SandHill.com | Finance | Consolidation? What Consolidation?

SandHill.com | Finance | Consolidation? What Consolidation?: "OPINION
Consolidation? What Consolidation?
Software industry insiders present their views on the long-anticipated Oracle-Siebel deal: what it means to product innovation, the CRM space, the health of the software industry - and whether it was a good deal in the first place.
M.R. Rangaswami, Sand Hill Group
Sep 16, 05
Finally. The Oracle-Siebel deal is done and the industry can stop speculating about it. Interestingly however, the deal seems to have woken some observers from a deep sleep. Consolidation has been going on for years. The latest deals - specifically Oracle's aggressive buys - have simply made the trend front page news.

But broader awareness of big software mergers is important in and of itself. The sense that young companies cannot make a go of it alone any longer, that they must find a 'Big Brother' to take them under their wing, dampens enthusiasm of many software executives and investors.

This is the wrong reaction. I would argue that innovation and opportunity continue to drive the software industry today - even in the face of these megadeals.

Innovation Continues to Power the Industry
Consolidation is most certainly accelerating. However there are major sectors which have yet to see any major mergers. Take middleware - or business intelligence. There are many small markets which continue to innovate and thrive.

Even in established software categories, innovation thrives. Look at Salesforce.com. NetSuite. These vendors operate in so-called mundane application areas but continue to grow rapidly and flourish at the same time consolidation is going on in their sector.

These upstarts and other vendors are succeeding by innovating - both product- and business model-wise - in areas where megavendors have weaknesses. T"