I had lunch last week with Drew Clark, the lead strategy guy at IBM’s Venture Capital Group based in Silicon Valley. Amid a lively discussion of VC trends around the globe (most startups seem commoditized from birth, Web 2.0 is becoming Enterprise 2.0, the flow of VC dollars continues unabated and is increasingly funneled to Asia), he coined a couple of phrases that I kind of liked.
What sits on top of middleware? Not applications (which IBM presumably leaves to its partners), but … upperware! Drew touted the appeal of a Web-based marketplace for enterprise on-demand upperware that could run on top of a standard, Web-based utility infrastructure. And the perfect distribution vehicle for such modular components? Well, of course, Upperware Parties (my bad joke, not his).
And then there’s the issue of productizing services … something IBM is furiously working on so it can become more of a services company but with the financial profile (aka profit margins) of a product company. I’ve been wincing at this phrase ever since people started using it -- it seems like an oxymoron. How about service-ize, Drew suggested? Sounds a little 1950s to me, but I don’t have anything better.
I walked away from the lunch thinking this: What’s exciting right now in enterprise IT is that all the big vendors are reinventing themselves, despite the supposed lack of competition from quickly vanishing smaller companies (RIP Mercury Interactive). IBM, Microsoft, Oracle, HP -- there’s a lot of change happening out there, in response to the competition that wasn’t supposed to exist (India, Google, Salesforce, open source) if you had asked the experts four years ago. Everybody’s transforming. Except me. It’s time for my nap.
A license to print money? Now that IT’s focus is finally shifting from cost-cutting to innovation (I don’t know if this is actually true, but I keep hearing it, so it must be), the topic of licensing, while still esoteric, is looking a lot more relevant.
How does IT deliver innovation? Well, you either produce it yourself, or you license someone else’s intellectual property. Perhaps you yourself have been put in charge of licensing a process, a set of algorithms, or even a piece of core technology you’re going to build on top of?
Before you sit down at the negotiating table (accompanied by a phalanx of intimidating lawyers, I hope), check out the findings of the PricewaterhouseCoopers 2006 Licensing Competitiveness Study to get a sense of the other side’s issues. Based on 150 interviews with executives at technology, biotech, and entertainment and media companies, the study generated a few interesting findings.
First and foremost, although the marketplace for technology licensing is growing rapidly, smaller vendors are having a harder time these days making a go of the licensing business model. Licensing revenue at companies with smaller license portfolios (fewer than 250 licenses) is growing at a slower rate, the study found, than at larger companies with larger portfolios. Scale matters in licensing, in other words.
Specifically, companies with larger licensing portfolios were better able to monetize them, the study found — even in the seemingly pedestrian area of simply collecting on licensing revenues that they’re owed. And larger licensors are better able to compete globally, marketing their IP outside of their home turf. So before you sit down to do a licensing deal, take a look at the size of the vendor’s IP portfolio to get a sense of the strength of their licensing business.