Predictions are a tough exercise.... The likelihood of being wrong far outweighs the chances of being right. So why even give into that art form? Well, what I find interesting about them is less whether they end up being right, but more the thought process beyond. It tells a story about how you see things: technology, adoption trends, markets, etc. Now, let’s be honest: I had one out of my three predictions almost right in 2018 (Red Hat being acquired), so I do intend to do better this year!
This year, I’ve decided to split my predictions in two. First, I’ll focus on technology and give three predictions (and as an added bonus, they are not specific to DevOps). Then, since M&A gossip seems to be of interest, I’ll give three predictions in that category. In total, that makes it six reasons to be right at least once! Let’s go...
Technology First….
I’ll give my first prediction on a topic that’s very dear to my heart: open source. To date, public cloud providers have clearly more benefited from open source than open source has benefited from public cloud providers, and innovative open source-based companies (possibly due to lack of a business model that is able to resist those “critical-mass-killers”) have been crushed in the process. This is not a sustainable equilibrium and we have seen the first blips of counterattacks show up on the radar: creative “open source” licenses (but are they really open source?), attacks against the Open Source Initiative (OSI) (what do they know about open source anyway…) and this is far from over! 2019 will increasingly see the topics of open source, open source-based business models and cloud collide and public cloud providers will start PR fights over who is the best open source citizen, using all kinds of metrics to their rescue. This will, in turn, have a positive impact for open source. But with public cloud being the new normal, open source-based businesses will have to continuously adapt. Cloud, Software and Freedom colliding? Richard Stallman knew it all along…
My second prediction focuses on cryptocurrencies. Early 2018 showed the rise of Bitcoin touching the $20,000…then falling close to $3,000 barely 10 months after! A recurring criticism of cryptocurrencies is their energy consumption (some estimates see it as high as the total consumption from countries such as Ireland or Austria!). As such, my second prediction is that a new wave of eco-friendly (i.e. low/non-compute intensive) cryptos will emerge, solving one of their biggest criticisms. My intuition tells me that leveraging “latency” and space (speed of light is the only thing you can’t trick).
My third and last technology prediction concerns the automotive industry, another one close to my heart! I’ve always been a big fan of Tesla because of the automotive revolution they initiated, both from an electricity and a software standpoint. And so, in 2016, Tesla triggered a new disruption by selling cars based on a bold Full Self Driving (FSD) vision and a clear promise: the cars sold as of the end of that year (AP2) would become FSD through some future software updates ! This wasn’t mere marketing that could be misunderstood: a specific option could be pre-bought as early as 2016 with such a clear commitment. How far were we from that goal based on Tesla’s claim back then? Only one thing was missing: regulators approval, that’s it! And a great video was shown (and is still visible on their web site) to back that claim:
The problem is that since then, Tesla has clearly lacked delivering on any solid features (and I’m not even talking about FSD here – not even a Level 3 implementation!), the demo video was “doctored” at best and the FSD team went through multiple rounds of leadership changes. In parallel to this circus, Waymo just launched its public service – Waymo One and MobileEye announced a public self-driving car offering for 2019. That’s not good...Furthermore, some of the first customers who bought their Tesla cars with the FSD option (“pending regulatory approval...”) with a two-year year lease, have had their lease expire: while it is fine to sell on vision, that vision “has to meet the road” at some point (pun absolutely intended). My prediction? Tesla will be increasingly on the defensive on what used to be one of their biggest sales tools and they will have to do something bold in 2019. This might include rebuilding bridges with MobileEye (and OEMing their software, but that would just put them at parity with other vendors), adopting LIDARs (to make their AI challenge easier to solve than through a vision/radar only system) or acquiring third-party tech and talent to accelerate their delivery. Or... Apple might decide to buy Tesla and put them back “on track” (pun^2).
That’s it for my tech predictions.
...Onto M&A predictions now!
My M&A predictions will be heavily tainted by spaces I know well, cloud and DevOps.
As the cloud war is raging, there is, in all likelihood, room for at most three leading IaaS vendors. The first two spots have been secured by Microsoft and AWS, while Google is fighting to keep their third spot. Yet, despite great raw technology, they’ve been unable to create an enterprise sales motion and culture, and this is acting as a ceiling to their growth (vs. Microsoft and AWS). The most obvious way for Google to build this muscle is a DNA-transplant i.e. to acquire this culture. But Google’s M&A track record is not super obvious: Google Cloud’s latest cloud acquisition dates from … 2016 with Apigee! Google is very much aware of this and after failing to recently acquire both GitHub and Red Hat, their options are diminishing by the day. With the arrival of Thomas Kurian, things will drastically evolve. Mr. Kurian comes from a strong enterprise business culture and M&A has been Oracle’s breakfast for decades. How is that different from Diane Greene you might ask? While the DNA is very close, the timing is very different! Diane Greene also has an amazing enterprise background and culture. The big difference is that Ms. Greene, as she arrived at Google, had to (re-)build the business foundations and put things back on (business) track. That consumed a lot of her time and energy. Thanks to Ms Greene’s work, Mr. Kurian takes over a very clean technical foundation, and, very quickly, will want to validate that he has relative free reigns and corporate backing to make GCP successful. If this is not going to work for him, he might as well know it fast and move on (and nobody at Google will want that kind of bad PR) My first technology prediction? Under Kurian, Google Cloud will acquire at least five companies in the first nine months of 2019. If they don’t, Kurian will leave the company - fast.
Onto my second prediction with … Pivotal! Now that Red Hat has been acquired, Pivotal becomes the next attractive target with strong products and cultural assets – key elements of any digital transformation. In the next 9-24 months (I am extending my horizon on this one!), I predict that either the Dell/EMC/VMware mothership will accept to sell Pivotal for a hefty amount (could be to Google) or, if this doesn’t happen, Pivotal will be merged back into VMware. This is a stack war and my bet is that VMware will want that asset to be directly aligned to their strategy. As a data point, the Heptio deal shows VMware cares about having a solid end-to-end story. Stretch prediction: maybe all of VMware and Pivotal will make it into a single Dell mothership!
Last but not least: ServiceNow! ServiceNow is a fascinating company that has grown extremely fast in just a few years and has become the leader in all IT management categories (ITSM, ITOM, ITAM), focusing on managing ongoing services and operations. However, and very interestingly, they do not yet cover DevOps-based software development and delivery – although they announced a new Enterprise DevOps initiative at Knowledge 18 last May. The problem is that today, in DevOps circles, ServiceNow is not perceived as a “DevOps enabler,” but more as a gate: the traditional “Ops” culture of having a change management process at the end of your software delivery breaks the very notion of velocity and continuous delivery! This doesn’t mean that change management is incompatible with DevOps, but that this concept, like many IT concepts, will also have to go through its DevOps transformation. My bet is that ServiceNow will need to inject fresh DevOps DNA and perform a cultural shift, which means they’ll start an acquisition spree – which likely will start early in 2019 to leverage their high valuation.
Voilà, that’s it for my 2019 predictions. If you want more, you can also take a look at my 2025 predictions !
In the meantime, I’ll get ready for my 2020 predictions…
Onward,
Sacha
Disclaimer: I own stock in all of the companies above, so I wish them well ;)