Software Companies Competing On Construction Skills

from the building-developers dept

Nick Carr has been making the point for some time that IT is increasingly becoming a commoditized utility that will one day be piped in to a company, just like electricity or water. While some aspects of his argument are up for debate, he's correctly identified certain important trends. The business model of many software companies, both open source and proprietary, is becoming less about selling high-margin software and more about selling low-margin services. Confirming Carr's point, companies like Google and Microsoft are investing enormous amounts in new data centers to host on-demand software, which in many respects resemble power plants. In his latest column on the subject, Carr again talks about the emergence of IT power plants, while framing it in a slightly different, but useful, manner. Essentially, for the first time, these companies are being forced to compete on their ability to build out tangible, physical goods. When Google develops a way to string servers together in a way that makes them faster or less power hungry, it gains a competitive edge. The same goes for anyone else doing a similar thing. It's no wonder that there's been so much attention paid towards data center innovation these days. The whole thing underlines the broader point that the information economy is not about selling information, but about selling tangible goods made more valuable through information.

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  1. identicon
    StammesOpfer, 28 Jun 2007 @ 12:53pm

    Re:

    And Nobody would ever rely on the power grid because it can't be 100% reliable. So everybody will keep their own generators.

    In the same sense yes there will be some people or companies that need better than 99.9% uptime and yes thay will keep local machines that can take over in some way if the "main line" fails. However they will still use the net services for the majority of their needs.

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