Last month, I compared the annual Software 500 listing from this year with the same source in 1997 to see the physical evidence of consolidation in the software industry. This affects you because it limits your enterprise software choices, which theoretically increases your costs - not to mention reducing innovation.
I thought it might make sense to reverse the analysis. Who's new in 2007 that wasn't there in 1997? How's open source doing in the upper echelon of software companies? What other trends are evident that counter the effects of software market consolidation?
Pitney Bowes is a new name at 28th on the list with over $2 billion in revenue. But 10 years ago you knew it as Group 1 (126th, at $46 million). Maybe it should get some award for gain in rank and revenue (but see methodology note below).
Juniper Networks, which shipped its first product in 1998, is probably the first real newcomer to the list. It's also a good symbol of the Internet decade. Not only did Juniper grow based on the growth of the Web but it is a company - like Cisco and EMC - that probably would not have been considered a software company 10 years ago (despite the fact that the systems, storage and telecom equipment suppliers always depended on software). Ditto for smart-card supplier Gemalto.
VMware, at 53rd on the Software 500, will be the poster child of the current decade and the company most would consider a leading newcomer. However, I would have combined it with EMC since EMC effectively owns 97 percent-plus of VMware. My nominee for top outright newcomer would be salesforce.com at 96th. A software purist might argue I shouldn't count Software as a Service (SaaS) suppliers, but that's basically what Sterling Commerce -- on the list both years -- has been all along (and Fiserv, and HBO/McKesson, and Siemens/SMS, and so forth).
As for open source, another key trend of the 1997-2007 timeframe, Linux- and JBoss-supplier Red Hat makes the list at 104th. Sourcefire and Black Duck are also in the Software 500. But tracking whether a company uses open source terms and conditions is less of an issue for the next decade because all the leading software companies - both old and new definition (see below) are now committed.
NOTE: The current Software 500 methodology includes services revenue in its ranking criteria, which leads to ranking companies such as CapGemini, Convergys, CSC, SAIC, Tata and Wipro that would not have been traditionally considered software companies (although they might have licensed some of their intellectual property). Similarly, the revenue of IBM's management services group as well as its software group are included. Therefore the Software 500 ranks IBM first and Microsoft second in the market whereas a purer comparison of the two companies' software/service revenue makes Microsoft first, two to three times larger than the IBM software group.