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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: gdichaz who wrote (36893)	12/21/2000 10:03:58 PM
From: Mike Buckley	Read Replies (1) of 54805

Guess who picked up a new business partner today that hopes to do an additional $10 billion in applications software business. Siebel did. Huh? Microsoft announced the purchase of Great Plains Software. Great Plains is a significant reseller of Siebel's software to mid-sized companies. I had a conversation with a friend earlier today who was as bewildered as I was about why Microsoft would be interested in buying such a small applications business. We got our answer when I read the Fool news. "David Vaskevitch, senior vice president for Microsoft's Business Applications division, said 'We see this as our next major business, providing the software for small and medium businesses to run themselves.' He added that 'We see the opportunity for at least an Office-sized business here,' with 'on the order of about $10 billion a year' for Microsoft." $10 billion! At Great Plains's respectable 40% rate of growth over the last five years, it'll take the company more than 30 years to get to $10 billion. Clearly, Softie isn't planning on waiting for Great Plains to get to $10 billion on its own. Anyone wanna bet there's gonna be some more consolidation in the mid-tier software distribution market? Maybe one way to get there is to give Wintel a new look. Maybe all those server farms Intel has in the works are gonna be pushing Microsoft's applications to the mid-tier and small business market. Right outta Value Chain 101? Maybe. Maybe not. Still, I've gotta be skeptical about Microsoft's investment in such a small applications company. It kinda makes you wonder if they've ever thought of buying Siebel or i2 or ... well, you get the point. Given the scrutiny they're under by the feds, buying a company with less than a quarter of a million dollars in annual sales probably passes muster more easily than buying a big, successful company. --Mike Buckley

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