When most of us read stories about how low-cost, open-source products disrupt this industry or that one, we say: “Can’t happen to me. Our products are too complicated, have too little volume, or just not interesting enough for the disrupters.”
Think again!
Introduction
Before writing this post, I did a quick Google search on a few key terms. Here are the results:
I was not surprised by the software or data communications equipment results, but I was by the others. I thought they were disruption-proof, but as you will see towards the end of this post, there is already a thriving industry within the laboratory community (which is where many of my readers are engaged).
The first primary high-tech industry to be disrupted by open-source products was software. But this is an old story! Who thought Windows would compete with a no-cost, open-source software product called Linux? Or that Chrome, Firefox, Edge, and Opera would take on (and beat) Internet Explorer?
Let us continue by discussing some significant contemporary situations.
The Data Communications Networks
On May 21, 2017, Business Insider published an article called “Inside Facebook’s Plan to Eat Another $350 Billion IT Market”. This section uses paragraphs from the paper to describe how open-source products may disrupt a big industry.
On an ordinary work day in mid-2016, a handful of Facebook engineers were sitting on the couches in a corner of the company’s Menlo Park, California, headquarters when one of them tossed out a wacky idea. He suggested doing something that had never been done before and could potentially upend the $350 billion telecom market.
“It can’t be so difficult to build our own system,” the engineer said, referring to the telecom equipment that sends data across cables and wireless networks, and which the engineer suspected could be made to operate faster and cheaper than the pricey equipment sold by big vendors like Nortel, Huawei, Ericsson, Cisco or Juniper Networks.
Facebook’s director of engineering Hans-Juergen Schmidtke, who was among those on the couch that day, was at first a naysayer. “Building a system ten years ago was like building a new company,” Schmidtke said.
Still, Schmidtke agreed to help this tiny group hack together a white box system at one of Facebook’s famous hackathons. Three months later they had a working prototype. Six months later, on November 1, they announced it to the world as a real product called Voyager.
When most of us read stories about how this industry or that one is being disrupted by low-cost, open-source products we say: “Can’t happen to me.
Voyager was the first product, and a major proving point, for Facebook’s young Telecom Infrastructure Project (TIP), a consortium led by Facebook and launched at the industry’s worldwide gathering, Mobile World Congress, on February 21, 2016.
TIP is a spin-off from a similar organization Facebook launched a few years ago called the Open Compute Project (OCP). Facebook launched OCP and TIP because it had to take control over the technology it uses to support over 1.8 billion people uploading billions of photos, videos and updates every day.
OCP created so much competition for hardware vendors like Hewlett Packard and Dell that they opted to join the organization and embrace the white box concept. The alternative was to be squeezed out of selling their products to companies with the biggest and fastest-growing data centers in the world, not just Facebook, but Microsoft, Goldman Sachs and dozens of others.
And Voyager isn’t the only product. TIP’s OpenCellular project is working on an open source 4G LTE/LTE base station, the hardware and the software.
Another Data Communications Initiative
On April 5, 2017, Business Insider published an article called “AT&T just completed a first-of-a-kind test – and Cisco should be terrified.” This section uses paragraphs from the paper to describe how open-source products may disrupt a big industry.
A week ago, AT&T did something with network technology that’s never been done before, and companies like Cisco and Juniper Network should be terrified.
AT&T ran a test using data from its customers that proved it could build a superfast, reliable network with inexpensive no-name computer switches, some open-source software, and software from a startup.
The no-name hardware devices AT&T used are known as “white box” switches in industry speak.
But that’s not all. AT&T’s test, conducted last Tuesday, successfully sent data from one white-box switch in Washington built with one kind of computer chip to another one in San Francisco from a different vendor using a different computer chip. That means a company doesn’t need to buy all its networking gear from one vendor to have everything work well together.
AT&T used this network gear with its homegrown network-management software, called ECOMP, that makes sure all the data gets to where it’s supposed to go.
And AT&T has given ECOMP to the Linux Foundation, meaning anyone can take that software, use it, and contribute to it. That includes other telecom network providers, some of whom are trying it now and would likely be interested in the low-cost hardware AT&T just tested.
Seeing the writing on the wall, Juniper and Arista have begun to sell versions of their network software that could run on white-box switches.
Cisco is working on a similar thing, internally called Lindt, according to a report by Kevin McLaughlin in The Information, although Cisco wouldn’t publicly confirm that.
But selling the software without the high-end hardware could lead to a major decline in revenue for Cisco and possibly cannibalize its largest, most important product lines.
Imagine being able to buy Apple’s iOS, put it on a $99 phone, and have it all work great.
That’s the quandary Cisco faces. And AT&T just made this problem very real and very public.
Data Center Infrastructure
On October 28, 2016, Business Insider published, “LinkedIn is working on a project that should terrify Cisco and the rest of the $175 billion hardware industry”. This section uses paragraphs from the article to describe how open-source products may disrupt a big industry.
