Observing electronic ecosystems and value chains change over time is fascinating. For instance, the design chain for mobile devices fundamentally changed over the past two decades with waves of disaggregation and aggregation. Today, the area of computing and data centers is amid tectonic shifts and transformation, with the combination of hyperscale, networking, Artificial Intelligence (AI), and machine learning (ML) fundamentally re-shuffling value creation.
Back in 2002, Grant Martin and I wrote “A Design Chain for Embedded Systems” for IEEE Computer. We described the embedded SoC provider-integrator design chain and argued that “what used to be a vertically integrated process within each product company has become significantly fragmented. Platform-based design can accelerate the flow in this chain.” The associated graphic looked like this:
For instance, until the early 2000s, the design chain from embedded mobile systems was dominated by platform-based designs like the TI OMAP platform. The semiconductor vendors would provide all drivers and then interact with software OS vendors like Palm OS, Symbian, Microsoft WinCE and PocketPC 2002 to port their operating systems to their silicon, to then provide it jointly to device and equipment manufacturers.
Ten years later, a keynote by Nimish Modi at CDNLive Israel 2011 featured a slide emphasizing how the once fragmented design chain was aggregating into vertically integrated design approaches again:
2011: Aggregation vs. disaggregation in the mobile market
Today we arguably face a mixed industry, with some companies taking control of more of the full hardware/software stack. As Alan Kaye once said, “People who are really serious about software should make their own hardware.”
So, what about the compute market? Spoiler alert: The changes have the potential to dwarf what happened in mobile, both in terms of depth and scope.
As to depth, hyperscale operators accounted for a third of all spending on data center hardware and software in 2019. “Hyper” literally means over or excessive, and the word “scale” refers to scope, size or extent. At this point, Synergy Research Group defines 24 global companies as “hyperscalers.” Two tiers, mega hyperscale operators and SAAS, and platform companies and cloudlets are defined by Data Center Frontiers. The former include the likes of Google, Microsoft, Amazon Web Services (AWS), Facebook, Apple and Alibaba, and the latter tier includes cloud providers like Oracle, Baidu and and China Telecom, along with SaaS providers like Salesforce, SAP, Workday, Paypal and Dropbox and platform companies like Uber and Lyft.
