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China: The Great FireWall

Wednesday, December 7th, 2011

Only I would fly to China for 36 hours, but alas, it is my life. It remains a fascinating land, full of smog, and gross people. God I do love it.

There are now 87 different wines in China, which is good. Most of them are awful, which is bad.

Terrifying: looking up while driving in Beijing. Simply “Exorcist”-like terrifying. “Silence of the Lambs” kind of terrifying. Zanax inducing.

Gross: people like to “hawk up a loogie” (clear their throat, and spit a pile of phlegm) pretty much anywhere. Dinner time? No worries. Breakfast? Sure. They also continue to smoke, anywhere and everywhere.

Brilliant: there have to be more PhDs per square foot here than anywhere else in the world.

Bizarre: The Chinese have absolutely no issue answering their phone, and engaging in loud, animated dialog, no matter where they are – say, as in the middle of a presentation in a small conference room. With me.

Similar: to the Israelis, the Chinese seem completely fine yelling at each other, over each other, and around each other in a meeting. It seems like it could come to blows at any minute, but then everyone is fine.

There are WAY too many Chinese. Traffic in Beijing is insane.

I still, after many years studying this market, have no real idea how it operates. The good news is the Chinese are the world’s bank, as they have the money. The bad news is they don’t seem willing to spend it as “normal” buyers. I can’t figure out how anyone makes money selling to this market.

When Europe inevitably collapses due to debt – or the US does – those entities will stop spending (by force, not by design, because god knows we don’t want to stop spending money we don’t have – we can print more! My ex-sister in law once said “I can’t be out of money, I still have checks.” She must now be a prime minister somewhere.) Since our collective governments are the largest buyers of IT stuff, and that will terminate, expect major IT vendors to double down on active markets such as China. Their power – already tremendous, will only increase. Those with the dough control the flow.

Surprisingly the entrepreneurial nature of the Chinese continues to blossom. It’s not your grandfather’s ministry anymore, son.

This is probably the only country on earth that continues to control information flow. No Twitter. No Facebook. No porn (I’m told). They continue to be able to alter reality to fit the “social best interest.” It’s stunning really. Countries have toppled in the last 18 months because of the social mechanisms available to the masses – but not here. Not that anyone would want to topple China, they are all doing just fine, thank you.

Apparently these folks will eat just about anything. I have photos of scorpions on the menu, duck tongues, and maybe the grossest thing I’ve ever seen – the sea cucumber. Oh, did i mention the bullfrog? Damn. I get that you have a billion plus people, but yikes.

The people in general are very pleasant. They smoke in elevators next to newborns and cancer patients, but they do so with a smile.

They are stunningly well spoken. I know two words of Mandarin. The average farmer seems to know more English than I do. There is a reason they own the world.

It is fascinating to read the English version of the “news” in China. It’s Pravda circa 1972.

They literally control the weather. I couldn’t see 8 feet out my window this morning. No unrest if you can’t see.

Perhaps the greatest thing ever in China is the fact that while the country is approximately 9,000 miles wide, they have ONE time zone. Screw you. One! In India I think they change time zones every 15 miles. But China has one. Too confusing otherwise.

There are gas masks in every hotel room. No lie. Gas masks.

It’s too bad it’s a billion miles away from me, because it truly is one of the most awesome places on earth.

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Fail Factors – Why Startups Die: Market Research

Thursday, November 3rd, 2011

When I was a relatively young man, Coke, the perennial powerhouse, introduced New Coke. It was an unmitigated disaster that might have a killed a lesser brand. It ended faster than Kim Kardashian’s latest marriage.

Coke is a big company, with tons of money, and tremendous marketing resources. One might think that prior to risking life and limb on a product launch, they might have done a little research. If they did, it sucked. If they didn’t, they sucked.

As I write this we are in the midst of deja vu all over again: Netflix is reeling from consecutive faux pas causing wonderful customers to flee their service – offering recently dead competitor Blockbuster a much needed chance to regain some share. Bank of America is about to rescind a brand new “feature” of its ATM card service–the $5 monthly fee for the privilege of using their ATM cards.

Sometimes I think there may be an inverse correlation between the size of a company and its higher brain function.

These are all prime examples of A: arrogance, B: stupidity, and C: not knowing your customer or market. They are not mutually exclusive.

