* ‘Designer’ markets at Interop 2005
Since Enterprise Management Associates is not a networking analyst firm per se, but instead one focused on management, we always attend shows like the recent Interop 2005 with something of a partisan perspective. Unimpressed by the latest “big box,” we look instead for management products that come either as software only, as an appliance or sometimes as extensions of a hardware package.
This year, probably more than any other, the show seemed to be made for us.
With three analysts at the show and very few joint meetings, we could still not cover all the worthwhile areas. This is partly because there were a huge number of security-related products and EMA views security as an extension of the broader category of enterprise management. Computer Associates last year declared that we are now in “the age of management” – and Interop 2005 seemed to reflect this.
The signs of health were fairly abundant. One of the vendors in the application-flow management arena, which had just several years ago been very much a start-up, is now at 80 people with more than 200% year-to-year growth. A more established player in capacity planning analytics had grown substantially to 400 people. And yes, there was consolidation – straddling multiple markets – as Juniper recently acquired Peribit and Redline, for instance. But there were also new vendors with new designs coming forward, and some of them are showing strong uptake – demonstrating that buyers still want the best solution for their problems, and are willing to shop beyond the big names.
However, underneath the positive glow – which was mostly based in reality and perhaps just a little bit in Vegas sunshine – was a deeper question: What markets are hot? What management markets are really growing fast and what are not?
I got asked this by at least two investors interested in the “opportunity” for some of the up-and-comers.
I also got steered in this direction when, at a cocktail event, a Cisco executive declared, “Nobody makes money in management, but Cisco will.” I raised my eyebrows and cited a few statistics, but quickly realized that the executive and I were talking about two very different market frameworks.
Finally, at a vendor dinner, I was challenged to rectify what I had been complaining about for years: the fact that the old market categories no longer apply and that what the management marketplace needs is a new framework for approaching and defining markets. I accepted the challenge (after a few drinks), and EMA is now committed to introducing a new marketplace taxonomy this fall.
In the meantime, we still have to wrestle with old categories, but in what I would call “designer” fashion. Just how big do you want the so-called “network monitoring” market to be? Well, if you want it to look small, we can drive it down to under $1 billion. If you want it writ large, we might be able to press to as much as $15 billion or even more. It’s easy to play with the numbers, since the term “network” no longer has any substantive meaning in defining process-centric management and “monitoring” can be defined a dozen different ways.
Without understanding how the management industry is growing away from managing “things” – variously defined as network and systems hardware and applications and their components – and towards enabling processes and managing service delivery, we will be playing with designer choice options for the foreseeable future.
Some of the recent partnerships and acquisitions clearly reflect this growth. EMC’s acquisition of SMARTS is really not about storage management. Juniper’s acquisitions of Peribit and Redline will either transcend selling network hardware or become largely a wasted opportunity. Cisco’s partnership with Opnet – more to come there – is going to demand a systems-centric (vs. device-centric) mindset to bear fruit. And EMA was privy to at least four or five other discussions in which vendors seemingly within the same market found good reason to partner together.
So make no mistake – the enterprise management marketplace is healthy, and those companies that acknowledge the new reality have a good chance to grow well. Those lost in the “thingness” of the past are probably either not profitable or growing at a snail’s pace ahead of inflation. And given the unique approaches that many management vendors bring to the customer, I suspect that “designer markets” will be around for a long, long time.
