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Is the age of the mega tech company drawing to a close?

10 Oct 2014

With news out this week that HP is to split into two closely followed by a similar announcement from Symantec, it could be time to ponder whether or not mega-corporations still make sense in the technology business. After all, in this ever-faster paced environment, it is the smaller more nimble competitors which seem to be capable of innovation and ‘game changing’. And when a single company ‘does it all’, it has the attendant limitations of taking longer to make decisions and put them into action on the ground.

As a theory, it has some legs, with no shortage of evidence available to show that this is what investors are demanding. There is news that EMC is under pressure to spin out VMware from under its mantle (a decision which does make sense, since VMware is fairly ubiquitous where virtualisation is concerned, and could be limited by its closeness to any one information management outfit).

Of course, when companies like IBM, HP, Symantec, EMC and others went on their empire-building sprees, it all made sense too. Diversification was a good idea back then. After all, why wouldn’t the likes of EMC, a data storage company in a lot of trouble back in the early 2000s, want to add a security company like RSA? If you store it, you should protect it. And what about VMware? If you store it, you should optimise it. Same goes for Symantec – from security to storage management with Veritas – makes good sense.

Except the IT industry is a world where lunches get eaten before anyone even notices there’s someone new at the canteen table.  Decisions have to be made fast, and political problems such as partner alignments across a diverse and diversified organisation can hamper that process.

The Wall Street Journal notes that more investors are saying bigger isn’t better (and that’s not confined to the technology industry). However, given the nature of tech, we’re inclined to agree.

Perhaps someone needs to get on the phone to Oracle, particularly with Larry Ellison retiring the hot seat.

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