In each of these very public cases, the downsides could, and I suggest would, have been avoided if the company simply contracted with a really good market research firm (like, say, ESG!). By really good, I mean one that doesn’t go into a research project with a predetermined desired outcome–which, like it or not, exists when a company does it on its own. It happens even when a company tries to be impartial–it’s human nature. In tech, I bet 90% of contracted market research is done after the fact–so a company can find supporting evidence that the decisions they have already made were/are correct. For the record, I used to be that guy. I’m a convert.

It’s easy to get an answer you want. It’s hard to get the correct answer. It’s science–mixed with some art. You have to know what questions to ask, and how to ask them (good researchers ask the same question 87 different ways without the respondent knowing they are doing it–thus good researchers can find and trap false positives). I suspect there were a lot of false positives in the flawed market research done by the Bank, Netflix, and Coke (assuming they bothered doing it at all). Those are giant, professional consumer brands with marketing budgets bigger than the forward looking projections of your company in 20 years–and yet they screwed it up. What’s the chance that you are going to get it right without help? Zip.

Good companies do this research BEFORE they make huge bets. Arrogant/stupid companies don’t do it at all. Inexperienced companies do it too late, normally.

“Because I know” is the most popular line in a startup. Why are we building this? Why those features? Why that market? Because they know. So they build it, then they wonder why no one bought their fur covered servers (in both Leopard pattern and Bengal tiger). Being stoned may provide creative insight, but being right requires proof.

The second biggest reason that people don’t perform this function (after “because I know”) is that they are terrified they will be proven wrong. This is a leadership issue. Clearly it would be far better to be proven wrong than to run out and launch something the market doesn’t want. Sure you might have wasted time and money–but I sure would rather know and put an end to it now than waste more! I, however, seem to be in the minority in that position.

Whoever the leadership is in your company is responsible to ask “WHY?” as many times as possible until the answer has legitimate merit. “Because I know” is not legitimate. “We did X, Y, and Z to test the thesis and the results support it” at least sounds better. If you are small you need to question yourself. If you raise money then your VC/board should be pushing you on this. If no one is, then you are destined to be stunned at your lack of success. Sometimes you can be wrong and wildly successful (post-it notes), but the odds aren’t with you.

Do your homework, preferably before it’s due. Wish my kids listened to that advice.

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Big Problems on the Horizon: Disk Shortages

Tuesday, November 1st, 2011

We take it for granted that disks are abundant and cheap, but that’s about to change. The impact, at least for a while, will be far reaching.

Quietly, over the last decade, we’ve gone from a disk drive industry of dozens to two primary enterprise players: Western Digital and Seagate.

Both do most final assembly in Thailand. Both are fed by component manufacturers based in Thailand. You may not have noticed, but Thailand is under water with the worst flooding in history.

Many of the component suppliers facilities are gone. Those that are not are severely damaged.

Both Seagate and Western Digital plants have been damaged or completely destroyed.

What will it mean?

  1. No one is saying it publicly, but we estimate that the disk drive industry will be operating at no more than 50% capacity for at least the next 2-3 quarters. Translated, if there is real demand for 100 drives, the best the industry could do is deliver 50.
  2. The factories aren’t easily relocated or rebuilt. Even if factories for the assemblers are available, the components may not be available.

What does that mean to you?

