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Software Companies - Merge or Die?
pillageplunder writes "This article in Businessweek points out that large software companies like Siebel, BMC and Veritas are all warning that 2nd quarter results would be lower, and predicts a shakeout. According to the article, 'Investment bankers say half of the sector's 600 publicly traded companies are likely to be eliminated.' Ouch!"
in mature industries you can count members with the fingers of your hands
Without competition software will just get worse, with no need to improve.
Large companies have a tendency to acquire smaller companies and keep them as a separate department, but they inevitably get phased out over time and absorbed into the larger entity. How many people really want to deal with the software giants past a point?
Its going to be ugly in software. 75% of firms are on borrowed time.
Don't ever make your company public. Once you do, it stops being a company and instead a money-collector. Instead of a commercial entity which produces (hopefully) a superior product, you are controlled by people who more than likely don't give a rat's ass about what is made, unless it's money. This is the problem, they don't care how the money is made, so they'll press for cutting corners at every opportunity, and make a prime target for "mergers". Mergers are just an excuse to cut even more corners, by taking advantage of economy of scale. However, once one player in the field does this, the others must follow or be eaten up. Thus is perpetuates until we reach a number of large companies which are too large and bloated to react to demand and conditions, and fudge the books, or stifle innovation in order to keep what rightfully should be a corpse alive. True innovation will always be carried out by dedicated individuals or small groups, possibly in a private company, but these large ones are just disasters waiting to happen.
I really have a tough time relating to an article that has to explain that IT is an accronym for info-tech. Stupid analysts are just guessing anyway, half of software companies being gobbled up seems a bit overstated.
in bed.
In general large software companies are, for lack of a better word evil. They produce inferior products at criminally high prices, industry rates for ASP development are still at $200 - $300 / hr, MS spends 300k per year per employee. The developers are certainly not getting most of this money and the clients certainly not getting good work or code for these horrendous rates. The large software companies produce the poor products and rely on slick marketing to the sell their products to ill technically informed clients/managers. These companies seems to use the strategy of charge the client as much as possible, pay the developers as little as possible, both client and developer get screwed, managemeent gets rich for nothing. I think its a good thing many of these companies are going away, its just their scam is over. Its not that people don't need software, its that the're tired of getting ripped off for it. I believe that these companies are just being replaced or put out of business by small companies and individual developers working directly for non-tech clients. Its the big US companies that have been the most enthusiastic about replacing US workers with H1-B's outsourcing etc, small companies tend to use better quality, long term local talent. Anyhow this seems like the trend I've seen. Due the large availibilty of developers, cheap bandwidth, cheap hardware, and free development tools/platforms, its seems like the large companies are going to have ahard time, but I think this will be better in the long run for both developers and clients/users. M
Maybe the mergers will lead to more jobs, but my guess is that most mergers will be followed by layoffs (and possibly more overseas outsourcing).
The hemorraging of outsourced jobs will stop once the first big security problem arises. Be it, proprietary code stolen, trojan horse inserted (perhaps by a foreign government), etc. Unfortunately, it'll take something of this magnitude to make companies realize that the short-term dollars saved in outsourcing will cose them long-term when the real problems arise.
...these "investment" bankers are the same toads which suggested Timer-Warner merge with AOL and the many other content & distribution companies which are all now being sold off in pieces (i.e. DE-merged).
As such, I hope these software companies ignore this "advice". These bankers are proven investment moron in it for themselves and their greedy friends.
The only benifit to this might be we'll be able to see some more perp walks on CNN.
Rich...
Given this, the successful (read, profitable) small software company has three choices: 1) Get acquired by someone like MS, Sun, Oracle, or whomever; 2) go public and grow, grow, grow; or 3) stay small and play the reinvention game. It's tough.
I thoroughly empathize with the poster, though, because a small, profitable, private software company is a great place to work. If you are at one now, congratulations! Enjoy it.