Where is this Software World Going?

I wish I had an answer for the emerging business trends in software, and how they’ll play out. I can’t see the horizon very well but I do have some clouds to gaze at in the meantime. I am interested nonetheless. Here’s some trends I’m noticing that are worth considering together.

1. Seems like the bigger fish keep eating the smaller fish. In the last 12 months I can remember that Adobe bought Macromedia maker of Flash animation fame. Sonic bought the consumer division of Roxio. Avid bought Pinnacle last summer. And these aren’t small companies with great technologies being bought for their core assets. They’re really viable companies with a large installed base, loyal developers, solid channel, and a viable product road map. And I’m not sure the combined companies end up innovating any better. I could point to several decisions that would suggest innovation has actually gone down in the newly acquired companies. In the next year, I could imagine Avid buying Sonic and then Adobe buying Avid, and ultimately we’ll have only a few companies doing software. Those companies would have the benefit of doing integration between different features / usages. Desktop software could change from a whole bunch of options to a few standard suites. Over the last 10 years, Microsoft has combined different software so now there is 1 standard package called ‘office’. Could there be one called ‘beauty’ from Adobe that will combine anything that is visual, and one called ‘organized’ for all things and how they relate to one another from EMC. And since I still like Apple, they have all things “music” or “digital fun at home” related. Anyone who is a market segment leader better watch out. It looks like other software vendors will expand in search of other, new revenues and possibly target you.
2. Same old, same old. Software vendors keep doing the same things that have already been solved. Microsoft will have PDF built into Vista this year, and they’re introducing new graphics software, while Apple and Adobe keep duking it out with photo editing software. Seriously, people, do these vendors not see that they’re just copying each other in the most inconsequential ways. I don’t get the value creation in this. Does anybody? I say, OEM each others’ best stuff and cut out the extra cycles. Create something that adds real value (I have several ideas on what vendors could create…I’ll blog on that later).
3. It’s a Quilting focused world. Linux and the Linux community continue to add so much value. Just to state the obvious,I found my last link on Sherman Williams making Linux choices in a Business Week 2002 article. Late last year, I saw the IT leader from Novell onstage at Softsummit, and she said that they take 70% of their source code from the Linux community. Traditional software is not their core asset, but integration is what creates value now. And if you look at the fact that IBM has effectively left the software business to focus on services, you can see the intelligence and direction other vendors could take.
4. It’s a services world. The trend toward delivering software as an online service — rather than as a packaged product — is gaining steam. That presents both opportunities and risks for desktop software firms. I ran across an ad from weboffice where a small business online collaboration tool looked rather strong (certainly more valid than last year’s option). Microsoft is using online services to extend its Windows and Office franchises. Adobe is doing the same thing with its Create PDF Online service, to have people make electronic documents online. But Web services are also letting new competitors threaten established desktop software products. Google for example, is giving Microsoft a run for its money by offering e-mail, desktop personalization tools, and now an online word-like editor.
So where will all this end up in 10 years from now? Which trend will become the uber theme? Let me know if you’ve got the clear horizon view.