Operations

Recently, on a cable news program, discussions turned from Apple’s “cash on hand” position (several hundred billion dollars or “enough to buy several countries”) to an emerging trend that will see tech companies shortly replacing banks and financial institutions as the new “bad guys” of world economics. The reasons tech companies will become the target of populist ire are familiar. Simply put, for all their talk about delivering tools for helping companies compete in existing markets and create new ones, tech vendors really seem to be about “wealth extraction”—or so the lines will be drawn. 

Tech critics argue this isn’t some anti-capitalist view, so much as it is a report card on what the tech industry has promised vs. what it has delivered. Rather than delivering greater economies of scale, less expensive goods and more efficient service delivery, amazing feats of micro-miniaturization and commoditization have been accompanied by equally ingenious ways to derive higher profits from “value-add” kits.

That’s right, the evil tech vendors seem inclined to add unnecessary bells and whistles to commodity kits with the clear and unabashed intent to increase the cost of products to the consumer and percent of profit to the seller. Storage technology provides excellent examples of this. 

In one case, a virtual tape library rig, with 3,000 1 TB SATA hard disk drives, which would cost roughly $89 each on NewEgg.com, has a manufacturer’s suggested retail price of $410,000 because its commodity controller also operates a proprietary software program that applies a de-duplication algorithm to data stored on the virtual tape library. The vendor says de-duplication enables the rig to deliver the functional equivalent of 70 times the capacity of a standard kit. So, that provides a justification for a 153 percent markup of the hardware kit, right? Only … no one really gets a 70:1 data reduction.

In another case, the vendor sells its latest rig with a three-year warranty agreement (despite the fact this vendor routinely schedules its products’ end-of-life within 18 months of release). If the consumer wants to use the rig for more than three years, re-upping the three-year maintenance agreement costs as much as buying a whole new rig.

Perhaps the biggest burr under a lot of consumer saddles is that they can’t publicly vent their disgruntlement. Warranty and maintenance agreements contain gag orders that threaten consumers with warranty negation if they discuss publicly the performance of purchased products. While vendors claim such prohibitions are necessary to prevent reputational damage created by phony critiques of their products (often by non-users who are engaged by competing vendors), the practice also decreases the amount of information available to decision-makers who want to understand the operational differences between products under real-world workload.

Yes, there’s a case to be made for criticizing the tech industry, but care needs to be exercised when “villainizing” it. For example, is tech really the villain because tech-enabled manufacturing (think automobiles, aircraft, home appliances, etc.) leverages fewer human workers and more robots? Is tech the culprit for the loss of high-paying manufacturing jobs? The answer, to the fair-minded, is no, but remember how Dutch factory workers responded to the introduction of machine processes into 15th century factories—throwing their wooden shoes or sabots into the machines, thereby creating the term “sabotage”?

However, taking the argument further, we hear that the manufacturing of computers and cell phones and other tech gear will never come back to developed countries, where workers demand higher wages than laborers in underdeveloped economies. Ultimately, that isn’t the fault of tech as much as it is of consumers who don’t want to pay an extra $10 for an iPhone, don’t want the polluting silicon chip manufacturing process in their backyards, or who simply don’t want to “make do” with an older model of a tech product.

What will happen to IT when the tech industry becomes the villain in discussions of economics? Already viewed in many cash-strapped firms as a nice-to-have or luxury expense, IT is on the chopping block in too many companies whose leaders have consumed the marketing of outsourcing vendors and decided that tech, for them, isn’t a “core business.” Despite the fact you would be hard pressed to find anything a company does that doesn’t depend on tech, it has become increasingly challenging for IT operators to defend their work in the face of well-marketed outsourcing memes such as contemporary “clouds.”

The villainization of tech, which has already begun coloring views of corporate IT, is a byproduct of the infrastruggle—a contest among the big tech vendors for the domination of their architectural model in next-generation IT. While more marketecture than anything else, evil tech is likely to be a much discussed idea in the coming year. Get ready for the mean season ahead.