It’s been an interesting week for sure, as we’ve split our time between
two ends of the software industry. First, we hung out with investors and CEOs
of software firms at Sand Hill’s Software 2000 conference. Then we camped
out in a fleabag hotel, forgot to shave, and hung out with developers at JavaOne.
This week, we got to have it both ways.
We saw a tale of two industries that was joined by a common theme. Customers
are feeling freer to mess around – and even buy – software again,
and investors are coming back in. “The VC community is finding higher value
companies, so there shouldn’t be any more bubble effect,” said MR
Rangaswami, in remarks opening Software 2007. And this year’s JavaOne,
which was otherwise quite uneventful, had its fullest turnout in years. Companies
have given their developers travel budgets again.
At the macro economic level, it’s a tale of cyclical spending. The bubble
was followed by the bust. But whatever goes down must go up –- at some
point. IT spending is a lagging indicator -– business must be well into
an up cycle before they feel hunger pangs for modernizing their systems to cope
with growth. And so, as there are questions on whether the 4 – 5 year old
recovery from the bust is now flattening out, coming to a soft landing, or hitting
a momentary pause, IT budgets are this point still on the upswing as a reaction
to last year’s growth. (We’ve seen the same phenomenon in our consulting
business, with vendors having accumulated a backlog of marketing projects.)
On the customer side, it’s safer to invest, or at least to kick the tires,
and because of the new pricing structures brought on by open source and Software-as-a-Service,
buying, subscribing, or simply evaluating new software no longer requires major
capital commitments. That’s prompted legacy players — like IBM, Microsoft,
and Oracle to offer free kick-the-tires “Express” editions of their
products. And you’ve got vendors that incorporate freebie open source pieces
so they can better focus on adding spot innovation, rather than having to reinvent
the wheel.
In some cases, this makes markets downright boring. We ended the week at JavaOne,
where aside from Sun’s useless announcement of yet another rich Internet
client framework (we’ll get to that in a moment), we saw little if any
news. Or, as our friend Bill Roth of BEA put it, “JavaOne never ceases
to amaze me. Year after year, I expect the show to be a flop. This year is no
exception. I am wrong again this year.” Roth was referring to the show’s
turnout, which was probably the largest since the days of Sun being the dot
in dot com.
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