To gain an edge in the marketplace, major software companies are increasingly returning to a classic strategy: providing customers with “end-to-end” software solutions.
This trend can be described as an old approach for a new race. The idea of boosting sales by selling everything from operating systems to database software and business applications has been employed by IBM for many years. “Big Blue” has historically bundled a variety of high-tech products, from hardware and software to services, into a single product offering. Now, Microsoft has introduced a one-stop solution at retail channels following a similar model. Oracle and SAP are not exceptions to this trend.
This trend stands in stark contrast to a few years ago when software companies focused solely on their strongest areas. There were solution packages introduced, primarily based on a combination of the best products on the market, emphasizing product features without regard for the manufacturer.
The shift in the business strategy of the software industry is largely due to declining profits in recent years. Major companies seeking to maintain growth are compelled to introduce comprehensive solution packages to maximize profits from loyal customers.
This trend is most evident at Oracle, a company that generates billions of dollars from selling databases and commercial application software. In recent years, Oracle has continuously acquired smaller companies, even acquiring competitors like PeopleSoft and Siebel Systems. After each acquisition, Oracle integrates the unique applications of its subsidiaries across various fields into its database products, forming a middleware software line.
Red Hat has also acquired JBoss, ushering open-source software into a new competitive era within the community of companies specializing in comprehensive software solutions. Consequently, manufacturers can now offer large system software across multiple domains.
At this point, only Microsoft has “covered” its products in almost all areas, while IBM, SAP, and Oracle still have a few gaps. Oracle’s CEO, Larry Ellison, has lamented to the press that they have only “almost achieved a complete software solution.” “We are missing an operating system. You can understand why we are compelled to develop and support Linux,” Ellison stated.
Experts believe that the strategy of offering comprehensive solutions is appropriate for software companies at this time. This trend is even beneficial for newly established companies. By providing software suites, suppliers can optimize profits from their existing customer base. Moreover, regulating future software development becomes more manageable. Customers benefit from consistent technical support and tight integration within the products.
“Everything is under control,” said John Rymer, an analyst at Forrester Research. “Oracle sells you an overarching license and maintains core revenue and profits from that. From here, they can continue to boost sales through additional products, services, and many other potentials.”
Ha Thao
