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The First Mover Disadvantage

There is always an advantage to being first to market with a new
product or technology, except in storage and networking. Companies that are first in the space have the most difficult
time staying viable. Certainly there are exceptions, but it seems that
there is a first mover disadvantage in this area of technology.

The first mover almost always has to explain what this new wrinkle in
storage is, how it works and why you might want it. I'll never forget
the first deduplication company years ago that I met with, and how they
tried to explain how deduplication worked. Basically, I got the impression that they were saying, "we are going to save you money but not store all your backup data,"
and that did not seem like a good idea to me. The second company that
came through had the advantage of refining the message a little bit and
building on the groundwork that the early mover laid.

Another luxury the second movers have is time. Time for the market to
evolve and time for customers to absorb what this new technology can
do. People rarely get it the first time. Repetition after all is the
mother of perfection. Time is needed for the problem that
the new company is solving to really become a problem. A great example is file virtualization or global file systems. We have seen a few
of the early movers in the space disappear and others evolve or get
purchased. In some cases, these companies may have acted before the extend of the need was clear;
the problem appeared like a bruise not a broken bone. Now, unstructured data is a
massive problem in many data centers, and they are actively looking to
companies like F5 and AutoVirt to help address it.

The masters of the second mover advantage are the larger, more
established companies that wait for the market to develop and for the
various competitors to work themselves out before deciding which one to acquire. While it probably costs them more to wait until a leader
shows itself, the extra money spent is well worth picking a more viable
entrance to the market. Many end-users simply won't buy a new
technology until it is purchased, not even OEM'ed, through a larger
storage manufacturer. They know how to play the waiting game too.

There are exceptions to every rule. There are first movers who are
successful or at least viable right out of the gate. These are addressing a problem that you are having right now or who fill a gap left by other manufacturers. Automated
tiering solutions, like those from Avere, Storspeed and Dataram, are good
examples. There is a gap between SSD and mechanical drives, and these
companies are looking to fill it. Interestingly, an indicator of
success for a market is how many of these companies enter at nearly the same time, thus avoiding being the lone pioneer getting
all the arrows. Multiple organizations telling the importance of a
technology increases the chances for success.