Will there be one ERP vendor?
Two PC manufacturers?
Three data base vendors?
Will there be any independent BI vendors?
What happens when the dust settles? What will the industry look like when the M&A music stops? Let me make some predictions.
First, vendors will continue to gobble each other up. HP, IBM, Oracle, Intel, Microsoft, Hitachi and Cisco will get bigger. EDS, Dell, Accenture, PWC, Deloite, CSC, Sun, Lucent and EMC will be acquired and folded into solutions providers as the gap between software and services blurs. SAP is a wild card, though I would not be surprised if they ended up with IBM or even Accenture on their way to IBM or even Microsoft. HP will gobble up the smaller players in the hardware space. Dell has to fix itself and if it does could become an acquirer versus, ultimately, an acquiree. Apple will go its own way as long as Steve Jobs is running the company, though he might well acquire some key partners or even move on some unconventional partners like gamers.
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Total solution providers (TSPs) will emerge as the vendors of choice. As more and more buyers outsource, they will be looking to offload management responsibility to a single point of conflict. IBM is already there; HP is almost there. Oracle and Microsoft need to add software and broader consulting services to their repertoires. Cisco will cross the hardware/software chasm, offering a variety of software and consulting services, especially in the infrastructure area. Intel will remain an arms dealer, supplying weapons to whoever wants them.
TSPs will rent as much software as they sell-for-installation until 2012 when they will rent more than they sell-for-installation. Software-as-a-Service (SaaS) will become the dominant software delivery model in five years. TSPs will blend proprietary and open source software for delivery to their clients who really wont care who ultimately owns the software (or where its located) as long as its secure and reliable.
TSPs will become the repositories for APIs and widgets, guaranteeing their interoperability and security. Mashups will replace rapid application development (RAD). What lives inside the firewall will continue to shrink over time: by 2020 there wont be much left. Instead, data, transactions and processes will live in named corporate clouds where companies will access their own virtual servers, data bases and desktops in cyberspace. By that time, there will be less than 10 global technology vendors controlling 75% of the business.
Innovation will not, by and large, come from the mighty ten. Of course, they will invest heavily in R&D, but disruptive innovation will continue to come from entrepreneurs funded by a still robust venture capital community (in spite of what Warren Buffet says about the structure of private equity funds). The mighty ten will acquire this new technology and, in effect, outsource much of their R&D. Over time, their R&D budgets will actually shrink; the really smart ones will divert a lot of R&D funding to early-stage company investment opportunities.