Saturday, September 20, 2008
I have been toying and observing the markets for quite a while. Back in 2003, I ran a poll calling them mega-megers. HP, Sun, Oracle, Microsoft etc were involved in the poll. I did get quite a few responses then.
First lets me tell you why this may happen. Simple as market is consolidating aggression. Several firms are doing the same things in different ways. Differentiation is there but over-capacitization and saturation of innovation limits are reached.
Innovation Trap: Many firms are at the brink of the proverbial S-curve (as Clayton explained in his book: Innovator's Dilemma). Many firms need to shelve products that resemble and work on newer products. Innovation budgets cannot be in Billions of dollars anymore. Things change, so will the strategy. Call it CrowdInnovation, which is taking some form today, will still need to be contained as some IP Container will need to be locked and sealed as firms/Nations/Communities would want to retin their identities via product portfolios.
Sales will decline as SaaS, Cloud Computing gets mainstream: Competing against each other will lead to declining sales, meaning it will be hard to innovate against depleting resources and budgets. Consolidation may be inevitable but the lead can still be extended as you partner or merge with another firm.
Today its Financial Markets, You could be next!: We haven't seen things like what we saw in the last few months. When BSC was rescued by JPM, we thought and talked about it. And then came the Lehman Brothers, and then came Merrill Lynch. And we will see some significant developments as Morgan Stanley seeks help and suitors. Bottom Line? No one is immune to this consolidation or correction (as many financial analysts, including Paulson might say).
Software firms too will have to go through this wave of consolidation. This industry shift is not about to end as of yet. The correction will invade many domains.
What could it mean to HP & Microsoft: Both are big and both sell well. Obviously they should be able to practice within their own domains and work collaboratively as true compartmentalized merged entities.
What can it mean to the industry: One-Stop Shop. Market is getting crowded and consumers are tired of being thrown around for support, sales, purchases, upgrades etc.
Read it lightly as its Saturday :-)