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Further proof has emerged for the theory that the integrated software and service providers are gaining share on the specialist, point product providers. Dataquest has just completed its assessment of the market and concludes that, '...top-tier software vendors are gaining revenue share at the expense of the pure-play vendor'.

There are a multitude of reasons for this situation - top of the list as you might expect is the economy. In these days of weakened profit margins and slow to market projects, the top tier software vendors, Oracle, IBM, SAP, Microsoft, are better equipped to weather the storms. They have big old cash reserves to bolster the marketing efforts, squeeze the last drops of budget out of a flat market and a slew of products to sell.

The point product providers on the other hand are often finding themselves increasingly squeezed in a vertical market, but that doesn't explain why the customer would not vote for them. It seems that it's a simple vote of confidence. Point products are great but if you can have your preferred vendor deliver a suite of products, cheaper and faster, then they're going to win. Add into that the increased possibility that a point player is either going to go bankrupt or be acquired and suddenly the battle is looking rather one sided.

This has been an ongoing intellectual debate for years of course. Do customers want specialist, best of breed products that deliver far more than the alternative. Or the alternative, which is the over-arching solution from one vendor that touts generic, good products.

On the one hand, the argument rages, the best of breed products are obviously a better idea, they're more powerful and it's better than putting all of your eggs in one basket. Then there's the other side of the story which says that if you choose a solution provider you can get decent solutions quickly implemented.

The fact of the matter is, however, that people will choose a range of applications from a range of vendors but, increasingly, the solution providers are winning the lions share. It's been happening in the enterprise space for years of course - the SAP, Oracle Applications, IBM, cover all, finger in every pie approach. But the independents have always been able to stand up and say, my product is better. They probably still can though fewer people are listening.

That's not game over for the specialist product vendors. It's still a very large field out there. Worldwide spending on software through 2002 is expected to have grown to $76.9bn, a rise of 3.6% and could hit as much as $81bn through 2003, according to Dataquest.

© IT-Analysis.com

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