I had one of those moments this week when someone said something to me that I know I already knew, but which came as something of a revelation. One of those things that you've always known, but it takes someone to articulate it in order for you to become aware of it.
In this case, it was the simple comment that over 70 per cent of the profits of the IT industry go to five vendors. This Gang of Five is made up of Microsoft, IBM, Oracle, Sun Microsystems and Hewlett-Packard. Breaking it down even further, there is a Big Three within that group in the shape of Microsoft, IBM and Oracle.
This, according to analyst Martin Butler, has enormous implications for the direction of the IT industry. Effectively it means that these companies are the ones which decide what is important and what is not. Once they aim their marketing dollars at a particular target, that is what becomes top of everyone's list of things to do.
This is important when you consider that they're all looking for new revenue streams to replace the slumping sales of recent years. Those new streams are going to come from the internal IT spend inside corporations and the weapon they'll use to bash it out of you is software as a service.
Of the Big Three, IBM is clearly the best placed at the moment. Its forthcoming acquisition of PWC will only strengthen its arm, especially in the applications space. Oracle has already begun pushing software as service, although to date the takeup has been significantly limited. The company remains hampered by its devotion to the 'one true word' approach, although harsh economic
reality might soon dilute that.
Microsoft remains the dark horse. Clearly .Net is the battleground of choice at the desktop level, but what about the enterprise level? Butler proposes an interesting theory: what if Microsoft went out and bought itself a slice of the action by purchasing, for example, Accenture? If it did that, we might as well all pack up and go home frankly.