Vignette & Interwoven - proceed with caution warns Ovum.
The entry into the Enterprise Content Management (EMC) market of Microsoft and the increased interest of IBM, Oracle and (via acquisition) EMC have lifted the bar on competitiveness. According to Ovum, the analyst and consulting company, this may well impact the ability of some dedicated vendors to compete effectively in the future.
The current global ECM market is worth $1.54 Billion (licence revenue only) with a positive outlook in terms of growth according to Ovum's latest analysis. However currently no vendor has more than 10% market share, and the sector remains highly competitive.
Ovum content management experts Alan Pelz-Sharpe, VP Software and Services, Ovum North America and Chris Harris-Jones, Research Director in London outline some of the key findings.
"There is overall growth, but this isn't positive for everyone, says Alan Pelz-Sharpe. In the past 18 months, Microsoft has entered and stifled competition in the SME markets while IBM and Oracle are busily building out solutions to dominate the large enterprise market. This is leaving many ECM vendors caught between two opposing forces.
"Vendors such as FileNet and Open Text (FILE & OTX) appear to be gaining strength with strong survival strategies and instincts, he comments.
Positioning themselves as meaty acquisition targets, but with the focus and scale to compete should they not be acquired.
"Players such as Vignette and Interwoven (VIGN & IWOV) look to be far more vulnerable, says Pelz-Sharpe Both these companies are working hard to close a considerable revenue gap (figure below) and it is starting to look as if that gap has become too big to bridge."
Ovum believes this effort has come too late to have any major impact on the market, with rumours about possible acquisitions of these players abounding.
Being acquired may represent the most positive exit route for both players, however this may not signal equally good news for potential buyers of their products.
Chris Harris-Jones explains further:
"Both Vignette and Interwoven's customers have relied heavily on intense support from the product developers and integrators, as these are both highly complex product sets that have a history of requiring buyers to overcome very steep learning curves.
"If acquired either company would at one extreme become a small division of the mother company, and at the other be fully integrated into the acquiring firm. Such focused and dedicated support is unlikely to be a part of an acquirers business plan," he says.
In summary, both vendors offer high-ticket products and services that are complex and dependent on highly skilled and dedicated support. Both products sets also need extensive and long term R&D efforts to keep them relevant and competitive. At present neither really has the scale to compete with the much larger players, and potential acquirers may be more interested in the technology than the underlying customer bases.
It should be made clear that neither company is in danger of financial collapse, despite huge drops in their market capitalizations and share prices since the 2000 boom. However they are in danger of being snapped up by faceless major players, or of becoming increasingly irrelevant as the market surges forward.
Ovum, the analyst and consulting company, is the largest European headquartered advisor on telecoms, software and IT services.
Resolutely independent, Ovum advises large corporates, IT and software vendors, IT service providers, telecoms operators, regulators, service providers and equipment suppliers. It analyses the commercial impact of technology and market changes and has a real strength in advising on the developments where telecoms, software and IT services interact.
Ovum takes a global perspective on leading-edge developments from our offices in Europe, North America and Asia Pacific. Its experts spot the short-term issues that will have an immediate impact on markets and organisations and advise on the longer-term 'visionary' aspects which form the basis of strategic planning.
More information on Ovum, its customers and its independence is available at www.ovum.com
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