10 Software Industry Predictions For 2012

The Software Industry In The New Year

Legal battles over patents, big acquisitions that will succeed and fail, exploding demand for mobile applications, and the fortunes of Windows 8 -- all provide fodder for our predictions for the software industry in 2012. Mayan prognostications about the end of the world are not included. Nevertheless, we're guessing 2012 won't be boring…

10. Oracle Wins As Businesses Increasingly Favor Integrated Systems

In the past, IT departments purchased system software, database software and applications from multiple vendors and integrated it into a functioning IT system. Those days of buying "best-of-breed" products are gone and businesses are moving toward buying software from fewer vendors that requires less assembly work.

That trend will accelerate in 2012 and Oracle, which through many acquisitions has put together a top-to-bottom software stack, stands to benefit the most. With its "engineered systems" the company can boast of offering servers with operating system, database, middleware and application software all pre-loaded and ready to run. Some see this as a throwback to the IBM of the 1960s, but others see it as the wave of the future.

9. HTML5 Rules For Mobile Apps

HTML5 will become the standard for developing mobile applications, largely eliminating the question of whether it's better to build native applications for specific devices or develop for Web browser standards.

A corollary to this prediction is that development of mobile apps is quickly becoming the primary platform for personal applications, rather than an afterthought or follow-on to development of desktop apps. That means HTML5 will be a big deal -- a very big deal.

One downside: While HTML5 has built-in security capabilities, its very newness and complexity mean that web developers will make mistakes and leave security holes that hackers will be quick to exploit. Great ready for a lot of HTML5 security horror stories in 2012.

8. Software For Handling "Big Data" Hits Its Stride

"Big Data" was a buzzword in 2011, but with a few exceptions (Google's Big Query Service was one) there were few truly new products this year for handling it.

That will change in 2012 when we can expect a wave of new software products and technologies that really deal with the problem of not just huge volumes of data (a staggering 1.8 zettabytes of data was created and stored worldwide in 2011, according to IDC, a number that will grow 50-fold by 2020), but also the disparate types of structured and unstructured data that traditional data processing and analysis tools can't handle.

With open-source Hadoop serving as a platform, we can expect an explosion of new products to help businesses tackle the big data problem. One catalyst of the coming wave: In November venture capital firm Accel Partners launched a $100 million fund to provide financial backing for companies developing technology "at every level of the Big Data stack."

7. Mobile Business Intelligence Apps Are Hot

The use of business intelligence and analytics applications on smartphones and – especially – the iPad and other tablet computers, will explode in 2011.

Desk-bound analysts and IT department developers have traditionally been the heaviest "consumers" of business intelligence software. But the rapid proliferation of next-generation smartphones and tablets is generating a wave of increasingly sophisticated business analytics software for mobile users.

Most every BI software vendor has either developed a native application for one or more mobile devices or has browser-enabled their software. The capabilities range from providing simple access to data and reports, to serious deep-dive analytics. Either way, the trend may finally fulfill vendors' long-stated goal of bringing business intelligence capabilities to a broad range of business users.

6. The Coming Battle Between Chrome And Internet Explorer

In November Google's Chrome browser surpassed Mozilla's Firefox browser, making it the second-most used browser after Microsoft's Internet Explorer, according to StatCounter Global Stats.

One year ago it seemed that with Internet Explorer losing market share and Firefox adoption growing, the open-source Firefox seemed poised to one day catch up to IE. But Firefox seems to have stalled and now it's Chrome that's gaining on IE. And on December 15 StatCounter reported that in the last full week of November Chrome 15 was the single most popular web browser version in the world, with 23.6 percent of worldwide usage compared to Internet Explorer 8's 23.5 percent.

Microsoft and Google are on collision courses in a number of technologies and markets. And the web browser arena is shaping up to be one of them.

5. Microsoft Will Get Its Act Together With Skype

When Microsoft announced that it was acquiring Skype, the first response from some observers was "please don't screw up Skype."

In 2012 Microsoft will surprise many when it successfully leverages its $8.5 billion investment by integrating Skype's voice and video calling services with Windows 8, Windows Phone, Windows Live Messenger, and Microsoft's Lync unified communications software.

Such integration will let Microsoft offer PC- and device-based voice and video calling -- something that competitors Apple and Google haven't really figured out -- and improve Microsoft's standing in consumer markets where it has struggled.

4. Hewlett-Packard Will Struggle To Become A Software Vendor

The fact that software accounts for a paltry three percent of HP's sales was the chief reason behind then-CEO Leo Apotheker's decision to acquire Autonomy for a whopping $10.3 billion -- seen as a bold move by some and an expensive mistake by others. Will it succeed? A look back at HP's software company acquisitions turns up a long list including Bluestone Software (2001 for $470 million), Peregrine Systems (2005 for $425 million), Outerbay (2006, price undisclosed), Opsware (2007 for $1.6 billion), Exstream Software (2008 for $371 million), and dozens of smaller acquisitions. Despite all those acquisitions, however, software just doesn't seem to be a core component of HP's business. HP's repeated efforts to launch a business intelligence line of products, for example, just never seems to get off the ground. Throw in the fact that HP doesn't have a great track record of making big acquisitions work -- it increasingly looks like its $1.2 billion investment to buy Palm was a bust -- and there's reason to be skeptical of the Autonomy deal.

3. The Coming Patent War

The software industry is in the midst of a patent arms race. In 2011 Microsoft, Google and Apple spent big to acquire patents. Google was the most active, buying more than 2,000 patents from IBM. And Motorola's rich patent portfolio is believed to be a major factor behind Google's pending $12.5 billion acquisition of the company.

Google, however, was thwarted in an effort to acquire 6,000 Nortel patents, being outbid by an Apple-led consortium that put down $4.5 billion in cash to buy the patents. In late 2010 a consortium of companies led by Microsoft put down $450 million in cash to buy patents from Novell.

Google portrays its actions as defensive, saying its competitors are using patents as weapons against Android. Oracle is suing Google for billions claiming Android violates its Java patents while Microsoft is extracting licensing fees from Android makers for alleged patent violations. Look for this war to widen in 2012 to the point that it threatens innovation in the IT industry.

2. Big Software Vendors Will Go On A Cloud Acquisition Spree

In a sign of what's to come in 2012, SAP struck a deal in early December to acquire SuccessFactors, a developer of cloud-based human capital management applications, for $3.4 billion. The deal brings "cloud DNA" to a company whose core business has long been selling big, on-premise ERP applications.

SAP's move certainly wasn't the first cloud technology-related acquisition. CA, for example, has aggressively been buying up cloud software companies such as Nimsoft and Interactive TKO.

But in 2012 you can expect this trend to accelerate as big, mainstream software vendors acquire cloud technology startups as they try to keep up with customers' transition to the cloud. Even relatively big cloud-application companies such as NetSuite, Intacct and Workday could be acquisition targets.

1. Windows 8 Adoption Will Be Slow

Windows 8 will make its formal debut in 2012 with a lot of fanfare. And while it won't be a dud like Windows Vista, sales of the new desktop operating system will be slow to take off for a number of reasons.

The biggest reason will simply be upgrade cycles. Vista wasn't seen as a safe upgrade option, so many customers who stuck with Windows XP for years have been adopting Windows 7 in droves. With so many users just settling in with Windows 7, the number moving to Windows 8 will be relatively small for some time.

Other factors to consider: Solution providers say many businesses have adopted a practice of only upgrading to every other Windows release, and with many skipping Vista to adopt Windows 7 some will likely pass on Windows 8. And the operating system's new "Metro"-style user interface may just be too much of a change for some.