Monday, I read an interesting article by Peter Yared on VentureBeat “Why HP needs to merge with SAP”. The author states that SAP and HP are both losing the battle in the enterprise market because they do not have a complete enough offering. The “rule of three” economic theory states that in any market only three big players will dominate. Since HP has already indicated they’ll move out of the consumer market, a strong move is needed to survive in the enterprise market. A market that requires a fully integrated stack to compete. Oracle has been aggressively expanding its offering in the last years and has made a big leap when they acquired Sun. In his article Peter compares the solution offerings and shows how a merge of SAP and HP may be able to compete with Oracle and IBM and potentially keep Microsoft from 3rd place.
Yesterday another article caught my attention (and that of many others, since it was top headline on my LinkedIn home page and mentioned many times in my Twitter time-line): Is Oracle Considering Buying HP? Although it is probably just a rumor, the article calls it “thinking the unthinkable”, the chance that an acquisition would indeed succeed is slim. Just remember the difficulty Oracle had getting the Sun acquisition approved in Europe. If successful, it would shift the balance enormously in favor of Oracle. What would it mean for SAP?
The article in Forbes is a great read and gives some good insight in world of the big powers in our industry. Following the movements of the big vendors can give us some insight on the direction our industry is moving. Our friends from Oracle and their competitors make their decisions party or even mainly because they feel the customer wants them to. Large enterprises want to do business with less vendors, trying to reduce cost and risk. Vendor lock-in is apparently less an issue, The vendors themselves are fighting for “share of wallet”, who gets the biggest slice of IT budget of those enterprise customers.
I guess we’ll see more mergers in the future, even if HP and SAP won’t merge and even if Oracle won’t acquire HP. If the trend for vertical integration continues, we’ll see new and further integrated products like the Exalogic / Exadata solution Oracle offers since the Sun acquisition.
These are interesting times.