Consolidation in the Enterprise Software Market: A Giant Leap towards Dominance

Strategic Insights -

The recent merger of Symantec and Veritas Software in a $13.5 billion deal marks a significant shift in the enterprise software market. This consolidation is a response to the growing dominance of giants such as Microsoft, IBM, and Oracle. The market is witnessing a period of accelerated job losses and vendor consolidation, with research firm Gartner predicting that as many as 50% of technology suppliers will be eliminated from the competitive landscape.

Key Takeaways:

  • The Symantec-Veritas merger is expected to close in the second quarter of next year, creating a combined company with a revenue of $5 billion and $5 billion in cash.
  • The merger is a strategic move to remain competitive in a consolidating market, as Forrester Research analyst Galen Schreck noted, "The reason is simple: it's entirely about market dominance."
  • The acquisition of PeopleSoft by Oracle for $10.3 billion is a significant deal in the enterprise software market, with Oracle seeking to dislodge SAP as the market leader.
  • The pace of consolidation in the software industry has accelerated, with the Symantec-Veritas deal being the second-largest merger transaction in the industry in recent history.
  • The combined Symantec-Veritas company will have a total market opportunity of approximately $35 billion, expected to grow to $56 billion by 2007, according to International Data Corp.
  • Research firm Gartner has predicted that as many as 50% of technology suppliers will be eliminated from the competitive landscape, leaving companies that survive to focus on providing quality rather than being price-driven.
  • The acquisition is expected to be a disruptive influence in the enterprise software market, according to The 451 Group, a New York-based technology analyst firm.

Statistics:

  • The combined Symantec-Veritas company is expected to reach a revenue of $5 billion for its next financial year from April.
  • The combined company will have approximately $5 billion in cash.
  • The total market opportunity for the enlarged Symantec is estimated to be about $35 billion, expected to grow to $56 billion by 2007.
  • The Symantec-Veritas merger is the second-largest merger transaction in the software industry in recent history, with Oracle's acquisition of PeopleSoft being the first.

Sources:

  • Gartner Asia-Pacific research director Dion Wiggins
  • Forrester Research analyst Galen Schreck
  • International Data Corp
  • The 451 Group
  • Reuters
  • Bloomberg