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Industry In Flux
Predicting the future is always dicey, especially when it comes to the future of software. Just ask Bill Gates, who greatly underestimated the impact of the Internet in the first edition of his 1995 book, The Road Ahead.
As we now know, the Web changed everything in just a few years. New software companies appeared, and some old ones that couldn't adjust to the new paradigm died. Many of those new companies disappeared during the dot-com bust, yet they played a part in shaping a software industry that looks quite different than it did 10 years ago.
In the next few years, software, the way it's developed and supported, and the vendors that deliver it are in for more changes, driven by emerging business needs, new customer demands, and market forces. "There's an argument that almost every company is in the software business in one way or another," says Charles Fitzgerald, Microsoft's platform strategy general manager. People may not think of eBay or American Express as being in the software business, he says, but they are. "If you participate in the information economy, you will be a software company. If you're in a customer-facing business, software is the way you're going to differentiate yourself."
But will the industry that provides much of that software look the same three, five, or even 10 years down the road? Probably not. It's an industry that goes through periodic waves of consolidation and expansion, and the consensus is that it will be in consolidation mode for the next few years. Oracle CEO Larry Ellison has famously predicted that, within a few years, the software market will be dominated by a few companies, including Microsoft, SAP, and--of course--Oracle.
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