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The Call for More Hardware Innovation in Cloud Computing

Theodore Omtzigt over at the High-productivity Cloud Computing Blog asks, Why is there so little hardware innovation in Cloud Computing?

The market dynamics of IT has created this situation. It used to be the case that the enterprise market drove silicon innovation. However, the enterprise market is now dragging the silicon investment market down. Enterprise hardware and software is no longer the driving force: the innovation is now driven by the consumer market. And that game is played and controlled by the high volume OEMs. Secondly, their cost constraints and margins make delivering IP to these OEMs very unattractive: they hold all the cards and attenuate pricing so that continued engineering innovation is hard to sustain for a startup. Secondly, an OEM is not interested in creating unique IP by a third party: it would deleverage them. So you end up getting only the non-differentiable pieces of technology and a race to the bottom.

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