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This brief update was given in November of 2007 by Kris Tuttle and Dennis Byron to cover recent developments in Web 2.0 software, SaaS, SOA, Open Source and the Cloud. The presentation also touched on how Microsoft, IBM Oracle, SAP, Google and Red Hat were effected.
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Software Trends Update
November 13, 2007Kris Tuttle, Director of Research
Dennis Byron, Senior Analyst
Agenda• Web 20 performance update and changes• Key technology themes• A closer look at SaaS, Open Source and SOA• Impact on major software suppliers• Stock commentary• Q & A
Research 2.0 Introduction
• Initiated new coverage in April of 2005.• Added first employee July of 2006.• Expanded operations May-August 2007.• Exceeded 400 subscription clients in Sept.• Adding advisory services November 2007.• Several new coverage categories in beta.
Experience Bias
Software Stocks (SoundView)Business (IBM, NYU)
Artificial Intelligence (Carnegie-Mellon and IBM)
Micro-computing (Pre-80’s and IBM)
Software (Carnegie-Mellon and IBM)Equity Sales and Finance (S.G. Warburg)
Research (Research 2.0)
Private Investor/Advisor (Good Data Corporation, Rathpeacon Management LLC, alfabetmeta-modeling AG, Cape Clear Software, Azure Ventures)
Web 20 Performance
Web 20 Update• New Changes
– Added Cisco and Trimble• WebEx and Navteq acquired
– Added Citrix and Research in Motion• WebSense and SanDisk removed
• More groups coming:– Existing: Cloud, SaaS, BI, Binding Problem– New: BioIT, ResourceTech
Web 20 Outlook• Google and Apple won’t own the world.
– Lack of feature/function and support.– Most mashups today are only prototyping.
• Microsoft better positioned than most think.– 99% of existing commercial base won’t move.– More integration and refreshed product pipeline.
• Virtualization marks a change in architecture.– VMware leads now but like Veritas, BEA, Sybase.– Less appreciated may be Citrix, Equinix, Akamai.– Still-private players like PlateSpin fill important gaps.– Large players like IBM, Microsoft and Oracle have deep
resources and product plans.
Investors and “killer applications”• History:
– mainframes, personal computers, mini-computers, networking– relational database, BI 1.0– 32-bit Windows– IT services
• Almost:– object-oriented programming (Rational, IONA, Nextstep)– EAI, Y2K– Application servers (BEA), Web 1.0 (Netscape, Yahoo)
• Today:– Disruptive technologies and forces have contributed to a
recognition that “cloud computing” is the right model.
Cloud Software Architecture• Bind and be bound - discoverable, arbitrary• Call or be called - no hierarchy• Transparency - clear functions and methods• Context aware - maximum advantage• Sub-second response time - adoption
Underlying infrastructure changes often require newarchitectures and pave the way for new tools, servicesand content.
New Opportunities• Cloud Computing
– Virtualization– Binding Problem– Data/BI– Open Source– Hosted Services/Content Delivery– Processing/Network Convergence
• Enterprise Software Trends– Software as a Service (SaaS)– Service-oriented Architecture (SOA)– Open Source Software (OSS)
Looking at SaaS, OSS and SOA.
• Trends as a construction metaphor:– SaaS: one way to sell the building– OSS: one type of construction supply– SOA: one form of blueprint
• Not interdependent but highly interrelated.• Also related to other trends like virtualization.
SOA, SaaS and OSS revenue forecasts
Other Maintenance
OSS Subscriptions
New Perpetual-License-
based Business
Perpetual License
Upgrades/ Add-ons
SaaS (includingrentals, monetizationInto advertising)
10% of license revenue flow to have OSS software built in
Software Fundamentals Still Matter
• Functionality• Value proposition vis-à-vis SOA, OSS and
SaaS• Audience (IT, departmental, C-level)• Channel• What will disrupt them?
– Current market structure– Leaders, shares
• Positioning vs. each other, Amazon, etc.
How the majors interrelate
Can “own” consumermarket
Still one-trick pony butdamn great trickGoogle
Acquisition highly likelyunless nixed by EU
Spread too thinSAP
Think of Intel, Cisco,Adobe
Likely to settle in a atechnology providerOracle
Doesn’t compareNo longer a technologyplayIBM
Can “own” business marketvalue > sum of partsMicrosoft
L-T ImplicationAnalysisSupplier
Reactions to SOA
Not relevant to L-T strategyNot a message buttechnically savvyGoogle
1000 third-party services =a new game
Needs a much betterchannel strategySAP
With DB, could be leadingSOA enabler
New guy will drive Fusionto servicesOracle
Doesn’t compareKey software group storynot aimed at ITIBM
Not relevant to L-T strategyNot a message buttechnically savvyMicrosoft
L-T ImplicationAnalysisSupplier
Reactions to OSS
Looking to be the pure playand market leader
Have a clear objectivesince 11/7/2007Red Hat
Not relevant to strategyAn effective PR messagevs. MicrosoftGoogle
Not relevant to strategyNibbling around theedgesSAP
Will embrace when theyhave to
Nibbling around theedgesOracle
…doesn’t compare againstthe others.
Already an OSS leaderbut…IBM
…muting the choir’svolume
Joined the choir…Microsoft
L-T ImplicationAnalysisSupplier
Reactions to SaaS
To be acquired or to?Hard to get beyond CRMSalesforce
Everything and nothing(KT)
Revenue?Google
If successful, SAP could bean acquiror
Only way to meet user-count objectivesSAP
Doesn’t matter (except forNetSuite?)
Struggling and distractedOracle
Doesn’t compareNot relevant to strategyIBM
Move to business servicesTied to channel rebuildingMicrosoft
L-T ImplicationAnalysisSupplier
Conclusions
• Infrastructure retooling and new applications will continue to bea major growth area in technology.– Cloud Computing architectures.– SaaS, OSS and SOA are elements.– Enterprise needs addressed slowly.
• Some names are underappreciated.– Microsoft: Far better positioned than investors realize.– Akamai: Unique content distribution ability, price fears aside.– Citrix: has virtualization angle like VMW without the valuation.– EMC: Storage is crticial. Along with S/W portfolio will get acquired.– Brocade: While servers get consolidated SAN usage accelerates.
Resources & Questions
Kris Tuttle (kris@research2zero.com)Dennis Byron (dennis.byron@resarch2zero.com)
www.research2zero.comwww.research2zero.com/blog
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