The next generation of IT vendors has arrived on the scene. Driven by a tentative economic recovery that is seeing venture capitalists release a few more dollars to tech startups, and a need to create tools for the world of cloud computing and virtualization, a flood of young technology companies is hitting the market.
One startup you've never heard of might end up being the next Intel or Microsoft. Others may force changes upon established vendors that have gone stale, which will have to innovate themselves or purchase startups that have a brilliant idea the big guys haven't thought of. Still others may simply fade into the tech industry graveyard, never to be seen or heard from again
At Network World, we've identified 25 IT startups that we think are worth watching. These startups have recently released their first products or remain in stealth mode, and typically have financial backing from venture capitalists.
Most of these startups, in one form or another, are attempting to fuel the shift from static IT infrastructures to virtualized data centers and cloud networks. Analysts say the biggest opportunities may be in software that can manage, secure and accelerate cloud-based and virtualized systems. However, a few brave companies are building new hardware products that compete against the Intel/AMD monopoly in the chip market.
The shift to cloud computing and virtualization is not unlike the shift from mainframes to PCs several decades ago, an era that saw the rise of giants like Intel and Microsoft but also the demise of several mainframe vendors not named IBM, says Zeus Kerravala, an analyst with the Yankee Group.
But predicting which new company will distinguish itself and join the class of IT giants, like VMware did a decade ago with innovations in virtualization, is nearly impossible. The window of opportunity will be short -- particularly in the hardware market -- because billion-dollar vendors such as Oracle, IBM, HP and Microsoft will jealously guard profit margins, and try to push out new competitors by swallowing them up or replicating what startups have created.
It's often easier for small companies to innovate, says Robert Armstrong, a financial analyst and senior columnist at Dow Jones Investment Banker. But established vendors are so good at marketing and sales, and IT customers are so conservative that "just having a better product" isn't enough "to break the iron grip of the incumbent," Armstrong says.