Microsoft, the world’s largest maker of software for personal computers, last year had approached Germany’s SAP, the world’s leading business-software company, about a potential merger, but the preliminary talks were discontinued this spring, said the dry-as-dust announcements. The news sparked a buzz throughout the technology world, and for good reason. Wharton faculty members and other academics say that it was as good an indication as any that the software industry is ripe for consolidation. If nothing else, highly respected but little-known SAP has become a more familiar brand as a result of being wooed by Bill Gates. They differ, however, on whether SAP needs to link up with a major partner in order to thrive. And some suggest that a SAP-Microsoft merger may not be a dead issue.
The coming consolidation in software will involve companies in the three chief categories of software for both businesses and for consumers. They are: applications (software that handles a slew of administrative tasks for corporations, such as financial management, procurement, human resource management and order processing, as well as for desktop computers); platforms (the so-called “middleware” systems on which some software applications run and which coordinate different software programs); and system infrastructure (the operational software that keeps computers running). These three categories are breaking down as both consumer- and business-software companies eye new markets for growth and as the open-source software movement grows.
“I think [a shakeout] is inevitable, I really do,” says [continue]
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