  1. The drives that will be built will be the high end drives sold into storage and server vendors–these have the most margin for the drive manufacturers. High vs. low end drives share 95% of the same parts, so if you can only supply LESS than the market demands, you are going to build the highest margin products. Simple economics.
  2. The low end drives–sold into PCs, as standalone drives for backups, low end servers, etc.–will be very scarce and will be marked up. Again, supply and demand.
  3. All drive prices will increase. How much is hard to tell, but if you are the only one with the “stuff” and the world needs that stuff, you can charge what you want. Those with purchase contracts may be protected, but that is a pretty rare few. The rest of the world is going to either be in trouble or have to look to alternate offerings. It figures that systems manufacturers that purchase the bulk of enterprise drives will get the lion’s share of the allotment–which could leave out retail operators.
  4. If it has a drive in it, you should assume it will get more expensive. So if you are thinking about a new PC for the kids, best buy it now–or wait. Same for low end servers.
  5. This could be a boondoggle for flash technologies. If disk prices rise, flash will look more attractive and assuming disk shortages (even at higher prices), expect companies to push flash offerings in PCs and servers. It could very well provide a spark to the new “performant storage” companies as well–especially those developing economically viable flash-based systems (with compression/deduplication, for example). Flash–based tablets (iPads, etc.) will replace PCs in many applications since folks may not be able to get ones without flash.
  6. I worry about SMB IT operators–the biggest buyers are most likely already negotiating allotments and pricing from their core vendors, but little guys won’t get that opportunity. If you know you are going to be adding capacity in the next year, you might be best served to buy it now. The storage industry could experience a short term gold rush. For a change, those with large drive inventories could look very attractive.
  7. This will probably slow down your primary vendors roadmap development a year from now.
  8. Expect more aggressive virtualization (server and storage) rollouts once this hits the market, because that’s one way to get more out of what you have.
  9. If cloud infrastructure providers have capacity, they may find the SMB running to them if supply tightens up as we expect.
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9/11 Ten Years After

Friday, September 9th, 2011

This is the e-mail I sent my address book on 9/11/2001.  I didn’t have a blog then.  My IT guy sent it to me.  Brings back a lot of shitty emotions–but the story of Jacob still makes me smile to this day.  Ten years ago, I almost lost a nice guy I barely knew.  Ten years later, I have a friend for life.

“From: Steve Duplessie

Subject: September 11, 2001

To: “webmaster@enterprisestoragegroup.com”

Date: Tuesday, September 11, 2001, 6:44 PM

Friends, family, and colleagues – I hope this message finds you well.

I won’t try to explain the unexplainable events that occured today, and hope that you are all well and your families ok.  It is a pathetic, cowardly deed done by demented people who feel this is their quest.  Why? I don’t think normal people can ever understand.  I am appalled and angry, as are most of you.

Instead of harping on the negatives, however, I thought I’d share a miraculous positive with you.

Yesterday, Sept. 10, 2001, a friend and ESG client by the name of Jacob Herbst was in our Milford office.  Jacob is the founder and CEO of an Israeli company named FilesX, or Files Xpress. As Jacob left around 3pm yesterday he was heading to Boston.  Before he got to his car, Tony Prigmore from our office reminded me that I should introduce Jacob to a potential employee named Mike Beaudet.  I stuck my head out of the window and asked him to come back up.  I gave Jacob Mike’s phone numbers and he went on his way.

Jacob met Mike for breakfast this morning at 6:30. They had a great meeting, and as such Jacob missed his flight to Los Angeles – Flight 11.  Flight 11 crashed into the first tower just before 9AM.

I don’t really know why i’m writing right now, perhaps to try to make some sense of this.  As most of you know, I’m an emotional guy.  I’m really pissed off.  I’m also very grateful that there are going to be stories like Jacob’s told over the next few weeks.  I’m not sure what to tell my kids.

What I can tell you is how I’ll personally react–it will be business as usual.  I have a hectic travel schedule this fall, and my wife is beside herself with all the travel that is about to happen.  As i told her, I think that it is important that we (by we I mean all civilized people of the world) not succumb to this flagrant act of dementia by letting them win – i.e. letting them change the way that we live as free people.  I may be crazy, but to me life in hiding isn’t life at all.

So, while this whole things sucks about as bad as anything I can remember, it won’t keep us down.  It is a tragedy that should never have happened, and I truly hope that the US spends every effort possible to hunt down not only the actual perpetrators, but those that aid and abet terrorists wherever they hide, and crush them.  Preferably publicly.  This is not a time where individual rights supersede the rights of a nation to protect its people.

So, I pray that you all receive this, and I give my heartfelt condolences for any losses you have suffered.  The computer business seems pretty insignificant all of the sudden.

Cheers.

Steve Duplessie

Senior Analyst

Enterprise Storage Group

211 West Street, Suite 2

Milford, MA 01757

(508)-482-0188

(508)-482-0128 Fax”

I was right back then.  F&* those who feel compelled to screw with the lives of good people just trying to get through life happily, just because they are miserable.  And bless our dumb ass IT business for not missing a beat.  We should never forget what happened–but we should also not lose sight of just how resilient we are, both as a people and an industry.  The world didn’t end. Life didn’t end. Geeks are more popular than ever.