In the shadow of its acquisition by Microsoft, LinkedIn has quietly begun talking about an internal project that has the potential to shake up the roughly $175 billion data-center hardware market.
LinkedIn’s plan is somewhat similar to what Facebook is doing with its Open Compute Project. OCP is creating brand-new “open source” data-center hardware, in which the engineers from different companies work together and everyone freely shares the designs.
In its five years, OCP has upended the data-center market and generated a cultlike following so big that when Apple forbade its networking team to join OCP, the whole team up and quit. Likewise, LinkedIn is designing and building nearly all the pieces and parts of software and hardware that it needs for its data centers, poaching key people from Facebook and Juniper to do it.
“We are not building servers and switches and all these things because we want to be good at it. We are doing it because we believe it gives us an advantage to control our own destiny,” Zaid Ali Kahn, senior director of infrastructure architecture and operations at LinkedIn, told Business Insider.
This is a terrifying trend for vendors like Cisco and Juniper. In the past, only the biggest internet companies like Amazon, Google, and Facebook have gone this route: designing their own IT infrastructure from scratch.
The story begins with a Facebook network hardware engineer named Yuval Bachar. He was part of a Facebook team in 2013 that had a big goal: reducing the price of building a super-high-speed computer networks tenfold. Facebook had stolen him from Cisco, and he did a stint at Juniper, too.
He wanted to pay $1 per gigabyte, or $100 for each piece of network equipment that normally costs $2,500 — and he publicly announced the goal at an industry conference.
About the time Bachar announced his goal, the LinkedIn networking team was struggling with its own network, which wasn’t handling the company’s user growth very well.
“The Production Engineering Operations (PEO) team found it very difficult to meet the demands of our applications when network routers and switches are beholden to commercial vendors, who are in control of features and fixing bugs,” Kahn wrote in a blog post.
In early 2015, the team began to build its own switch, called Pigeon. In the fall, it hired Kahn to help do it. It began testing the switch early this year.
In the meantime, having been a part of OCP, Bachar came up with a similar plan for LinkedIn. OCP started by creating a rack that holds stacks of computers, storage drives, and network switches.
As a company grows, it simply adds more switches, servers, and disk drives to the rack. But the racks themselves can be expensive, including all sorts of bells and whistles that LinkedIn didn’t need.
Facebook had the same problem, so it built a stripped-down 21-inch rack, then designed its own servers and storage to put in it.
But hardly anyone else uses a 21-inch rack. “Probably 99.5% [of companies] are using a 19-inch rack,” Kahn told us.
That means for LinkedIn (or anyone else) to use Facebook’s rack, it had to renegotiate supply deals with its vendors to get gear in different sizes.
It was deja vu. Bachar led an initiative called Open 19 to create an open standard for a low-cost 19-inch rack. This rack can be stuffed with 96 servers for $50,000 total, saving $25 million across a 500-rack data center, the organization says.
Having seen the impact of OCP, vendors jumped on board, including some of the Chinese contract manufacturers that have made a killing supporting OCP. Hewlett-Packard Enterprise, which was late to OCP, is also a member.
Laboratory Products
Scientific and analytical products seem to me to be immune to open-source disruption. Most are based on proprietary sensors and data analysis algorithms and must be traced to recognized standards before their results are accepted. But many product areas are still being created and built by innovative lab workers trying to save money by participating in the DIY trend.
One of the more interesting sources I looked at was “Open-hardware’ pioneers push for low-cost lab kit” by Elizabeth Gibney, which appeared in Nature on March 8, 2016. Here are the first two paragraphs:
Few scientists know that, instead of buying their lab equipment, they can often build it much more cheaply — and customize their creations — by following ‘open-hardware’ instructions that are freely available online.
Fifty enthusiasts who gathered last week at CERN, Europe’s particle-physics laboratory near Geneva, Switzerland, are hoping to remedy researchers’ lack of awareness about open science hardware. At the first conference dedicated to the field, they met to compare creations — and to thrash out a road map to promote the widespread manufacturing and sharing of labware. “We want open hardware to become a normal part of the scientific process,” says Shannon Dosemagen, a co-organizer of the conference who is executive director of the non-profit citizen-science community Public Lab.
This photograph accompanied the article:
One of the attendees at the conference was Dr. Joshua M. Pearce, author of Open-Source Lab, How to Build Your Hardware and Reduce Research Costs. Dr. Pearce maintains a website, Thingiverse.com, which contains a lot of help and guidance on constructing numerous laboratory equipment projects.
One of the enabling technologies for open-source lab equipment is a 3D printer. I even saw instructions about how to print a 3D printer on a 3D printer.
And suppose you are responsible for supporting and servicing scientific and analytical instruments. In that case, you should be redoubling your efforts to make the low-cost DIY products look less attractive because of your ongoing customer value creation. So, while the traditional scientific and analytical instrument manufacturers are not yet threatened like the computer and communications manufacturers, you will be remiss if you do not look for an open-source competitor if this is your industry.
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