Gartner: Vendor top cats on takeover prowl

The relentless march toward consolidation in the IT industry has pundits betting on which computer giants will be here in 2006 and which is a likely takeover target.

Across the globe IT has seen an unprecedented level of merger and acquisition activity in the past 12 months and takeovers are set to continue unabated.

The biggest warning to IT professionals about the impact of consolidation has come from Gartner Inc. which is standing firmly behind its claim that 50 percent of IT vendors will be eliminated from the competitive landscape by the end of 2005, albeit with an important qualification that Gartner Asia-Pacific senior vice president Bob Hayward insists has been there from the very beginning.

"We are not saying that the number of registered companies that sell IT product will decline by 50 percent. What we are saying is that (for our customers at the big end of town) the vendors they will be dealing with and have a desire to buy from will be reduced by 50 percent (over 2004-5). Our view is that that prediction is holding true," Hayward told Computerworld.

Hayward said there was plenty of evidence that the global consolidation juggernaut continues to gather pace as large enterprises aim to extract efficiencies from standardizing their suppliers and platforms, and this was being reflected through acquisitions and mergers.

"A number of segments of (the IT industry) are paring down to a just handful of vendors on a global basis, and it's been happening for a while. There are only four or five companies worldwide that (large enterprises) buy servers from. Now that's beginning to happen with services and certain categories of software like ERP and office automation," Hayward said.

In terms of who is on the prowl for new acquisitions, Hayward predicted that Microsoft continues to hold strong ambitions to crack the enterprise applications space and is likely to try and buy a seat at the tier-one table.

"Microsoft will have to acquire large numbers of software companies sooner or later. It has a huge amount of money in the bank and is struggling to become a growth story again. The only way it can realistically grow is to move seriously into applications software. (It might) try and buy a tier-two ERP player, but it is not in a position to buy Oracle, SAP or PeopleSoft. (It might look at) SAS, or companies here in Australia like Mincom or TechOne," Hayward said.

However, Hayward expressed some doubts about whether Computer Associates might be on the acquisition menu.

"I'm not sure anyone would want to buy Computer Associates. I'm not sure anyone would quite know what they were buying if they bought (it)," he said.

Sign up for ITworld's Daily newsletter
Follow ITworld on Twitter @IT_world

• Email
• Print
• Share
  • Slashdot
  • Digg
  • Stumble
  • Reddit
  • Newsvine