29 January 2024 17:51 29 January 2024 17:51 | Share
The world has seen a vicious practice of reducing competition in the information technology segment. The trend is set by American large corporations buying up small companies. As a result, the diversity of the offer is lost, and the remaining players begin to forget about innovation and concentrate on selling old solutions and switching to subscriptions, which ruin consumers.
You need to buy a competitor
The international IT industry is becoming increasingly devoid of significant players as one larger company takes over a smaller one. As an example, The Register cites the upcoming deal to transfer the American company Juniper Networks, a vendor of network devices, into the ownership of IT giant Hewlett Packard Enterprise.
It became known that the deal was about to take place in early January 2024. HPE is ready to pay almost $14 billion for Juniper.
After the deal, there will be one less independent player in the network devices market. The Juniper brand may remain, but HPE will now stand behind it. Meanwhile, this market, writes The Register, is already excessively consolidated. American Cisco has several subsidiaries, including Meraki, which it also bought at one time, and with which they are now terrorizing the Russians. Thanks to this, Cisco earned $57 billion in revenue over the past year, which significantly exceeds the total revenues of its competitors – Ariata and the aforementioned Juniper.
Conquered the market – put pressure on customers
Taking advantage of its market position, Cisco not only decides in which countries its equipment will work and in which it will not, but also manipulates customers’ wallets, increasingly forcing them to switch to a subscription model. In the software world, this is gradually becoming the norm, although not everyone is ready to pay developers money, receiving only a temporary lease instead of a permanent license for their software.
There will be fewer and fewer new technologies due to endless mergers and acquisitions
This sales scheme is much more profitable for developers – giants like Microsoft and Adobe realized this a long time ago. Cisco also sees huge benefits in subscriptions and is pushing customers to switch to this model, even if it comes at a cost to their wallets. Cisco shareholders, by the way, support it in this, and HPE follows its example.
Cisco is also currently in the process of acquiring Splunk (the deal was announced in September 2023), an American company that develops software for processing and analyzing machine-generated data. This is another example of how a tech giant buys companies that are small in comparison – for comparison, Cisco employs 85.4 thousand people at the end of 2023, and Splunk employs exactly 10 times less.
Moreover, in this case, the tech giant absorbs a company that is not its competitor – it simply needs its developments in a long list of its assets.
Everything slows down
It’s not just HPE and Cisco that are destroying competition in the IT industry. Another recent example is the acquisition of VMware by Broadcom. Formally, VMware will continue to exist, but will cease to be a separate company.
In past eras, such acquisitions and consolidations may have benefited technology buyers because companies actively developed better technologies rather than focusing on existing ones or concentrating on acquiring businesses.
Experts at The Register confidently claim that Cisco, in the form in which it is now, exists only because IBM at one time turned away from network technologies. By the way, IBM also got rid of its computer and server divisions, selling them to the Chinese Lenovo, which is now the leader in the global PC market.
Gostekh will turn into GitHub for Russian developers
CNews Analytics
In the recent past, investors liked the idea that smaller companies could challenge one of the tech giant’s businesses. Money flowed like a river, and such enterprises quickly grew and prospered.
But now that the market for local enterprise IT is shrinking, investors and innovators will be cautious, according to The Register analysts. In 2024, creating a better router, server or data storage array is a useless undertaking, in their opinion: all recognized market players have long been entrenched, they have no new rivals, but if they make a mistake, the remaining competitors will not miss the opportunity to turn this into your benefit. In view of this, you definitely shouldn’t expect truly innovative solutions from large corporations in the foreseeable future.
At the same time, tech corporations will continue to promote subscriptions to their services, and in some cases, to hardware. Big market players want users to think that such changes are in their best interest because they will no longer need to have a deep understanding of technology. Users may also become less knowledgeable about the technologies they need to solve specific problems. However, corporations will respond to this that it is for their own good, writes The Register, even despite the fact that customer bills are growing due to subscriptions, and the choice of technologies, due to the lack of a sufficient number of competing market players, will, on the contrary, be reduced.
Gennady Efremov
2024-01-29 15:28:48
#industry #dumber #customers #poorer #ways #giants
