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Software's Big Four: Cisco, IBM, Oracle, Microsoft

The enterprise software industry is converging on just four hegemonic vendors, with interesting implications for competition and IT spending. What about HP and SAP?

Enterprise software is coming down to four big choices: Cisco Systems or IBM or Oracle or Microsoft.

Hewlett-Packard? HP is doing very well in hardware, but it lacks the overarching software strategy that fuels these other four.

Even as the industry consolidates into these big ecosystem vendors, it's becoming ripe for a new kind of hegemonic, all-out war.

It's a fun time to be in the industry. For one thing, it's fascinating to watch (and, in some cases, assist) each of the Big Four to use open source as a strategic club with which to pummel their neighbors. Open source, thy name is capitalism.

But open source is just one part of it. The bigger part is conflicting product-level competition. Microsoft dominates the desktop and uses it as a "home base" from which to compete in other markets. Cisco spreads the power of the network into a wide variety of complementary businesses. Oracle uses the database as the center of the enterprise-computing universe, but surrounds it with a host of exceptional software.

And IBM? Well, IBM enriches its massive software business with integrated hardware and services that no one has yet been able to match.

Each, of course, is starting to infiltrate the others' safety zone with new initiatives. IBM, as announced on Monday, is pairing up with Brocade to go after Cisco's core networking market. Cisco, for its part, is stepping on just about everybody's toes with collaboration initiatives that veer toward Microsoft's SharePoint, even while it adds a server line to compete with IBM.

Oracle announced the acquisition of Sun Microsystems to help give it a leg up on IBM and Microsoft through Java, Sun's hardware lines, and MySQL. Microsoft, for its part, is expanding into everyone else's markets with the ubiquitous SharePoint.

This is only the beginning. The question is, "The beginning of what?" In some ways, this dramatic industry consolidation reduces customer choice. But in other ways, it enhances it.

Given the centrality of software to this enterprise cage match, it also begs the question, "When will SAP join the fray?" Last week, I spent time at the Open Forum Europe conference, where I repeatedly heard the question raised, "When will Europe produce a dominant software company?"

SAP's strength in enterprise resource planning, or ERP, software could serve as a nice complement to one of the Big Four's product lines--or as a beachhead for the assembly and deployment of an additional, independent software ecosystem.

Red Hat could do the same, fostering an open-source ecosystem to rival that of the Big Four, mostly proprietary software vendors. While the company has shown little ambition beyond infrastructure software, there are hints of a growing interest to sell (and build?) solutions. Red Hat's recent channel expansion through Synnex suggests that it may be toe-dipping its way toward a larger vision of being the hub of the open-source "wheel."

Given this waxing and waning of competition in enterprise software, I suppose that the real question is, "On which ecosystem are you betting your business?" Enterprise IT is a study in heterogeneity, but for how long?

Follow me on Twitter @mjasay.