The two technology markets

While pundits strive to influence stock price, IT stays focused on strategic objectives — that’s not easy

In computing, the space between major technology advances could be measured in years, and observers saw the variety of solutions as more of a melting pot. In microprocessors, each architecture was regarded for its respective strengths, and the informed recognized that strong systems for a variety of applications could be built around Motorola 68K, Intel x86, AMD’s K-series, MIPS, POWER, SPARC, Alpha, PowerPC, and PA-RISC. When Motorola’s fascinating 88K made its too-brief appearance, it wasn’t lambasted for its uniqueness. Instead, Unix lent this architecture, as it did with others, a large measure of credibility and equality.

There was, and still is, no such thing as an IT impulse buy, a system purchase or a switch in suppliers driven by the emergence of a new or updated CPU architecture. Indeed, institutional buyers are still unmoved by that great obsession of punditry, market share. It delights me whenever tech industry oddsmakers’ projections, always presented with such certainty, are made hollow by the market that these pundits fancy themselves driving rather than watching.

I’ve found most delicious proprietary RISC Unix servers’ failure to hew to analysts’ actuarials and AMD’s success despite prophecies of inescapable doom. In seeming frustration with this, analysts have taken to issuing long-range market projections based on the debut of new technology, despite the fact that a few months or a year later, a competing vendor is certain to reach or surpass that laudable milestone. The market isn’t moved to make strategic decisions based on snapshot-driven analysis.

That doesn’t keep analysts from trying. If I wanted to make myself the most-quoted tech journalist for the month of May, I need only issue the most dire of projections for Sun Microsystems’ future following the debut of IBM’s POWER6 CPU: “IBM’s POWER6 has dealt a death blow to Sun Microsystems’ already-foundering SPARC. Sun’s devotion to SPARC is waning in favor of x86, reflecting the market’s growing disinterest in proprietary architectures. Now IBM has emerged as the last true believer in RISC and big iron’s supreme ruler, and those vestiges of the SPARC program that Sun struggles to maintain will prove to be unworthy investments.” I write that parody not having seen any analysis of that sort, but with certainty that it will appear (if it hasn’t already) and that analysts will compete with one another like movie critics, searching for that one clever phrase that pulls people into, or steers people away from, theatres.

What tech analysts seek to influence these days is not the IT market, but the stock market. Those strings are far easier to pull, and “told you so” trophies are dealt out when an analysts’ remarks on a new technology cause a chipmaker’s stock value to take a dive. Through this mechanism, analysts’ prophecies fulfill themselves. A loss in share value reduces a manufacturer’s access to capital and can force snap strategic decisions that aren’t aligned with the company’s road map, but which might calm shareholders who are rushing to dump their stock.

In this way, technology analysts stymie innovation and slow the pace of new technology. What they lack is the power to move technology buyers, to affect the decisions you make in your investments. Sun Microsystems isn’t folding up its tent on SPARC because it doesn’t stand a chance against POWER and x86, any more than it’s planting and reading over Solaris because of the looming threat of Linux. Sun doesn’t make strategic decisions based on analysts’ manipulation of short-term stock market investors, and that’s one of the reasons that I hold the company in such high regard.

That’s not to say that Sun doesn’t go on the offensive when it foresees remarks like the ones I parodied earlier in this column. Immediately following IBM’s announcement, I got a call from Sun offering me a chat with a spokesperson for comment. I politely declined when I learned that the spokesperson assigned to me was of low rank, meaning that I’d get the canned response being dealt out to the media at large. My phone rang within half an hour with a call from Tom Atwood, the group manager of Sun’s Systems Business Unit. I’m taking advantage of the looser deadlines of blogs to relate that interview in detail. Suffice it to say that Atwood set out to dissuade me from reflexive and opportunistic dire analysis, but as soon as he discovered that I was far more interested in technology than in driving Sun’s stock price, he relaxed. Our discussion was revealing, enlightening, and enjoyable, but I have no doubt that minutes after talking with me, Sun PR dialed him into a call with an analyst or journalist who put him on the defensive and probed for the one-liner that would portray Atwood as the apologist du jour for the doomed SPARC.

That shouldn’t happen, but I’m heartened that I reach thousands of readers who would rather have the conversation that I had with Atwood, or sit next to me at AMD’s CTO Summit, than read some analysts’ answer to “What impact do you think POWER6 is going to have on the market?” with a knowing wink that the “market” in question is a stock exchange. I know that when you come here to read, you realize that you are The Market, and that all of the investments you make are long-term. In IT, there are no day traders.