The takeover of Compaq by Hewlett-Packard was a merger of such a scale that many people feared that it would be a failure. So far it seems to have worked out all right and H-P are doing as well as anyone in the IT industry at present. IBM's acquisition of Rational was another large scale merger, but one dictated by IBM's long term strategy which created the need for dominance of the automatic application design and generation software.
At the other end of the scale BEA are the biggest of the newcomers, helped significantly by the acquisition of WebLogic. While they do not have the total range of IBM, they are their equal in the specialist market for Java based Application Servers. This is something that will not please IBM, so BEA had better beware.
Microsoft has also made some smaller but equally significant acquisitions in Great Plains and Navision. Clearly the PC giant is trying to broaden its scope by attacking the market for business applications packages. They will try to push out the current market leaders such as Sage before racking up the cost, something they can afford to do.
But there are some interesting developments afoot among the major software houses that produce applications for the larger corporations. This market is dominated by the German company, SAP, with a reported 54% market share, followed by Oracle and Peoplesoft. But Peoplesoft have now made a bid to take over another significant supplier, J.D.Edwards.
The merger of Peoplesoft and J.D.Edwards would make them number two. Thus Oracle has reacted furiously by making an aggressive bid for Peoplesoft! There is a long way yet to go, but this is really serious. But the most intriguing question is what will happen to J.D.Edwards. Up till now they have been a highly regarded, successful, but unspectacular software house. They would probably have merged well with Peoplesoft, but where do they fit in with the much larger Oracle/Peoplesoft combination (if it happens)?
One scenario is that J.D.Edwards continues on its own sweet way, but in this climate of take-overs that is unlikely to be the outcome. The most intriguing move will be an approach by Microsoft. J.D.Edwards services companies that are larger than those favoured by Great Plains and Navision. The Microsoft strategy would normally be to dominate the small to medium sized company market first and then to expand upwards, once the monopoly is established. But wrangling between Oracle and Peoplesoft could give Microsoft an opportunity to move into the enterprise applications market before they have established control of the SME market. This is counter to the usual Microsoft strategy and would be a huge gamble, but they must be seriously looking at it. There is one other big plus for Microsoft in acquiring J.D.Edwards in that they have a big share of the IBM AS/400 user base. This would provide Microsoft with a vehicle for pushing out the superior AS/400 and replacing it with Windows, a horrible prospect for the users, but a good move for Microsoft.
This of course is not going to please IBM. The last thing they want is for Microsoft to get into the J.D.Edwards user base. They too must be watching with interest. So far they have avoided buying into and competing with application providers, preferring to focus on consultancy and services, but this could make them think again.
This jockeying for position is all well and good for the suppliers but it is not good news for the users; they can do without major disruptions!< BR>
Martin Healey, pioneer development Intel-based computers en c/s-architecture. Director of a number of IT specialist companies and an Emeritus Professor of the University of Wales.
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