Internet to mould shape of software sector

The internet is changing the face of the software industry, and whether traditional players such as Oracle and Sybase can survive will depend on how well they make the transition to the model.

According to senior analysts at investment firm Bancboston Robertson Stephens (BRS), the industry is on the cusp of a business-to-business ecommerce wave, following a previous focus on the business-to-consumer ecommerce market.

As a result, suppliers will need to rethink their strategies in five areas: application servers, content management, analytical systems, applications management, and ecommerce portals. Analysts believe the applications server market will be worth $2bn in a few years.

Marshall Senk, internet and ebusiness software analyst at BRS, said analytical systems try to perform the same functions as data warehouses, but don't need fat clients or hours of training.

They are more intuitive to users and know how to integrate information from a variety of sources.

He added that applications management systems ensure that packages and databases keep running and deal with failover situations. They also ensure that users receive the latest and correct information and need to be available, fixable and perform well.

However, Senk also predicted that applications service providers (ASPs), or companies that host applications for customers over the internet, will become more popular over the next six months.

Eric Upin, ebusiness applications analyst at BRS, claimed that the "old guard will go away" as the industry welcomes "new players, new architectures and new landscapes. Most of the beneficiaries will be small companies."

He added: "The business-to-business sector will be as big as business-to-consumer. Software has to be built today but, in the future, companies will rent software. We are bullish about this market sector after the experience of the tough winter this year."