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Software Companies - Merge or Die?

Posted by ryuzaki0 on from the skate-or-die dept.

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!"

6 of 278 comments (clear)

  1. No Competition by LeoDavinci578 · · Score: 5, Insightful

    Without competition software will just get worse, with no need to improve.

  2. One argument by Unnngh! · · Score: 5, Insightful
    The one compelling argument the article mentioned as to why this may happen is that larger companies' only means of expanding their customer base is through acquiring smaller companies. From what I've seen, however, a lot of businesses/individuals go with smaller companies because they have a personal contact there, and the people are local or have some other affiliation with the customer. This can be really nice for custom development and support, even on a medium scale.

    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?

  3. Car industry by Ars-Fartsica · · Score: 5, Insightful
    Went from 400 firms in the 20s to less than ten major conglomerates. And this is in an industry that can be "open sourced"...

    Its going to be ugly in software. 75% of firms are on borrowed time.

  4. And the lesson is ... by goatstuffer · · Score: 5, Insightful

    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.

  5. stupid execs by gphinch · · Score: 5, Insightful

    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.
  6. Re:Great! by cynic10508 · · Score: 5, Insightful

    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.