Mar 13, 2006

Software Firms Getting Cozy

The desktop software market is getting more competitive as companies invade one another’s turf.

Source: Yahoo News
Written by Patrick Seitz

Microsoft (NasdaqNM:MSFTNews) is going head to head with Adobe Systems (NasdaqNM:ADBENews) in document sharing and interactive Web design software. Apple Computer (NasdaqNM:AAPLNews) is taking on Adobe as well, but in photo editing software.

Also, Avid Technology (NasdaqNM:AVIDNews), InterVideo (NasdaqNM:IVIINews) and Sonic Solutions (NasdaqNM:SNICNews) are duking it out in the video editing and playback segments.

Even as competition heats up, the number of companies in the industry has dwindled — largely because of consolidation.

Adobe in December bought Macromedia, which developed flash animation and other key Internet software. Sonic bought the consumer software division of Roxio in December 2004. And Nuance Communications (NasdaqNM:NUANNews), which has made a host of acquisitions in recent years, said last month it plans to buy Dictaphone. (See related story on this page.)

Five years ago, IBD’s Desktop Computer Software industry group had 33 companies. A year ago, it had 17. Today, it has 14.

“The players that are left are committed to achieving certain revenue growth targets,” said Chris Swenson, director of software industry analysis for the NPD Group. “So they have to innovate like crazy and come up with new business models and enter new markets. They have to target areas where before they haven’t had much of a presence.”

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