The UK software industry is slowly disappearing and
it's only a matter of time until Microsoft moves in to fill in the
void, says Simon Moores.
When Microsoft bought business software companies Great Plains
Software and Navision last year, I predicted that Sage, one of the
UK’s few software success stories, was about to join a growing list
of endangered species, leaving me uncertain whether the company
would outlive my daughter’s hamster, Eric.
Both Sage and, of course Eric, are still alive and well and a
recent meeting with Microsoft’s Simon Edwards convinced me that
Sage may survive Eric by a couple of years at least.
There’s no doubt that Microsoft is serious about its plans for a
web services business platform on which a host of third-party "biz
apps" can "add value".
The best analogy that came into my mind was the Lotus 1-2-3
"add-in" manager in the 1980s.
Lotus 1-2-3 was the de-facto industry standard before Microsoft
started experimenting with its own applications. Having edited the
Lotus buyers guide at the time, I vaguely recall some 200 or more
applications that could be attached to what was, after all, "the"
PC platform at the time.
Last week, Sage announced pre-tax profits up 14% to £74.3m on
revenues - up 4% to £281.1m.
Bearing in mind that a healthy proportion of Sage’s revenue is
service revenue, demonstrating double-digit profitability at all
in this economic climate, has to be seen as a good result,
particularly if the competition on the radar happens to be
Microsoft.
Microsoft is, however, biding its time. Buying Navision and
Great Plains Software was only the first step in a bid to dominate
the next generation of small business applications.
Microsoft, which is, reportedly, spending $2bn a year on
developing this market, can afford to wait until the time and the
technology are right for it to strike.
When it does, it will be the software equivalent of parking an
aircraft carrier across Sage’s doorstep.
Let’s be honest. The UK software industry is disappearing fast.
Last year, I was an advisor to a company that tried to sell itself
to both Sage and Microsoft. It had undeniably better software than
both, but that didn’t prevent the company disappearing and being
sold for a fraction of its true intellectual property value.
Like the light bulb that runs forever, or the car that runs on
water, there was no place for it and the venture capitalists took
one look at the competition and were never seen again.
Sage are rather larger and more successful than most, but these
two qualities have never been enough to save British companies over
the past 20 years.
After all, if Microsoft shows an interest in your market,
whether it be flight simulation software or accountancy software
the inevitable is only a matter of time, a hamster’s lifetime
even.
What do you think?
Is it healthy for the IT industry to be dominated by just a
handful of powerful
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Setting the world to rights with the collected thoughts and
opinions of leading industry analystDr Simon
Mooresof Zentelligence.
Acting globally, Zentelligence (Research) advises
governments, suppliers, business and the media on the evolution,
application and delivery of leading-edge technologies and
specialises in the areas of eGovernment and information
security.
For further information on Zentelligence and its research,
presentation and analyst services visitwww.zentelligence.com