I’m working with my team to build a company in a very mature market. It has been around for a long time, more than 50 years. It’s a market that’s more than 100 billion $ / years. I constantly challenge myself to understand the consequences of this choice.
In this market there are about 5 players, EMC, HP, IBM to name a few who own more than 70% market share. You can in a way call this a monopoly. For a long time they literally had no competition in this space. It was like it is now for Google in the search engine space. No competition. But things have changed radically in the last years.
From my perspective monopolies in certain markets are a good thing for society. They drive innovation and progress: they encourage people and companies like us to challenge the status quo and to come up with better solutions. In the storage market if we want to compete with the “big guys” we need to be better, brighter, bolder and more agile. It makes us “think different”, see the present differently. And who benefits from this? All the consumers of the technology we are creating.
An interesting thing to see is that the prices are falling dramatically, especially from the “big guys”. When they analyse their products and realise that they are inferior in all aspects from their newly created competition there is one option: set low prices to move customers away from competition so you can keep market share. But that comes with trade-offs – destroying your profit margins. A great example is what’s happening in the airline industry, where a single passenger trip in 2012 was generating $0.37 profit.
This strategy works to some degree, but we are leaving in the digital era where people are more and more informed, where traditional marketing like “i’m the big and the best” is not very effective anymore. Our collective knowledge is doubling every 12 months and soon is going to double every 72 hours. That’s amazing actually.
Looking over the market share it’s very interesting to see that the “others” section is growing year over year.
From my understanding there are more than 200 companies in the others section, us included and we are growing. A lot of innovation and smart solutions are being created and delivered in the data storage market in the last 5-10 years. Most of them from “the others”. That just comes to back up the facts that innovation is present in this mature market probably more than ever.
One thing I noticed a few days ago was that Google took the lead in the dangerous game called “Race to zero”. That means – unlimited storage for free. It’s provided for certain type of services, but it’s just the beginning. This makes me wonder if infrastructure in general will just become commodity. Well, commodity is good. Electricity is commodity but no one can ever live without it.
Challenging the status quo in such a market and building a successful company in this space takes time, a lot of time, and huge efforts. But we are here to stick around in the long run. And probably a lot of other founders and business owners out there take this challenge personally, and when you do that, great things can happen. In the end spartans where only 300. Confidence, agility, motivation are the keys. Bring it on! This is the image I usually use to give myself confidence.