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Here Today, Here Tomorrow What Next for the High Tech Start-up Looking to Stay Ahead of (or even in) the Data Center Game?
Sunil Mahale
MD and Vice President-Nutanix Technologies India
Wednesday, August 3, 2016
Recent history is awash with tales of high tech start-ups which seem to come from nowhere only to disappear just as quickly a few months down the line. Innovative small companies, typically driven by inspirational leaders with big ideas, able to identify and quickly fill gaps in the market ahead of established larger but less-agile incumbents. Start-ups which are here today, and on the button are gone tomorrow and never heard of again.

One key reason for this is that start-ups don't remain start-ups forever and few can sustain heady, often stratospheric, levels of initial growth or remain agile and innovative for very long. It's at this point, when sales level out, that they are at their most vulnerable. As the market moves swiftly on and the sleeping incumbents wake up to what's happening, either buying their smaller competitors out or pulling the disruptive rug from beneath them by putting their not inconsiderable weight into addressing those, previously overlooked, gaps in the markets themselves.

So how do tech start-ups grow and move beyond that initial flush of disruptive success? Keep banging the same evangelical tech drum in the hope of attaining critical mass and achieving an IPO before the VC money runs out? Pray for acquisition, perhaps, or do what they do best and look to build the next big wave of innovation while the incumbents are still waking up to the smell of last year's coffee?

Doing it Differently

It's this last option that I'd go for, every time. Indeed, I believe it's the only way of growing a high tech business from start-up to profitable publicly quoted company, especially in an increasingly competitive and still rapidly evolving marketplace where what the customer wants the customer can get and if not from you then somebody else.

But don't just take my word for it. The need for start-ups to move on and reinvent themselves to stay ahead or even just survive isn't something I've just plucked out of the air, it's more than backed up by what's happened in the tech sector in the past few decades, with Apple a high profile and obvious example here.

Once a disruptive start-up, Apple struggled big time as it got bigger in the face of massive competition in the desktop PC market. For a long time it was happy to simply tread water, trading on its reputation for style while doing little more than fulfilling the computing needs of specialist niche markets. But that was never going to work and the future looked bleak until it took the bold step of moving into new markets and meeting their needs by inventing completely new product categories and technologies, ultimately enabling it to grow into the behemoth we know today.

Similar stories are also to be found within the data center space where, over the past few years, small and very agile, start-ups have been busy chipping away at the customer base of more dominant players such as HP, Dell, Cisco, IBM and EMC. Enterprise storage, in particular, has provided a fertile ground for many of these VC funded newbies to thrive in.

Companies like Nimble Storage, Pure and Tintri have made great strides in the primary data center storage arena once almost exclusively in the domain of the big name vendors. And they're not alone, with countless others joining the fray in the wake of massive price drops for flash memory which have turned traditional pricing models on their head by delivering high levels of performance for ever decreasing amounts of money.

Unfortunately, this hasn't been lost on the incumbents who have been busy regrouping and stealing back lost market share. Their once-agile competitors, meanwhile, are struggling to grow and further develop their products with many just too busy to do much more than carry on addressing the same gaps in the market which are now closing at an ever accelerating rate.

Some, of course, have been acquired and their technology plundered. And there are clear indications that many of the others, once considered darlings of the storage world, may now never make it to IPO and could well leave the stage altogether.

The exceptions here will be those that move with the times. Companies those are willing and able to re-evaluate their approach to the market, to address new and changing demands and take advantage of recent technological advances.

Doing it Better

In the case of storage, it means giving up trying to compete on performance or price - simply because the big names have caught up and are able to match or even better anything the new wave companies have to offer in this respect. Rather the companies most likely to succeed are those that are prepared to take a different line altogether and differentiate their products by, for example, borrowing from data analytics to automatically change the way storage is configured to suit the type of data involved, levels of demand and so on. Similarly, others are moving on to meet the needs of secondary storage beyond that required for business critical applications, where different dynamics and pricing criteria apply and there's more room for innovation.

And it's a very similar tale as far as the rest of the infrastructure market is concerned with the incumbents finally realizing that convergence isn't going away and that web-scale technologies are what everyone wants. This has implications for all those involved and, again, the start-up survivors are likely to be those that look towards moving the goalposts rather than thinking they can hold back the tide of products and technologies the re-energized brand names are bringing to market.

Clearly, I don't want to give away any trade secrets, but the brand name incumbents are still behind the curve as far as applying web-scale infrastructure solutions to the data center are concerned. In particular, when it comes to integrating on-premise platforms with the Cloud in all its guises is making the kind of web-scale architecture enjoyed by the likes of Amazon and Facebook more widely available. Moreover, just as with pure storage platforms, there's scope to add value using data analytics to dynamically configure converged compute, storage and network solutions to better meet application and user demand.

The opportunities are still there, the incumbents are still to be found napping in a lot of areas and it's not a done deal by any means. Start-ups will, as a result, continue to come and go, but those able to stay agile and ahead of the curve as they grow are those most likely to make the transition from disruptive newcomer to established vendor and rise to the top in the data center world.
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