In the 1970s and 1980s the Swiss watchmaking industry went almost extinct as Asian companies such as Seiko moved to factory mass manufacturing of the new, cheaper and more accurate quartz watch movement. The Swiss industry shrunk rapidly, most of the brands went under or were sold and had to find a new way to survive. The Swiss survived, at much smaller volume, by producing high cost mechanical watches which were expensively marketed as luxury items, a type of positional good (a good whose value is determined by its desirability to others) and creating an artificial scarcity.

We have a similar economic event happening in the data center market today. The design, construction and operation of a data center to the minimum TCO has become commoditised, suppliers and operators no longer have any “secret sauce” or knowledge that enables them to substantially outperform the market, at the same time cloud technologies are driving down the market price at a huge rate thanks to the uber operators such as Google and Amazon.

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