Unified Communications

07:53 PM
John Dickinson
John Dickinson
Commentary
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Two Mergers, Two Circumstances, Two Results

Acquisitions and mergers are a sometimes-wonderful, sometimes-painful fact of enterprise life, and they tend to happen at two distinctly different times in the life of an industry and in the lives of companies in that industry: at the beginning, and at the end. At the beginning, companies that are growing in related, but distinct arenas of a growing industry can often find growth-giving synergy by merging their technological, intellectual, and manufacturing assets. At the end, companies that are

Acquisitions and mergers are a sometimes-wonderful, sometimes-painful fact of enterprise life, and they tend to happen at two distinctly different times in the life of an industry and in the lives of companies in that industry: at the beginning, and at the end. At the beginning, companies that are growing in related, but distinct arenas of a growing industry can often find growth-giving synergy by merging their technological, intellectual, and manufacturing assets. At the end, companies that are no longer growing in the same area of an industry that is no longer expanding, merge in order to survive by sheer numbers -- they think that if only they can get bigger in sales, in employees, in profits, they'll survive.

The former is the motive behind Microsoft's acquisition of Frontbridge. Sure, Microsoft is big and powerful, but while e-mail has been around for a while, its legitimate traffic continues to grow while its illegitimate -- spam and virus -- traffic grows even faster. Microsoft Exchange has the largest market share among a growing population of installed enterprise e-mail servers, so it's quite natural for Microsoft to acquire a company that can protect that asset. Is there synergy? Sure. Will Microsoft and Frontbridge benefit as companies, and will their executives get big bonuses from the moves? Sure. Will they be deserved? Probably.

The latter was the motive behind Hewlett-Packard's acquisition of Compaq, and it didn't work. Neither company had a clue about how to compete against the Dell Computing juggernaut. Executives under the leadership of Carly Fiorina at Hewlett-Packard and Mike Capellas at Compaq, were clueless about the innovative marketing and service programs developed by the aggressive Texans at Dell. But they were not clueless about how to squeeze their boards for big bonuses, and so now both have fat bank accounts, Capellas has a job as CEO of MCI, and Fiorina is trying to learn her childrens' names.

Oh, and just last week Hewlett-Packard announced that 14,500 jobs would be cut, and a significant number of research programs would be axed. Make that another 14,500 jobs, for a total of some 40,000 jobs, and some ungodly number of research and development projects and product development projects, axed.

Don't expect job cuts at Microsoft or at Frontbridge. Protecting e-mail traffic is a big job, and expanding Frontbridge to be big enough to cover every Exchange Server out there won't be easy. It'll take lots and lots of human resources, and many of you will be better off for it.

Even more important, it is a sign that the messaging industry, even the difficult part that has to fight spam and viruses, is in a healthy state of growth. That means you can expect more acquisitions and mergers. So far, at least, that's a good thing, and let's keep it that way.

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