Have a great weekend.

Mazel Tov Jacob!

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Heading on a Walkabout

Monday, July 25th, 2011

I’ve never been to Australia, for no other reason than it’s a billion miles away from me.  But now I’m on my way and very excited to be.

I’m speaking at the IIIS event in Sydney on August 2-3 and would love to meet my Aussie pals.  I intend to master the accent within a few days, then annoy the shit out of my American cohorts with it for a solid month after I return.

I would like to meet both Elle McPherson and Nicole Kidman if possible.

And Crocodile Dundee, but he’s not as important to me as the ladies.

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Summer Love and Software Licensing

Wednesday, July 13th, 2011

A while ago I wrote a blog on the hatred of software licensing.  It isn’t any better today.

Yesterday, VMware announced some new licensing information.  To be completely honest, I have no idea what those announcements were.  I do know that they were met with loathing, frothing vitriol.  People were all bummed out to say the least.

Mark Bowker, ESG’s resident virtualization god and all around mellow guy, is going to explain what they did calmly and rationally (how boring!) shortly, so I’m not even going to attempt it.  Instead, I have other thoughts.

  1. All software companies are hated for the way they license.  Really, which companies are loved for their licensing EXCEPT those who give their stuff away free?
  2. As a general rule, we hate successful companies because they are, well, successful.  They tend to be that way because they make money from us–via their licensing policies.  If they gave us free stuff, we probably would love them.
  3. This outcry is not unique to VMware.  Microsoft, Oracle, CA, etc. all face the exact same contempt.  Maybe because VMware was “free” not too long ago and now makes billions, we’ve developed an over the top hatred for them.
  4. This has been going on since time began.  I still remember people HATING Veritas for its confusing licensing scheme in 1994.  Hated it.  Bought a zillion dollars worth of its stuff, but boy did they hate doing it!

Now, it is conceivable that VMware has become evil, but I doubt it.  It is probably doing whatever it is doing for some entirely logical reason–and my guess is we will find this to be the case in short order once the lunacy dies down.  Or, we may find VMware screwed up, but it doesn’t matter.  If it did, it will either correct it or open the doors to customers going away–and while I’m not that smart, I know that VMware is–so I suspect that won’t happen.

I love to make Larry Ellison/God jokes, but truth be told, I’m enormously envious and jealous of the awesome power he has amassed by selling a product for huge amounts of money that no one is happy paying and yet everyone still buys.  That’s power.  Let’s face it, if you could go elsewhere, you would.  But you can’t, so suck it up and deal.

You can buy/borrow/steal other hypervisors.  But you won’t.  Unless VMware goes too far, which I’m pretty sure it hasn’t. It is going to make money.  Deal with it.  You will bitch and moan, but then you’ll send VMware a check.  Life will continue.

Yesterday, Netflix sent me a notice that it was changing its licensing policy–again.  Six months ago, Netflix told me I should stop getting my three physical disks a month plan for $15 and change it to one physical disk plus unlimited online access for $12.  I said, “super!”  I still needed physical access because Netflix has yet to put some “new” disks online … like the Exorcist, or Jaws, or any of the Star Wars episodes my nine year old watches incessantly.  Now, Netflix has decided that if I want to keep getting any physical disks, I need to pay double.  Evil, yes.  Moral? No.  Am I going to dump Netflix? No frigging way.  I’m going to pay. Bastards.

I’ll remain jealous.

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Truth In Press Releases

Thursday, May 19th, 2011

I read press releases.  Myself, my colleagues, and 17 other people in the world read them.  You’d think by the sheer number of them that appear daily, others would be interested, but no one is.  Only me, and my friends.

Companies think that if they send out a press release, it somehow will make them feel better.  It must make them feel good knowing that they have said something so profound and interesting, that perhaps 18 people will read it.  I don’t understand it.

99% of all press releases are an unmitigated waste of time.  Even that 1% of newsworthy press releases tends to ruin itself by hiding the important, relevant component of the release inside piles of useless babble.

I’d like to see this press release some day.

