To gain an edge in the marketplace, major software companies are trending back to classic strategies: providing customers with “end-to-end” software solutions.
This trend can be seen as an old approach for a new race. The idea of boosting sales by offering everything from operating systems to database software and business applications has been implemented by IBM for many years. “Big Blue” has combined various high-tech products, including hardware, software, and services, into a single product package. Now, Microsoft has introduced a one-stop solution in retail channels following a similar model. Oracle and SAP are no exceptions.
This trend is a 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 to the manufacturer.
The shift in business strategies within the software industry is largely due to declining profits in recent years. Major companies wanting to maintain growth are compelled to offer comprehensive solution packages in hopes of maximizing 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 businesses, even taking over competitors like PeopleSoft and Siebel Systems. After each acquisition, Oracle integrates the unique applications of its subsidiaries across multiple fields into its database products, creating a middleware software line.
Red Hat has also acquired JBoss, ushering open source into a new era of competition within the community of companies specializing in comprehensive software solutions. Consequently, manufacturers can deliver large system software across various sectors.
As of now, only Microsoft has managed to cover most fields with its products, while IBM, SAP, and Oracle still have a few gaps. Oracle’s CEO, Larry Ellison, has complained to the press that they are “almost there with a complete software solution.” “We are lacking an operating system. You can understand why we have to develop and support Linux,” Ellison stated.
Experts assess 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, vendors can optimize profits from their existing customer base. At the same time, regulating 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 a comprehensive license and maintains revenue and core profits from that. From here, they can continue to boost sales through additional products, services, and many other potentials.”
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