Thursday, May 11, 2006

The Enterprise Application Market Is Destroying Its Fragile Ecosystem (AMR)

The enterprise application market looks remarkably healthy...on the surface. It passed the $50B revenue mark in 2005, and the leading vendors, SAP, Oracle, Sage, UGS, and Microsoft, are all growing at double-digit rates. But peel back that surface, and you find that the success of these giant global players is not indicative of the state of the market.

Radical consolidation, several years of recession, and a major change in corporate buying preferences have combined to stunt the growth of most of the hundreds of smaller software firms that once drove much of the industry’s vibrancy and innovation. These companies, which have traditionally distinguished themselves on the basis of vertical, functional, or geographic specialization, simply don’t seem to be participating in the economic recovery.

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