The End Of The Internet?....Or The Start Of Something Bigger

Another disruption coming, who wins, who loses.

The New York Times has a story called Video Hogs Causing Internet Traffic Jam

Last year, by one estimate, the video site YouTube, owned by Google, consumed as much bandwidth as the entire Internet did in 2000

a research firm projected that user demand for the Internet could outpace network capacity by 2011.

Nemertes Research, which predicted the bandwidth squeeze by 2011

Experts say, say, high-speed networks are increasingly the economic and scientific petri dishes of innovation, spawning new businesses, markets and jobs. If American investment lags behind, they warn, the nation risks losing competitiveness to countries that are making the move to higher-speed Internet access a priority.

And upgrades needed in data centers are going to be a lot more expensive than in the past, now that all the excess capacity left over after the dot-com bubble burst has been gobbled up

Hewlett Packard's $1.6B buy of Opsware, should give us some clues on what to look for.

Some more ponderings on bandwidth.

Software...Dancing On The Hardware?

There is a dominant theme in the technology space.

Software that does the "heavy lifting" for hardware, is in great demand.

Om Malik has been spot-on with his call on hardware guys buying software companies.

"Bottomline: While Web 2.0 companies may get acquired by Google (or Yahoo), specialized software start-ups with products that enhance hardware will find buyers more often. Expect this trend to continue, and in fact gain momentum."

Hewlett Packard recently acquired Opsware, a datacenter automation software company for $1.6B. "Opsware unlocks the promise of technology by accelerating IT to zero latency".

Is a zero latency Internet possible?

Are there software companies that can do this?

BMC bought RealOps , a developer of software for automating IT processes, ranging from applying software patches to provisioning servers.

VMware, which sells software that makes servers more efficient, went public Tuesday and is now the 5th largest publicly traded software company. Only Microsoft, Oracle, SAP and Adobe are larger. VMware dominates the virtualization market. Their software creates multiple "virtual" servers within a physical server.

The next day Citrix Systems acquired virtualization software player XenSource for $500m.
" The deal will combine the California start-up's open-source virtualization technology with Citrix's extensive reach in computer networking."

What space is next for software to do the heavy lifting?

Price wars are kicking in for the content delivery network (CDN) players (Akamai, Limelight Networks etc) at the same time the explosion of Internet video continues. Software that can enhance content delivery network (CDN) hardware will be sought after to maintain an edge on competitors and increase profit margins.

Software companies that can resolve the upcoming Internet video boom are ripe for the picking.