The computer software industry is an ever changing environment. Companies and people demand that their software do more, and of course they expect more out of the vendors they use to supply the software they need. That is no more evident when consumers see companies acquire smaller firms to expand their business and of course their bottom line.
Recent news shows that companies like SAP are trying to maneuver their way in with the big boys. Aaron Ricadela of Business Week Online recently reported that, “SAP has decided to acquire Business Objects as part of its growth plan.” According to Ricadela, “The deal would put SAP, the world’s third-largest software maker, into one of the U.S. software industry’s hottest sectors.” Currently Business Objects competes in a fast-growing market for software that help companies plan budgets and close their books. “The proposed acquisition of Business Objects comes as competitors Oracle, IBM, Hewlett-Packard, and Microsoft have stepped up the pace of buyouts in the corporate software sector,” claims Ricadela.
Acquisitions are not the only hot topic in computer software these days. How about world wide web web sites and what some of them have to offer. We have all heard of the success story of companies like Google, Link Exchange and so on, where the creators come up with a wonderful web idea, and a couple of years later the company gets purchased for millions or go public in Google’s case and are now worth Billions. Nothing holds more true than the populare web site Facebook. Since Facebook has allowed outside software developers to create tools for the site, The New York Times reports, “The developers are hoping to both create and profit from expanded use of Facebook.” Brad Stone of the New York Times claims, “The company’s (Facebook) book value has soared. A report that Microsoft considered buying a $500 million share of Facebook would put its worth at almost $15 billion.” Stone is uncertain if the new tools can turn a profit.
Business Week recently interviewed Steve Mills, a senior vice-president and group executive at IBM. When they asked him about the growth of IBM’s software business, he said “that the percentage of the company’s software that comes from some of the faster growing parts of the portfolio continues to get larger.” According to Mills, “every acquisition made by the company fits into one of the major categories of middleware that makes up its portfolio.” IBM has decided to make a version of their Lotus Symphony collaboration software for free. A trend that other companies seem to follow, such as Sun, who recently has mentioned they are going to make Solaris and Java, free, to get back to the basics of what made them, what they are.
The software industry is forever changing, very competitive, yet very necessary. If you run a small firm, or distribute a software product, you may want to look to the big boys to gain some inspiration and knowledge of where to take that product or service next.
By: Bruce A. Tucker