In all likelihood, large, legacy providers like IBM, Microsoft, Oracle and SAP, who haven’t been playing the field for long will be the ones capturing the largest shares of the market.
“The e-commerce software industry is set to show the classical development of an immature market’s high growth followed by consolidation through mergers and acquisitions,” said Chris Cherrington, the report's author.
The e-business solutions industry has been led, so far, by a number of pure-play, specialty vendors such as Commerce One, BroadVision and Inter Shop. Over the years, these companies have achieved a high degree of visibility and have established a strong leadership position.
But large software makers have been beefing up their e-business offering and are poised to enter the market aggressively. According to the report, these companies will be bringing with them the advantages of experience, stronger brand visibility, suites of complimentary technologies and wide distribution networks.
“If the new vendors are to succeed, more partnerships of the same caliber as Commerce One and SAP alliance will be required,” said Cherrington.
E-business software market in Europe is poised to grow from US$533.8 million last year, to US$2.5 billion by the year 2007, according to the report. Much of that growth will be fueled by corporations’ fear of being left behind by the competition.
The market itself is showing signs of convergence. Technologies that have been centering around the three areas of e-commerce applications, content and trading community has to gel as e-business technology broadens to include more functionality.
Commerce One, which has recently announced an alliance with Microsoft is not surprised by the findings of the report. A spokesperson for the company suggested that the trends may be an indication of the shift in market demand toward end-to-end value chain integration solutions.
"Customers will want to see value across the board. You have to be able to offer end-to-end solutions, full functionality for both the buy and sell side, and be able to plug into any company's back end system irrespective of what vendor you are using. Most importantly, enabling effective collaboration in the supply chain - that's where the value is going to be in the future,” said Emile Lee, Commerce One’s senior public relations manager, Asia-Pacific.”
The Microsoft alliance gave Commerce One an investment of US$ 25 million. Couple that with the acquisitions that the company has made last year, including the adoption of a global services network, and they believe the company is on good footing to withstand the onset of consolidation in the sector.
For mature vendors to succeed in the field, the Frost and Sullivan study highlighted the challenge to build credible end-to-end e-commerce offerings, a point which Lee concurs.
“Now that we see folks like Oracle trying to get into this (e-marketplace) space, this is a validation that our strategy has been right all along,” said Lee, “but these ERP vendors will need to play catch up."
Pure-plays like Commerce One, BroadVision and Inter Shop, in turn, will have to do even better than that.