The battle of the big four

Feature | 1 February 2013

Damian Blackburn asks how the development of 
software and hardware providers impacts on law firms

Many of you will no doubt have heard of Dell, the PC and laptop manufacturer, and no doubt many of you use a Dell machine or own one. Dell are one of the few successful hardware manufacturers and one of only a handful of names left on the shelves of PC World and the like. Go back 20 years and the marketplace was awash with manufacturers of all sizes.

Over the years, competition, improved manufacturing techniques and consolidation has whittled it down to just a few players. Within the new market two manufacturers, Samsung and Google, did not have a market presence until fairly recently, and a third, Apple, had a very limited presence and somewhat precarious existence. How things change though.

Apple, after years of trying, has finally proven the case for manufacturing both the software platform and the hardware it sits on. Now Google are following suit by selling laptops with a built in operating system of their own making. Every now and then the IT marketplace changes in some significant way, and it may be the case right now that the market is moving towards the practice adopted by Apple.

Microsoft, once the dominant force in the software world, and by dint of their position able to have enormous effects on manufacturers of hardware, look like they are changing their plans on two fronts.

One is the move to cloud based computing, which I have written about previously, and the other is a potential move into manufacturing. The latter is underpinned by their recent investments. Not long ago, they invested in Nokia, the mobile phone manufacturer, which gave them direct access to handsets. Very recently it has been announced that they will be taking a stake in Dell, giving them more direct access to PC and laptop manufacturing. It is interesting to note that Nokia posted a profit for the first time in a long time, which has undoubtedly came on the back of the success of the Lumia Windows 8 based phones.

Battle plan

Microsoft’s moves may well be signs that the market for hardware and software is about to go through another consolidation process. Their investments give them a potential manufacturing base that is almost on a par with Apple’s. And it seems as though they are taking the view that in order to deliver non-cloud based software in the future they want a hardware platform to do it with.

This gives Microsoft a battle plan on two fronts. Hardware to ensure purchases at the consumer level, and the 365, Azure and related platforms to give them a cloud based presence that will enable them to compete with Google and their offerings.

But what of Google in all this? They have already started to manufacture laptops so they have a foothold in the market, but as yet they have not made inroads in the handheld and tablet markets, relying on other manufacturers to provide the equipment for their Android operating system.

However they may take, or have to take the view that in order to leverage more from the market, they may need to have more control over the manufacturing process, especially with Apple and Microsoft having huge market shares and as reports suggest, enormous war chests of spare money to invest further.

Google have set their stall around the notion of web delivered utility computing, and figures suggest that they are making huge inroads into traditional computing markets by doing so. Some of that market will have been traditionally serviced by Microsoft, but the extent of their product suite may well have an impact on bigger players such as SAP and Oracle eventually.

The IT marketplace is muddied further by Samsung, who in many people’s eyes are Apple’s main competitor. They have so far concentrated on hardware manufacturing, and have taken Google’s Android for their mobile system of choice, and windows for laptops. It doesn’t seem likely that Samsung and Google would make a play for each other. However if Samsung want to try and establish the same sort of control over its user base, it may be that they have to part ways with Android and do their own thing. That is not as easy as it sounds though, and there is a distinct lack of platforms to purchase in order to give them the total package.

What may also concern them is that if Microsoft are planning to build laptops with their own operating system, they may take a view on continuing to licence that system to what will be a competitor.

Power struggle

There is not likely to be any noticeable short term effect for lawyers of Microsoft’s decision to invest in hardware manufacturing. That said there may be back room issues to deal with sooner or later. The power struggle that will rumble on for the next few years is likely to have repercussions eventually. It seems more and more likely that utility computing, i.e. cloud delivery of services will become the norm. For this to happen, the traditional software model used by law firms will need to be adopted for cloud delivery.

There is always a mild amount of speculation of one of the big manufacturers dipping their toes into the legal software market and delivering it via the cloud. Now would seem to be as good a time as any.

Vol 157 no 05 05-02-13

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