Are Large Tech Vendors Losing Their Grip On Customers?

from the going-elsewhere dept

The last tech bust hurt established tech vendors like Cisco and Sun, but many small companies were wiped out entirely, leaving the big guys as the only game int town for companies looking to buy gear. Once again, however, businesses are starting to dabble in offerings from less-established firms. As is often the case, newer upstarts offer more advanced solutions, whose appeal has to be balanced against the fact that the company may not even be around in a couple years. So while large firms may move a little slower, companies can at least be confident that the vendor will stick around and support the offering for as long they need. This best-of-breed vs. incumbent vendor story is really common throughout a range of tech areas. In recent years, major tech firms have been snapping up small companies to expand their offerings, under the assumption that companies wanted to buy as much technology as they could from the fewest number of vendors. The fact that companies are once again expanding their vendor list to include smaller companies may be a sign that these types of things are cyclical. Another factor may be the emergence of more open standards in technology. As it becomes easier for customers to plug together technology from different companies, the lock-in effect that benefits large vendors will start to disappear.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Anonymous Coward, May 23rd, 2007 @ 9:32am

    I think this is a good thing. The big guys tend to get too focused on their cash flow and lose focus on the needs of the customer. Startups understand that the customer is the most important aspect of their business, and will gear their products and services accordingly. Just as Intel has AMD, big companies like Cisco and Sun need some healthy competition to keep the marketplace healthy for everyone.

    reply to this | link to this | view in thread ]

  2. identicon
    Overcast, May 23rd, 2007 @ 9:45am

    Well - get a cheaper product from the big companies...

    And I still believe the saying is true, "You get what you pay for".

    It's not so much that the product itself is bad, just support after the fact is dismal at best.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, May 23rd, 2007 @ 10:03am


    Have you seen the crap coming out of china? You get what you pay for. It's all over ebay if you want to order some and see the difference in quality.

    reply to this | link to this | view in thread ]

  4. identicon
    Chronno S. Trigger, May 23rd, 2007 @ 10:35am


    "And I still believe the saying is true, "You get what you pay for".

    With technology being what it is and big companies being what they are, the concept of pay more get more is flawed.

    Norton vs. AVG for example. (Norton being expensive garbage and AVG being inexpensive goodness.)
    Win vs. Linux as another.

    reply to this | link to this | view in thread ]

  5. identicon
    matt vawter, May 23rd, 2007 @ 11:17am

    a lock-in effect occurs when the customer cannot easily move to another vendor without substantial switching costs. Because of the closed nature of systems without standards for interoperability, components cannot be replaced indepedendently or mixed with another vendor. Upon being locked in, the customer’s negotiating power erodes and the price for subsequent purchases tends to increase over time. It is for this reason many buyers deliberately adopt a diversification strategy.

    I do not agree with the final sentence in your statement.

    reply to this | link to this | view in thread ]

  6. identicon
    Jason, May 23rd, 2007 @ 11:32am

    Re: Re:

    "And I still believe the saying is true, "You get what you pay for". This concept is flawed at best, paying more money does not necessary mean a better product.

    For developers think Genuitec's MyEclipse at $30 annually versus IBM's Rational at a few thousand dollars - MyEclipse has been noted time and again to be the top choice (I believe it's called disruptive innovation).

    reply to this | link to this | view in thread ]

  7. identicon
    IronChef, May 23rd, 2007 @ 1:35pm


    Good ideas.

    However, I've found a more reliable constant-- Specific Software implementation depends on the size of the company. As a company grows, IT requirements mature, and theories involving organizational maturity are put in place, a company is more inclined to go down the direction of the larger company (usually de-facto standards) for support. When it comes to deadlines, understanding upstream and downstream needs, the value is in delivery and execution.

    Ambiguity just adds another unknown to the equation, and because larger companies are risk-adverse, it makes more sense to go with the company's technology that will be around in 5 to 10 years, and support will be available. So finding solutions that are adopted at other Fortune companies typically win outside of OSS or

    Personally, I really like OSS; I think there are a lot of winners out there. But companies such as Oracle, Google, and Microsoft are generally pretty quick to add differentiating features usually only found in a startup, and sadly, many startups don't take the steps to protect their intellectual property.

    A simplistic example- it's a lot easier (and cheaper) to find an Advanced-Excel person than a Advanced-OpenOffice person.

    reply to this | link to this | view in thread ]

  8. identicon
    _Jon, May 24th, 2007 @ 9:51am

    Meh thinks smaller companies innovate faster - reacting to customer demand - which causes larger companies to respond with similar features to keep market share.

    The smaller companies may not survive, but the technology they bring to market lifts the boat for everyone else.

    It may be one of the few cases where a small company with a technology patent is a good thing. Even if they can't make it in the market-place, at least they could license the R&D work to other companies who make use of it.
    (All of TechDirt's arguments on how screwed up the patent system noted, of course.)

    reply to this | link to this | view in thread ]

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