Businessweek has an article covering IBM's recent acquisition of business intelligence software company Cognos. The article points out that IBM has made 23 software acquisitions since 2006 and points out that the software industry is is now dominated "by a handfull of giants". Key quote:
"The software industry, once populated by hundreds of so-called best-of-breed companies, is now dominated by a handful of giants, including Microsoft (MSFT), IBM, SAP, and Oracle, with vast portfolios of products. It's very difficult for midsize companies to compete against the giants because large corporations prefer to buy their technology from a few strategic suppliers rather than a lot of smaller companies."
While mid-sized software companies are becoming rare, there are thousands of small software companies - many based on Web 2.0 technologies. As with other industries, the software industry is developing a barbell structure with a few very large companies, lots of small companies and very few mid-sized companies. We will covering this trend in more detail in our next Future of Small Business forecast report.
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