The announcement of Logica's $797 million takeover of IT services rival CMG fueled speculation at the meeting about further consolidation in the IT industry as it approaches another year gripped by recession.
The view of a panel of Gartner analysts was that three big companies will dominate the most important information technology categories of hardware, infrastructure, software and applications.
In software, Gartner sees the big three "stack" software vendors--IBM, Oracle and Microsoft--increasing their grip on customers.
"Each one of the vendors is trying to own more and more of the stack... Their desire is to have you locked into their solution," said Betsy Burton, a Gartner vice president. "This is a game of world domination. They lock you into their infrastructure and you have to buy more of their products."
Gartner sees a similar picture in hardware, with Dell Computer, Hewlett-Packard and IBM dominating the field and all other players coming under increasing pressure. Gartner analyst Brian Gammage said Acer, Fujitsu, Siemens, Toshiba, NEC and Apple Computer were among those under particular strain--"basically anybody who is not IBM, HP or Dell."
Under the circumstances, Gartner said its analysts are advising clients to be cautious about any new expenditure, particularly when it comes to information technology hardware.
"We are advising our clients to keep a very close eye on their suppliers, because their suppliers are subject to the forces of consolidation. If they are signing contracts for hardware they need to make sure they are protecting themselves," said Gammage.
Gammage said he is advising companies to make good use of existing hardware. "Sweat the assets. Get more from them. Use them until they break or until they are giving you a productivity penalty," he said.
Business infrastructure software will not escape the consolidation trend, Gartner anticipates. "There are going to be three leading infrastructure vendors. I typically say three-and-a-half of software vendors in infrastructure, and they are Oracle, IBM and Microsoft... that half is Sun," said Burton. "Right now, Sun's on the edge of not holding on to that half position. I'm not willing to give them a whole position."
"In applications, it's going to be PeopleSoft, SAP and Siebel (Systems)," she said. "Siebel's biggest challenge is moving beyond CRM." One path for the enterprise software maker is to acquire companies, a route that Burton says may be difficult due to cultural factors. "Siebel has a very big culture. Let me leave it at that," she said.
Burton pinpointed BEA Systems and Sun Microsystems as two software companies that may have a hard time maintaining their current positions. Borland may also have a question mark hanging over it. The software maker will "have to grow or shrink. (It) can't stay where (it is) for the next five years," the panelist said.