does the company's weakness in the CRM and ERP markets dilute its appeal as the Gorilla in the HR automation market?
This would seem, to me anyway, to be determined by the overall profile of PSFTs business. If their primary business focus remains HR and they are a gorilla there, then their weakness in other areas is of marginal relevance. If, however, they are spreading effort, revenue, and expense broadly across all areas, then I think Moore would say that they were not doing a good job of converting their gorilla dominance in HR into a broader base.
While I can't claim to have looked as PSFT closely, this is my perception of the company. I.e., they established an early and very strong position in HR, but found, I would imagine, that the upside potential of revenue in that narrow a field was slowing and thus looked for other applications to broaden their revenue base. Thus, instead of finding ways to leverage HR itself, they re-defined themselves as the client-server financial application company, but by the time they got a reasonable suite of applications out for financials, they were no longer in a position to be a gorilla in that larger sphere and continuing to expand into manufacturing and CRM has not changed this. It doesn't seem likely at this point that they will establish an equivalently strong position to the one they once held in HR alone in any other definition of their market. I contrast this to MSFT and INTC, for example, who may not dominate in every single facet of every market in which they participate, but they certainly dominate in the area of their core business.
If it turned out that 60-70% of PSFT revenue was still coming from HR, then I would say that they were misdirected in trying to go after all these other markets and they ought to forget that and focus on ways to leverage their dominance in HR. If the revenue from HR is more like 20%, then I would say that while they may exhibit gorilla like characteristics in the HR marketplace, i.e., from Moore's perspective with respect to market positioning and such, but that they wouldn't qualify as an overall company gorilla for the purpose of investing since only a minority of the company, i.e., the stock, was gorilla-like. |
