To gain an advantage in the marketplace, major software companies are reverting 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 increasing sales by offering everything from operating systems to database software and business applications has been implemented by IBM for many years. The “Big Blue” has combined various high-tech products, from hardware and software to services, into a single product package. Now, Microsoft has introduced a One-stop solution at retail channels in a similar model. Oracle and SAP are no exceptions.
This trend is quite different from a few years ago when software companies focused only on their strongest areas. There were solution packages introduced, primarily based on the combination of the best products in the market, focusing on product features without regard to the manufacturer.
The shift in the business strategy of the software industry is mainly due to the decline in profits in recent years. Large companies aiming 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 earns billions of dollars from selling databases and commercial application software. In recent years, Oracle has continuously acquired smaller companies, even taking over some competitors like PeopleSoft and Siebel Systems. After each deal, 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 into a new competitive era within the community of companies specializing in comprehensive software solutions. Consequently, manufacturers can offer large system software across multiple fields.
As of now, only Microsoft has “covered” its products across most areas, while IBM, SAP, and Oracle still have some gaps. Oracle’s CEO, Larry Ellison, complained to the press that he is “almost there with a complete software solution.” “We are missing an operating system. You can understand why we are forced to develop and support Linux,” Ellison said.
Experts believe that the strategy of providing comprehensive solutions is appropriate for software companies at present. This trend is even beneficial for newly established firms. By offering software bundles, providers can optimize profits from their existing customer base. Additionally, managing future software development becomes easier. 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 overall usage license and maintains income and core profits from that. From here, they can continue to boost sales through additional products, services, and many other potentials.”
Ha Thao
