Anyone that’s been reading my blog posts here or over on Defrag has probably figured out that I’m a big fan of recurring cycles in history, industries, societies, etc. It’s always especially interesting to watch it play out in the tech world.
Yesterday’s acquisition of Cast Iron Systems by IBM seems like an indicator of where we’re at in the cycle for Cloud Computing. Let me break down tech industry development into 7 stages (this is the “successful trend curve,” not the “it crashed and burned” curve):
1. The pre-alpha stage: This is the stage where the new trend/niche doesn’t have a name yet. Normally, it’s growing out of the ashes or success of another industry movement, so people *try* to just call it that. For example, before there was “identity management” (in the enterprise) there were directories (and meta-directories). Hence, before IdM (identity management) was called identity management, it was called “directory services” — even though that name didn’t quite fit.
2. The “we’ve named it, but it’s all buzz” stage: Somewhere along the way, a name sticks. “Cloud Computing” – a helluva lot sexier than “Application Service Providers” isn’t it? Once the name sticks, you enter the stage of “all buzz.” This is where a ton of startups take root, and the common mantra is “technology X will *revolutionize*/permanently change/totally destroy the enterprise IT world [or whatever] and the big tech CO’s are clueless.” This is the time for visionaries and daring entrepreneurs. And, of course, some of the forward looking guys inside of the big vendors start paying attention. What this stage ALWAYS lacks is a) fully developed technology and b) customers.
3. The “um, we might have something real here” stage: In this stage the startups get their technology developed just enough that they begin to land customers. If the trend is lucky, the buzz word is now in full force and running headlong towards completely overhyped. Initial customers always arouses the big tech vendors — and they begin to make noises.
4. The “we’ve gotta get in” stage: This is the stage where the big tech vendors hear enough about this new thing from analysts and customers that meetings start to occur wherein an engineering guy says “holy sh&!, we’ve GOT to get in to this space.” The big tech vendors then do one of three things: 1) enter denial (ie, what we currently call “The Ellison”), 2) begin building something that will take 18-24 months to roll out (and be hopelessly outdated when it arrives), or 3) start buying startups from stages 2/3 (ie, the “CA” approach).
5. The end of early adoption stage: In this stage, the early adoption is in full force, and you can almost just *sense* that mainstream adoption is about to start happening. This causes the big tech vendors to wake up…which is to say, the CEO, COO and CFO finally go to that engineering guy and say, “holy sh&% this is gonna be big! why didn’t you tell us?” When this stage happens, an old, stodgy, been around forever tech company (*ahem* IBM *ahem*) makes a substantial acquisition (Cast Iron).
6. The “mainstream adoption/market gets real” stage: This is actually the longest stage, and it normally lasts 2-3x whatever stages 1-5 were. So, if stages 1-5 took 24 months to run through, stage 6 will take 48 to 72 months to occur. Some startups get REALLY big in this stage, some big tech guys make REALLY big acquisitions, and general mayhem ensues. In this stage, some tech conference will throw an expo around the topic and have 5, 10, or even 15 thousand people show up.
7. The “mission accomplished” stage: This is when you come out of the mainstream adoption curve, and the “industry” that has been built gets a) steady b) boring (to entrepreneurs) and c) profitable (for startups that ran the gauntlet). This stage usually lasts 2 years. At which point, the next trend will start.
Total time for stages 1-7: roughly 7 years.
Now, where are we in this cycle? Somewhere in the middle of Stage 5 (the “end of early adoption” stage). I don’t think we’ve seen the end of early adoption yet (indeed, I think it’s just beginning), but IBM’s Cast Iron buy lets us know where we are. Figure the early adopters need a year to play out (or so), and then we’ll move to stage 6 (assuming all stays on track).
What does that mean for the “cloud computing” industry? That there’s probably 4 years of REALLY explosive growth ahead of it, followed by 2-ish years of steady profitable stuff.
In other words, we’re just getting started. Be sure to join us at Gluecon.