon stock, either way.)