Previous Thread
SLWK, is this a question that is relevant to some specific business strategy issue of yours?
Categories: Strategy and Leadership
What are the cash cows in the software industry these days?
Member
- member since: 11/06/2001
- rank: 88 of 53411
- 31 forum threads started
- 1948 comments
March 28, 2007 8:43 AM
March 28, 2007 3:49 PM
Just wondering, that's all.
SLWK, is this a question that is relevant to some specific business strategy issue of yours?
Just wondering, that's all.
March 28, 2007 3:56 PM
A quick web search, using the phrase "Software cash cow" turns up over a hundred articles, etc. Might be worth exploring.
March 28, 2007 4:30 PM
I'm just interested to hear the views of people in the industry on what they think are the most interesting and viable markets out there.
Needless to say, if you're a software business owner and you have something that is doing very well, then you have some competitive advantage that others cannot easily replicate -- ie, there is some barrier to entry -- so it is not as if it is going to be taken away from you.
And if you have a lot of customers then you've probably been spotted by many other vendors long ago.
March 28, 2007 4:49 PM
SLWK,
Here are two areas:
o The area of most significant growth has been in the Software-As-A-Service (Saas) category. In 2006, I believe 8 of top 10 growth companies were SaaS categories.
o Another area of growth is the Health Industry. Microsoft has made a bet on this industry vertical and at a recent Health Industry conference, showing their level of interest, Steve Balmer was the keynoter.
Brian
Brian Turchin CEO/Founder Cape Horn Strategies, Inc. Helping CEOs Increase The Value Of Their Businesses [url]www.capehornstrategies.com[/url]
March 28, 2007 6:57 PM
I appreciate your time and comments, especially in light of your signature. You wouldn't be in a position to say who's in the top 10, would you?
Here are two areas:
o The area of most significant growth has been in the Software-As-A-Service (Saas) category. In 2006, I believe 8 of top 10 growth companies were SaaS categories.
o Another area of growth is the Health Industry. Microsoft has made a bet on this industry vertical and at a recent Health Industry conference, showing their level of interest, Steve Balmer was the keynoter.
I appreciate your time and comments, especially in light of your signature. You wouldn't be in a position to say who's in the top 10, would you?
March 28, 2007 7:28 PM
SLWK,
Here are the top 10 companies in terms of annual growth
1. Click Commerce(128.2%)
2. Omniture (108.1%)
3. Synchronoss Technologies(99.4%)
4. Knova Softwarwe(88.8%)
5. Open Solutions(80.8%)
6. Tecsys(78%)
7. Salesforce.com(75.7%)
8. Websidestory(74.6%)
9. Viewpoint(74.1%)
10. Kintera (72.5%
This was published in the article "50 Fastest-Growing Software Companies for 2006" in the September 2006 edition of Baseline magazine, http://www.baselinemag.com/article2/0,1540,2022343,00.asp
Brian
Brian Turchin CEO/Founder Cape Horn Strategies, Inc. Helping CEOs Increase The Value Of Their Businesses [url]www.capehornstrategies.com[/url]
March 29, 2007 12:05 AM
I see things very much otherwise. Maybe its the terminology that's throwing me off here ...
Just because a business is growing quickly, does not mean necessarily its a cash cow. It may have to be burning a lot of cash to generate that growth. In fact, many fast growth companies burn a lot of cash.
A cash-cow, to me, is extremely profitable. Margins, way above industry averages with a dominant market share.
Traditionally, a "cash-cow" exists in a mature segment, where the dominant players no longer face significant competition. Microsoft has several segments which generate huge profits e.g. desktop operating systems and desktop productivity apps. XP/Vista and MS Office generate most of its revenues ... Linux, WP Office, OpenOffice notwithstanding. Gaining a "strangle-hold" on a segment is easier said than done ... its taken MS many years to get there, and someone is always biting on their heels. Helps pay for Bill's big house on the lake and the campus in Redmond.
I would suggest looking at some more mature segments in the software market, where few competitors remain.
Or a segment where someone has a huge and dominant lead in that market due to some competitive advantage. For example, in FREE online dating services, Plenty of Fish . com is 10x larger than its nearest competitor. And this outfit is making loads of cash. Most of which is due to extremely astute management of Google SEO and being in the right place at the right time. Myspace.com, facebook.com and friendster.com are also doing very well due to mass build-up, and being in the right place at the right time as Web 2.0 type businesses.
Cisco in the late-90s would be another example of a cash-cow. They were so far ahead of the competition.
---
Robert Dubicki
March 29, 2007 5:04 AM
Dubicki,
I was actually interpreting the question to be where is the market opportunity in the software industry now.
For me the term "cash cow" means something like what you describe. But, it is not just product lines like Microsoft's OS and Office, where the profit margins are huge.
It is also a way to look at a company's "business" portfolio and recognize that for some businesses there isn't more growth or just minimal. But that business does generate cash. So the idea is to use this cash from your "mature" business to invest in a new business, where as you say, you will run cash-flow negative for a while, but where your business opportunity is much greater. (This is like Boston Consulting Group's Growth/Share Matrix.)
By the way, I had not heard about Plenty of Fish. Do they make their money on advertising?
Brian Turchin CEO/Founder Cape Horn Strategies, Inc. Helping CEOs Increase The Value Of Their Businesses [url]www.capehornstrategies.com[/url]
March 29, 2007 9:55 AM
POF is the "darling" of the online dating industry because this outfit has manoeuvered into the Top 5 Overall, and #1 for free sites, with little to no resources in a very short period of time.
Yes, it is pulling in nearly all of its revenues through ads, given their cost structure, amazing profitability.
I agree, the margins are huge elsewhere (beyond MS), but just wanted to provide an example to show what I was interpreting a cash cow to be.
---
Robert Dubicki
March 29, 2007 1:53 PM
The money that IBM makes off the mainframe business is very significant and they do not have to invest very much to continue it as those computing platforms are largely captive. Just ask anyone who has a mainframe.
Add Your Reply
Copyright © 2013
Capable Networks LLC and Computing Technology Industry Association, Inc. All Rights Reserved.
RSS |
Privacy Policy |
Advertise With Us |
Terms of Use |
About Us |
Contact Us |
Site Map
Our Capable Community Network:
DVR playground |
Explore3DTV |
MediaSmart Home |
My Open Router |
DijitCommunity |
Robo Community |
Sansa Community |
TechLore |
TiVo Community
SoftwareCEO - The resource for software CEOs and executives for software marketing, software sales, software business, software services & much more.
