IT industry may be damaged by vendor buyout trend

IT industry may be damaged by vendor buyout trend

McAfee buy out only the beginning as big players seek to expand reach into multiple markets

Industry leaders discuss the vendor buyout trend at the Forbes CEO conference in Sydney

Industry leaders discuss the vendor buyout trend at the Forbes CEO conference in Sydney

IT managers have been warned to closely assess their vendor relationships as a wave of buy outs and acquisitions sweep the globe, leaving the market dominated by a few key players.

Speaking at the Forbes global CEO conference in Sydney, a number of the global IT industry's key players spoke of the current consolidation trend and cautioned that competition was beginning to become an issue for end users.

“In the current market we’re seeing four of five big giants,” EMC vice president, Bill Teuber said. “Every one of these wants to go end to end, so you’re seeing dynamic changes very quickly.”

By way of example, Teuber said Intel’s recent well publicised buyout of McAfee is an example of this consolidation, and will allow the company to “put more security right into the chip”.

Pacnet chief executive, Bill Barney, echoed Teuber adding that despite the internet's ability to generate innovative new start-up companies to challenge existing players, the Asian market would also suffer from the same global consolidation trend.

“In Asia, we’ll start to see consolidation and as the internet continues to evolve, the market will emerge with three or four key players,” Barney said.

Providing some insight into the consolidation trend, Dell China president, Amit Midha, said Dell was on a consolidation path due to a perceived need to fill gaps in its market.

“Once your company has a strategy, you have to figure out what assets to buy or how to build them," he said. "That’s why we continue to look out for companies who will help fill that gap.”

“We’re not looking for a cheap asset; we’re looking for companies that will fit with our strategy.”

As reported by CIO Australia the consolidation trend not only has vendors worried. For one, Ovum principal analyst, Graham Titterington, recently said the Intel buy out could be the start of damaging changes to the IT market.

“We can assume that Intel's objective is to incorporate more security features into its chips," he said at the time. "For users, and for businesses, this will be welcome, but clearly there is a risk of monopolistic concerns damaging the market."

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Tags CIO roleintelDellemcmcafeeovumforbesvendor managementconsolidating IT and shared servicesBill TeuberAmit Midhaforbes CEO global conference 2010Bill Barney

More about BillDellDell ComputerEMC CorporationIntelMcAfee AustraliaOvumPacnet Australia

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