Home > Uncategorized > Hummingbird tells shareholders to reject the Open Text bid

Hummingbird tells shareholders to reject the Open Text bid

Well this is fun to watch I must say. The headlines today all imply that the board has shut out the Open Text offer but when you read deeper, they are just making a play for more cash. The Open Text offer was 27.75 and the board wants 27.85. We shall see how this shakes out, and more interestingly (for me anyways) to see how this affects the rest of the market. Here is my completely unresearched and seat of the pants feeling on the market (in other words, not worth much of anything other than water cooler talk):

  • OTEX continues to gobble up market share. There are opinions on both sides that say this is either good or bad but when looked at through shareholder glasses, market share equals survival (not necessarily my opinion though).
  • I personally believe that other ECM players will join the race for market share, and major acquisitions will be part of that strategy.
  • While documentum was and is the big dog in the ECM software market, I now see documentum as a small division of a hardware company. It is unlikely that EMC cares much more about building out its software strategy unless it’s a new way to sell storage. I don’t expect EMC to get into this software market share fight in any major way.
  • Filenet is the competitor that I see more and more in the marketplace and I doubt that they will take this lying down. I wouldn’t be surprised to see them make a bid for either Hummingbird (unlikely IMHO) or another tier-2 ECM player as a market share grab.
  • I have no idea what the big guys are going to do. Microsoft is a huge up and coming player, and they may rely on their cheap software and partners to build market share organically. However, I personally think that having a direct sales force and specialized consulting group remains important in the ECM space to ensure that the correct value is being sold at the correct levels. Microsoft has the opportunity to do an architecture play and sell “all Microsoft” into a company but by doing this I believe that they will marginalize ECM which will be a huge mistake for any corporation. The concept of managing and controlling your unstructured information (documents, emails, images, etc) is a business-first problem. Attacking it from the bottom-up though the IT department will spell failure for many large organizations; failure that will only be realized after the first big lawsuit finds you with your pants down.
  • Will Microsoft eat anyone? There have been plenty of rumours but to be honest they like to keep their own technology and Sharepoint 2007 has been a massive investment for them. They’re unlikely to make any large technology play but I do think they are weak in addressing the business problem directly. If it’s technology they’re after it will probably be some small outfit we’ve never heard of to fill a specific gap. If it’s a sales force and savvy consulting force they want, it will first take a big shift in philosophy (from partner-based to direct delivery) before that can happen.
  • Will IBM or Oracle eat anyone? That’s a distinct possibility and they both have different acquisition styles. In the case of ECM there is a big opportunity for someone to pull off the “we’re not Microsoft” story and either of these players could do it. IT departments are slowly warming up to Microsoft but there are plenty who don’t want to buy into Windows server, SQL server, and other prerequisite technologies. Lock-in is a dangerous game, and that would be their card to play.
  • The old WCM standbys like Interwoven and Vignette will probably be
    gobbled up by someone who needs to improve their web content management
    story; web content by itself is less and less useful these days. I
    hope that if/when they are acquired the proud new owner moves quickly
    to integrate WCM with the overall ECM platform or the value of the
    acquisition will be lost.
  • Other potential suitors: SAP should have an interest in linking ERP business intelligence and ECM knowledge, but that has been speculated for years and if they were going to do it, they should have done it by now via Open Text/IXOS. Google hasn’t come up because they don’t seem to be very enterprise savvy yet, but ECM is a huge search problem and one that they could jump on via acquisition to get very quick penetration into the enterprise. And I wouldn’t be surprised to see another hardware vendor enter the fray – ECM requires enterprise disk and ECM search requires horsepower. Maybe ECM would be a good fit for SUN since they seem to be weak on purpose these days.
  • Will there be a pure-play ECM vendor left once this is all over? Simply stated, yes. The problem is too big and too important to be commoditized and I believe that there will continue to be a very small handful of pure-play vendors who address it very well.

So who will win amidst the market consolidation? It’s anyone’s guess right now but I do expect the consolidation to continue. While I do have many friends and contacts in this industry, I do not have nor do I want anyone to give me inside information. This is pure speculation by a guy who’s been doing it now for over five years. I find it fun to play the guessing game and even more fun to look back a few years from now on this post to see just how wrong I was. 🙂

Footnote: Stellent is conspicuously absent from this post, I know. Given that I work at Stellent, I think it would be a mistake to discuss in a water-cooler type post something about which I do obviously have inside information. To discuss STEL would imply fact, which this post is not. Sorry.

Categories: Uncategorized
  1. Nick
    July 26, 2006 at 1:03 pm

    Pete, this post is interesting.

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