(1) From: Pierre de Vries
Subject: The beginning of the end of modularity?

Or at least the end of a layered IT industry. From the Economist’s story on Oracle’s purchase of Sun:

“Since the early 1990s the industry has resembled a cake made of horizontal layers of technology, with each layer dominated by a few companies… This structure is now collapsing as the industry’s heavyweights move into each other’s layers.”

http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=13527430&subjectID=348909&fsrc=nwl

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(2) From: John Richards
Subject: RE: The beginning of the end of modularity?

Thanks for sending pierre – yes this was a very interesting purchase.

My gut is that oracle will (a) go hard on appliances for the SMB market and to drive greater penetration at the department level within their existing customer base and (b) could potentially erode MySQL OR try to get some open source cred. personally i think they will erode MySQL – i don’t see much logic in oracle getting open source cred.

IBM was a much more natural buyer.

On the layer cake – lots going on here – cisco buying flip camera maker (going big from the core backbone to the consumer edge!), hp etc. etc.

In the book we talk about this primarily in the context of the biggest of these “movements from one layer to another” which is ms and google. in effect- we say that this will begin to look much more like competitors attacking other layers of the value stack to erode margin and/or gain share in neighboring stack layers. so in the book we talk primarily around google attacking ms in it’s core businesses and ms attacking Google in their core businesses. this is just an extension of this generic principle.

More broadly – it’s not clear to me that the oracle example is the best one – per my views above on what i think they will do with the sun assets. i think the best example of this trend.

John has this right.  Our point is that modularity both allows new combinations and makes it harder to leverage them.  But we try to identify some conditions when systems integration may work as a strategy.