Analysis: Microsoft and IBM preparing for battle
- By Gary Barnett
ANALYSIS: For several years now Microsoft and IBM have been politely engaged
in the run up to what is set to be an awesome battle, one that will commence
within the next two years and will help to shape the technology industry for the
If you've watched both of these vendors for any length of time, you'll notice
that while both have been very pointed in their comments about other vendors,
they've been scrupulously careful to avoid getting into any messy arguments with
each other. Indeed, despite competing fiercely, the two companies have gone to
great lengths to agree on technology protocols like Web services. This is
because Web services, and the various protocols that make up the family, are not
just about interoperability, they are about defining the field of battle.
Microsoft is starting at the low end of the valley and plainly seeks to
control the higher pastures, while IBM is conscious that if it is to grow it has
to expand its territory further down the hillside. Microsoft wants to conquer
the high ground, while IBM wants to conquer the low. This battleground lies in
the upper reaches of a territory known as SMB (small and medium business).
Both parties know this land well; indeed they both derive a great deal of
their prosperity from it. They also know that the company that can gain control
of this part of the market will be almost unassailable.
The past two years have seen a renewed effort on both parts to establish a
beachhead at the top of SMB. Microsoft's acquisition of Navision and Great
Plains are part of a larger plan that is being played out across the company's
product portfolio. Microsoft has a huge number of allies. These come in the form
of foot soldiers provided by simple resellers to the crack troops that the
mid-market independent software vendors can bring to the fray.
IBM has a similar strategy and is investing a huge effort in developing
better, closer alliances with resellers and ISVs in the mid market. IBM hopes to
make up for the shortfall in numbers by counting on the superior quality of its
Some of IBM's obvious allies come from the group who rally around the Java
standard, but the problem is that potential allies like Sun, BEA and Oracle
spend too much time squabbling and plotting against IBM itself to be truly
reliable in battle.
Microsoft's war chest is phenomenal. The firm has software revenue that
outnumbers the software revenue of IBM, Sun, Oracle and BEA combined. Indeed
Microsoft's revenue outnumbers the combined revenue of the next 10 software
vendors when ranked by size.
On the other hand, IBM isn't exactly short of a bob or two. While IBM's
software business may be dwarfed by Microsoft's, IBM is the king of the hill
when it comes to hardware and services. Overall, IBM is the bigger of the two.
Yet the key question when it comes to IBM is whether it can adapt its strategy
to switch from the castle-storming tactics it used to win the high ground to the
nimble street fighting that it will need to win in SMB.
What about the other nations in this landscape? Well, this is where things
inevitably get a little messy. Most of the smart ones will pick sides and swear
allegiance to one army or the other. Some will be able to declare neutrality and
profit from their refusal to pick sides. Sadly, a significant proportion will
simply be annexed by the invading nations or, worse, end up trampled underfoot
without the big armies even noticing.
After all, even the courtliest of wars incur some collateral
Gary Barnett is IT research director at Ovum Ltd., a United Kingdom-based consulting firm.