Spaz.Com Appoints Seymour Options As CEO

Leading Cloud Virtualizer VMware Deduplication Orchestration Alchemy company adds only person to say yes to rapidly dying company

Sunnyvale, CA – January 43, 2012  - Spaz.com, recently voted the valley’s “most likely to plummet,” is pleased to announce that industry legend, Seymour Options has been appointed by the board of directors, which includes such notables as Timmy the Shark’s Mascot and a pair of Grey Reyes’s reading glasses from 1994, to the position of CEO Emeritus Excelsior Magnum.

“We could not be more pleased to have Seymour join this exciting opportunity,” said a random stranger who apparently lives in the company’s parking lot.  ”The timing couldn’t be better,” he added, as he urinated on Seymour’s car.

“I am truly excited about Spaz.com’s prospects.  Being the leader in the Cloud Virtualizing Car Wash Data Domain 3Par Hampster Polishing sector is exactly the right place to be at this time,” said Options.

After an exhaustive search that included interviews with candidates living in the caves of Lanzhou, China to several Amazonian primates, the search committee is pleased to report that the best, and only, candidate with teeth has been appointed.

Options succeeds Hugh E. Go, who successfully raised, and pissed away, more venture capital money than any other silicon valley entrepreneur this year.  ”It will be difficult to fill Hugh’s shoes, as they are very large.  However, I’m hopeful that with the $97 we have left, we’ll be able to completely re-do the entire company, and perhaps develop a product that does anything.  Anything at all,” said Options.

That would be interesting at least!

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Binary Fun Facts For Monday

Tuesday, April 19th, 2011

I can’t figure out why or how this works, but it seems to.

Take the last two digits of the year your were born (in my case, 64).  Add to that number the oldest age you will be by the end of 2011 (in my case, 47).  The answer will end in 111.  If you are a kid, it will end in 11.

So, the challenge is to have some smart engineer that can also speak basic English (i.e., “dumb it down”) explain why this phenomenon occurs, such that I can explain it to my wife and kids.

Hurry up.

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When Did Industry Events Become So Awful?

Tuesday, April 12th, 2011

I’ve always been on the vendor/marketing/sales side of life historically, so growing up in this industry, events have always been a way of life. A vendor uses an event in hopes of reaching an audience of potential buyers–in order to push their agenda. I have no problem at all with that.

Perhaps I’m naive, but didn’t it seem like the reason you could get potential buyers to attend an event was that there was something in it for them? Something other than free booze and tee-shirts, that is. Didn’t it seem like people used to go to industry events because they could learn something that would help them in their job? That could help their company?

The VMUG and VMworld events are examples of things done right: users go because they NEED to learn things, and vendors go because that’s where the users go. That is the circle of event life as it should be: vendors aren’t pushing their story as “content” for users–users seek out vendors they want to talk to.  That sure seems like a more civilized way to do things.

I say all of this because ESG is days away from holding our first ever event (www.esg-ahead.com).  I was naive in thinking that creating an event specifically for IT pros by IT pros with a day jammed with education for IT pros on IT (virtualization, specifically)  issues, would somehow keep consultants, headhunters, vendor sales reps, etc. from attempting to crash the party.  How wrong I have been.

Make no mistake, I like consultants, headhunters, and god knows I like sales guys – but for the love of god, this is not for you! Even the sponsors of our event don’t get to pitch–which they are fine with, because they understand that the entire point of all of this is to HELP the poor IT folk get more advanced in their virtualization efforts.  If the user gets smarter and does more–it creates opportunities those vendors wouldn’t get otherwise. A “stuck” or “stalled” IT department does NO ONE any good–not the industry, nor themselves.

Our objective is to help them get unstuck.  Our sponsors are smart enough to realize that this is also their objective.  Thus, they don’t mind not being able to stand on stage and give an overt infomercial.  They realize that if the intent is pure and they are a positive member of this tight agenda in this tight community of like-minded people, they will have the opportunity they seek–eventually.

I don’t see how a head hunter or a consultant looking for leads helps anyone at this event (or most other events) advance their virtualization efforts. There are plenty of vendor networking events–and they are great. So go to those!  Leave the poor bastards trying to learn something alone!

So, my friends, even if I had an empty chair (which, thankfully, I don’t), I wouldn’t let you in.  It doesn’t mean I don’t love and respect you–it just means that for the same reason it is inappropriate for me to demand to be allowed into a Girl Scout Troop meeting (without my  kid involved), this is the wrong event for you. All we would accomplish is to make those who belong there uncomfortable with our presence.

