Microsoft Vista Launch to Boost Software Sector

Strategic Insights -

The highly anticipated launch of Microsoft's Vista operating system in the corporate sector this week is expected to have a positive impact on the software industry. According to Pauline Nepgen, manager of the Global Technology Fund at Investec Asset Management, the new operating system will provide a boost to Microsoft and lead to higher average selling prices and better margins for the company. Nepgen also expressed her bullish view on the software sector, citing Oracle as a particular gem with its dominance in the market and phenomenal margins.

However, Nepgen also noted that the launch of Vista may lead to a slow uptick in the market as companies test the new product. Additionally, she mentioned that Oracle's performance may come at the expense of SAP, due to SAP's high valuation and Oracle's recent acquisition of PeopleSoft and Siebel. Furthermore, Nepgen highlighted the potential for smaller software companies to benefit from the launch of Vista, and the difficulty in predicting which ones will be acquired by the larger players.

Nepgen also discussed Google, the search engine giant that is expanding its offerings into new areas, including free software online. While acknowledging Google's phenomenal growth prospects, Nepgen stated that the company's stock has been priced in and that Investec's rigid valuation process has forced them to avoid investing in it for the time being.

Key Takeaways:

  • Microsoft Vista launch expected to boost software sector, particularly for Microsoft, with higher average selling prices and better margins.
  • Oracle seen as a dominant player in the market, with phenomenal margins and returns to investors.
  • SAP's high valuation makes it less attractive compared to Oracle, which has recently acquired PeopleSoft and Siebel.
  • Google's expansion into new areas, including free software online, poses a risk to traditional software vendors.
  • Smaller software companies may benefit from the launch of Vista, but predicting which ones will be acquired by larger players is challenging.
  • Investec's Global Technology Fund will focus on larger cap players in the software industry.

Statistics:

  • Microsoft Vista launch expected to lead to higher average selling prices and better margins for Microsoft.
  • Oracle's dominance in the market is expected to lead to phenomenal margins and returns to investors.
  • SAP's valuation is higher than Oracle's, making it less attractive to investors.
  • Google's stock has been priced in due to high expectations for its expansion into new areas.
  • Smaller software companies make up a significant portion of the market, but predicting their success is challenging.

Sources:

  • CNBC/DOW JONES BUSINESS VIDEO ANALYST INTERVIEW MICHELLE CARUSO-CABRERA, CNBC ANCHOR
  • Investec Asset Management Global Technology Fund
  • Oracle Corporation
  • SAP AG
  • Google Inc.