Contrasting fortunes

For quite some time now I have been banging on (bloggin on?) about the gradual but steady progress than Microsoft has been making with its business intelligence offerings, and how these pose a long term threat to the pure-play BI vendors that seems to me underestimated by most.  Of course opinions are one thing but hard data is another, so it is nice to be able to put some numbers behind this thesis (“smug mode”, as they would say on “Red Dwarf”).  In the last year Microsoft’s BI offerings grew in revenue by a very healthy 36%.  Compare and contrast this progress with that of the pure play vendors.  Cognos just announced its quarterly results, which showed license revenue 1% down on a year on year quarterly basis, and down 7% overall (modest growth overall came from its services business). Cognos is still generating healthy profits at 12.8% operating margin, which although down from 15.5% last year is certainly very respectable. But the underlying difficulty in selling more licenses in what is supposed to be a fast growing BI market shows that something is not right.  Business Objects has managed slightly better sales growth but at the cost of halving its profitability over the last year, while Hyperion has managed 8.9% growth in revenue with just a small slip in profitability.  Of these, Hyperion with its financial consolidation speciality is the least threatened by the fairly low-end Microsoft BI tools.

Microsoft may not be particularly agile, but it is chipping away steadily at the business of the pure-play BI players, and I can only see this trend continuing.                                                                     


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