Significant Industry Announcements

By Geoffrey James

SAP (9/15/04) announced it will open a support center in Dalian, China, that will become the primary hub for delivering services and support to SAP customers in China, Japan and Korea. The service center will be staffed with approximately 130 native speakers of Chinese, Japanese, Korean and English. Analysis: SAP continues with its highly international deployment. This will help SAP sell into corporations headquartered in that region. Expect to see renewed competition from SAP at divisions of such firms headquartered in the United States.

Oracle (9/27/04) announced a list of partners that will resell Oracle’s E-Business Suite Special Edition North America, a package of preconfigured enterprise business applications. Oracle will work with its partners to develop a channel to sell Oracle applications to key market segments. Analysis: Oracle is a highly competitive company with a militaristic marketing perception. Watch for channel conflicts as Oracle sales reps butt heads with the new partners. If you sell against Oracle, you may be able to use this to your advantage.

Computer Associates (9/29/04) announced a restructuring plan and a workforce reduction of approximately 5% (800 positions) worldwide, with the majority of the reductions completed by the end of October. The impact on CA’s sales force is expected to be minimal, though the cuts will effect nearly all departments, with a focus on marketing. The plan is expected to save approximately $70 million annually. Analysis: CA is struggling to get its house in order after the removal of its top management. The shakeup in CA marketing is probably overdue, as the company has traditionally been weak in this area. Software firms selling against CA should be moving aggressively to capture business during the turmoil.

IBM (9/29/04) announced it will resolve certain claims in the class action lawsuit relating to its pension plan. The company will provide plaintiffs with incremental pension benefits worth approximately $300 million. IBM’s potential liability for the claims being appealed will be capped at $1.4 billion. If the company prevails on the appealed claims there will be no additional liability. Analysis: IBM made a PR blunder when it tried to yank away pension benefits. There’s little doubt the software industry is likely to roll back benefits, however, now that IBM, an employee benefits bellwether, has taken the big step. If you’re a long-term employee of a software firm, you should monitor your own company’s policies closely. If there are any changes in benefit levels, consider consulting a lawyer before signing anything that might reduce the value of your pension.

Microsoft (9/29/04) announced a low-cost version of Windows XP to the India market. The Starter Edition comes with a Hindi interface and will include help files and training in Hindi as well. With this announcement, India becomes one of five countries chosen for the Starter Edition Pilot Program that Microsoft announced in August. Analysis: This is all about software piracy. Microsoft software is approximately 95% bootleg in the third world, which drains billions from Microsoft’s revenues. Microsoft hopes that offering a lower-cost operating system will reduce piracy and recapture some of that revenue stream.