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Has The Big Dog Had It's Day?

The end of the megalithic software vendor?

Who Are The Big Dogs?
When you think of the big dog, game changing software companies you think of Microsoft (PC's), Apple (cool-factor), Oracle or IBM (enterprise), Google (search and now mobile) and I guess if you stretch it a little Cisco (yes I know they are primarily network hardware, but that hardware needs an OS) too.  There are a few others, but you get the idea.  Most of these big dog software vendors, are indeed just big dogs, and occupy many positions in the NASDAQ's top 10 for market capitalisation.

But Has the Big Dog Had It's Day?
Is there a point where these organisations like these, either become too 'large' or simply become less relevant?  15 years ago Windows was seen as the only way for desktop operating systems, certainly within the enterprise, being bundled on the latest HP and Dell hardware without question.  Today, it doesn't take long to find the latest netbook running Ubuntu or another Linux distribution.  Oracle was once seen as the de-facto standard in enterprise databases.  Whilst that is still the case in many parts, the number of greenfield sites has reduced dramatically, resulting in Oracle diversifying massively and at one point, running an acquisition trail of something like 50 new companies in 5 years.  Why such diversification?  The need to stay ahead.

Courtesy of JDurham via

Microsoft, Cisco and Oracle shares for example are pretty much stagnant compared to 10 years ago.  However, I'm not really a fan of using that as a metric for success or growth of the software industry as a whole, mainly as you could argue that equally, shares in Google or Apple have risen significantly, peaking several thousand percent higher on some days.

Big is Good?
Larger companies are generally good at scale.  Massive scale.  They can leverage internal and external buying power, create efficiencies from removing personnel duplication and invest heavily in R&D and automated process.  This generally allows larger companies to manage huge client bases, distribution channels and develop in-comparable brands.  However, that scale comes at a cost - agility.  A huge client base make it's difficult to make short product or marketing decisions without affecting (potentially negatively) large percentages of your customer base.  It's often difficult to add new features, release new versions or implement strategic plans without considerable effort from all parts of the organisation.

Those issues are the same for any large organisation.  Why is software any different?  Well, I guess software always has a large amount of innovation.  One of Microsoft's initial goals was to get programming into the home.  Get a compiler in front of the man on the street, give him the tools to create something and see what happens.

The Source Of Innovation?
Today, a novice coder can download the tools and libraries, blogs and videos to be able to create a basic phone app in say 24 hours.  That is pretty incredible.  Put that approach in the hands of skilled developers and innovation proliferates.  But is that a threat to the larger organisation?

The many Linux distributions have always claimed to compete on features, with the better known and more costly closed source alternatives, but recently the argument seems to have taken heed, with many of the smaller netbook style machines switching to the less memory and processor intensive distributions.

The many flavours of Linux are generally supported by communities of volunteer developers, adding features, fixing bugs, porting drivers and so on.  Is that individual innovation a threat to a corporate machine?  Surely, if a distribution or feature became popular it would just be acquired right?  Well, perhaps, but when it comes to open source and free software, the sum of the parts are generally greater than the individuals, and cash can't buy an ethos.

So the larger software machines will fall on their own capitalist sword then?  Well I'm not saying that either.  The key to their future is to understand the true source of the innovation.  You want a Windows PC and all the associated closed source software running on a free Linux distro?  That can be done in a few hours.  There are Office copies, iTunes copies, Adobe copies, you name it, there's a free open source version of a popular closed source product.  But how many open source products are there which don't have a closed source version?  Surely that would indicate that the innovation came external to the closed source large machine?

Has The Dog Bitten It's Tail?
By creating a larger ecosystem of users, a large closed source, license based approach software vendor, can achieve many of it's aims, namely to keep its shareholders happy and pay out decent dividends.   However, those aims are often seen to be at the disposal of user happiness.  I'm talking license cost, long term corporate lock-in, lack of control, lack of response and ultimately lack of choice.

Realistically, many of the larger corporate vendors have the cash and experience to buy themselves out of any potential trouble, through acquisitions and re-branding, but the true source of the innovation that will drive these organisations for the next 15 years is often more difficult to control.


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