IBM/Sun deal: Big SOA technology providers grow

And midsize companies continue to shrink

Once again we are faced with another megamerger, this time Sun and IBM. Both do SOA, selling SOA technologies and services. So what's the outcome of all this, and should you care?

I don't like the way SOA technology providers have grown out there -- let's get that out right now. I mean, we have two major categories: those startups looking for a juicy exit, and those overgrown software monsters providing those exits. There are very few in the middle, meaning SOA companies in the range of $100 million to $1 billion.

[ For more on the IBM-Sun deal, see InfoWorld's special report ]

This issue is around SOX compliance, really. It makes much more sense these days to avoid going public, and to do a C or D round for capital. SOX just makes being a public company too expensive. Thus, these guys typically sell at some point to provide ROI to the investors -- usually when they are relatively small. Therefore, the middle class of SOA technology companies gets smaller and smaller, the larger players become much larger, the smaller players find it tough to compete with billion-dollar marketing budgets, and thus sell out to the larger players are well. Or they just go under.

My issue is that most of the better innovation in the past came out of small companies that had great ideas and were allowed to capitalize those ideas within the public markets. They were able to grow the use of these innovative technologies to a critical mass independently.

Not to knock the big guys, but try getting a new idea launched in a huge multi-billion-dollar software company. It's not that easy. Indeed, that is why they are purchasing other companies because of the latency that's built into internal processes, when considering new and innovative ideas, and the amount of time it takes to build resulting technology. Time-to-market is ungodly slow.

So what does the reduction of the SOA middle class have to do with IBM sucking up Sun? The big are again getting bigger, the middle is becoming non-existent, and the smaller players are going to have to focus on surviving instead of innovation.

I don't blame IBM, Sun, or any of the other larger software companies. Were I them, I would be doing the same thing. However, I'm not sure holistically that the SOA industry, services, and technologies are better off in the long run from all this.

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