And for you vendor sales folk, well, I’m afraid you are just shit out of luck.

We are trying to create a safe-haven for IT folk to share, learn, and advance–not a battle ground to be accosted and pestered. Call me naive, but that is our quest. Will we succeed? I don’t know, but we sure as hell are going to give it our best shot.

Once the huge offers of dough start rolling in, I may change my tone–but for now, leave us to our mission!

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Why is Everyone so Fired Up About Big Data?

Tuesday, February 15th, 2011

Advanced analytical capabilities?  Enhanced business intelligence?  Superior decision support abilities? The ability to turn data into money?

Nope.

While all those are good things and very worthwhile pursuits, they are not the reasons our industry is so enamored with the construct of big data.  The reason we love big data is far less complex.

There are really two reasons:  first, because Oracle decided to get into the game and second, because once we figured out why they wanted into the game, we realized there was a ton of money to be made–or lost.

A quick history lesson:

Big data means nothing. It’s a well meaning term for (literally) big piles of data, sitting in various massive balls of infrastructure, randomly scattered around our enterprise.  More common terms include data warehouses or decision support systems, etc.

The IT industry has been built on the back of transactional systems: the big iron, big money, big visibility systems that run our companies.  Those are the most expensive, most important systems in our worlds and as such have the best people on them, the most expensive components–both software and hardware–and have the most risk (perceived or real) to our livelihoods, which is why they are the most reliable.

Transactions occur once.  We make sure our systems scale to meet transactional demands–once.  We pay a lot to over-provision in every aspect because transactional scale is not a nice to have, it’s mandatory.

Big data is created by copying transactional data and sticking it on another system. We copy ALL our transactional data and stick it on these systems. Over time, those systems become supersets of our transactional systems. We make lots of copies and put them in lots of big data systems.  Talk about the need for dedupe (which, in big data parlance, is MDM: master data management, but I digress).

Since we used big iron/big databases/big money stuff on our transactional systems, we had the tendency to duplicate those investments on our big data systems even though those systems behave completely differently from each other.  So, lo and behold, we found ourselves with giant systems and giant expenses all over the enterprise, built for transaction processing, that don’t ever do transaction processing.  They sit idle 90% of the time, waiting for an “analyst” to come up with some query to run against the data set.

I figure for every transactional Symmetrix EMC sells, they sell two more for big data apps.  Same with IBM, etc. Oracle sells TONS of RDB licenses for big data infrastructure, even though it seems stupid that that type of data sits inside an RDB.  People are creatures of habit.  Industry counts on it.

So, along comes the benevolent Mr. Ellison. He sees that the masses are paying $3M+ in infrastructure costs for each of their big data piles. He doesn’t think he is getting enough of that pie. So he brilliantly decides that he can radically reduce the spend on hardware by packaging up commodity stuff purpose-built to handle the big data issues. He then bundles all of his magic software–which now consumes 80% of the spend–and puts a bow on it for customers.  Then he gets downright evil (and even more brilliant): he runs into all the big sites, performs a quick software audit, and finds out those sites are all out of licensing compliance.  Suddenly, customer A gets handed a bill for $4M–but not to fret, because the good people at Oracle have a simple solution: instead of just paying up, why not just buy a new Exadata system–which will greatly simplify your life–and we’ll make that little compliance issue disappear?  Genius, really.

I figure there is at least $6B in big iron at risk in this area alone.

Thus, the reason this space is electric right now has nothing to do with the marketing you hear.  It’s not about the promise of driving value out of your data, it’s about vendors figuring out that they either attack that space or get slaughtered watching. EMC didn’t buy Greenplum because they are nice people. They bought it because it helps them go on the offensive in the big data space and–most importantly–it does so by attacking Oracle where its (black) heart is: at the RDB.  You don’t need a $2M Oracle DB license if you use Greenplum, or Vertica, or Aster, or Informatica, etc.  IBM knows it.  HP knows it (which is why they bought Vertica yesterday).  It’s just a matter of time before Dell makes a play.

Now, not to be overtly pessimistic, there is a silver lining.  Once all the plays have been made for their ulterior motives, then everyone will get down to the real value at hand, which is making those random piles of data start generating customer value.  That will happen.

First things first.

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