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Enterprise whales leave R&D to the startup minnows

Until you hit on something tasty - then we'll eat you up

Internet Security Threat Report 2014

Storagebod Why are the small flash vendors innovating while the big boys don't bother? Why are they leaving them for dust? More to the point, do the big firms care?

Innovation in large companies is very hard; you have all the weight of history pressing down on you and few large companies are set up to allow their staff to really innovate. Even Google’s famous 20 per cent time has probably not borne the fruit that one would expect.

Yet innovation does happen in large companies. They all spend a fortune on R&D. Unfortunately, most of that tends to be making existing products better rather than coming up with a new product.

Even when a new concept threatens to produce a new product, try getting an existing sales force to sell a new product…well, why would they? Why would I ask a big-tin sales-droid try and push a new concept to my existing customer base? They probably don’t even want to talk about something new; it’s all about the incremental business.

I have seen plenty of concepts squashed which then pop up in new startups having totally failed to gain traction in the large company.

And then there are those genuinely new ideas that the large vendor has a go at implementing themselves. Often they have no intention of releasing their own product, they are just testing the validity of the concept.

Of course, then there is the angel funding that many larger vendors quietly carry out. If you follow the money it is not uncommon to find a large name sitting somewhere in the background.

So do the big boys really care about the innovation being driven by startups? I really don’t think so. Get someone else to take the risk and pick up the ones which succeed at a later date.

Acquisition is a perfectly valid R&D and innovation strategy. Once these smaller players start really taking chunks of revenue from the big boys…well, it’s a founder with real principles who won’t take a large exit.

Of course, seeing new companies make an initial public offering is cool but it’s rarely the end of the story. ®

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