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For future of enterprise computing, watch consumers

At Oracle's giant conference in San Francisco, even speakers like Intel's chief executive are saying the real innovations in tech these days are coming from Web and consumer-focused companies.

The enterprise computing industry seems like it's turning into one big utility company.

It's a good thing the accountants didn't have to sit through the keynote speeches during the first two days of Oracle OpenWorld, because no one would be allowed to attend next year. Hector Ruiz of Advanced Micro Devices showed video clips of Star Wars and the World Series. Mark Hurd of Hewlett-Packard discussed whether or not he thought Oracle's Larry Ellison could beat him at tennis. At least Intel's Paul Otellini tailored his Tuesday morning address to the actual attendees of the conference, 42,000 technology professionals and Oracle customers looking for a sense of where this industry is going.

But after running down a list of Intel's pet IT projects, and making sure to tout the company's new Penryn processors on several occasions, Otellini let the cat out of the bag: You folks just aren't cool anymore.

The future of enterprise computing will draw from what is being developed on the consumer side, Otellini said. "Consumers today are the No. 1 users of semiconductors; they passed over IT and government in 2004. That's a big change; prior to that period, most people developing silicon in the industry were focused on the main market--the enterprise and IT. Today, most of us are focused on the consumer market as drivers."

Not so long ago, if you were technology-oriented and wanted to do something innovative and cool that would make you rich, you wrote a new piece of enterprise software. Or you came up with a new design for a server. Or you figured out a way to link businesspeople with their offices while on the road. Of course, there are always exceptions, but enterprise computing, most believed, was where the real innovation occurred. Those innovations paved the way for the computing industry as we know it today.

They also made a lot of people rich. Oracle's bash is easily the biggest tech conference of the year to hit San Francisco, covering all three halls of the Moscone Center, one usually busy street that runs between the north and south halls, and expanding out to the Cow Palace on the southern edge of the city where attendees will hear Billy Joel, Lenny Kravitz, and Stevie Nicks on Wednesday night. It's never hard to find a passel of men wearing sport coats without a tie juggling a BlackBerry and a medium latte in downtown San Francisco, but this week, it's out of control.

However, keeping an enterprise's IT operation up and running is rapidly turning into the technology equivalent of plumbing, or maybe electricity: extremely vital pieces of infrastructure that no longer attract the type of young engineering enthusiasts who built Silicon Valley. Those people are now building Web 2.0 applications. They're designing social-networking communities or virtual worlds, not some new piece of enterprise-resource planning software that's going to set the world afire.

Perhaps that's because they can see the endgame. "We are the IPO market for the enterprise software industry," said Oracle President Charles Phillips on Monday. Hurd echoed the sentiment later that day. "In the end, math wins. When you look at the math right now, in the tech industry, there are only a handful of players that have in excess of $100 billion worth of cash," he said. Enterprise computing has turned into an acquisition race between giants like Oracle, SAP, IBM, HP, and EMC.

Consumer technology and the Web are going in the opposite direction. Sure, Google, Microsoft and Yahoo are snapping up anything and everything that seems remotely interesting. But consolidation? Hardly. For every 10 companies gobbled by Google, a new powerhouse like Facebook starts forming its own little tech ecosystem, with start-ups eagerly feeding into it. You don't see that sort of thing in enterprise computing much these days.

The major trends in enterprise computing are things like consolidation and virtualization: how to do more with the stuff you've already got, or how to pare down the electrical costs of running a modern data center. Overall enterprise technology spending is basically flat as businesses work with the assets they already have.

Otellini focused his speech on his new Penryn chips and how they can save enterprises money off their data center expenses through lower power consumption and better performance. Notable goals, for sure. Consumer technology, however, is about the experience, about finding new and better ways to interact with technology.

"Computing is becoming free," Otellini said. That doesn't mean Intel will start giving away its products, but it does mean that the cost of acquiring computing power is getting smaller and smaller every year. In that kind of environment, where computing power itself is no longer the sexy technology, it's the presentation that matters.

Enterprise computing has never been about presentation: it's about getting stuff done. It's about running the payroll for Fortune 500 companies, and about analyzing and sorting huge amounts of extremely complex customer data.

Look, enterprise computing isn't going anywhere. Billions of dollars will continue to be spent on software needed to run increasingly complex businesses and the hardware that will keep it snappy. And the consumer appetite for technology could start to diminish if people have to start choosing between a new PC or HDTV and paying the mortgage or filling up the car.

But just as technology transformed the way the world does business, it's about to have the same effect on individuals, who are mostly still running desktop PCs, calling friends and family on a landline, and driving a car with an analog set of gauges. This is where the talent and the dollars are flocking, improving how we as individuals interact with technology. Not building CRM modules for the midmarket.