China, Google could be SAP's new rivals

SAP senior executives say China and possibly Google could be their future rivals.

If SAP's biggest rival today is Oracle, five years from now it could be a Chinese player or even possibly Internet search company Google, according to SAP co-founder Hasso Plattner.

"In five to 10 years, there will be a major Chinese player," supervisory board chairman Plattner said Thursday. He spoke with journalists and industry analysts on the sidelines of the company's Sapphire customer event in Orlando. "We have to go to Asia and become a major player there. Otherwise, they'll swallow us up."

Another potential rival is Google, Plattner said. "Who says where Google should stop?" he said. "They have money; they could buy expertise."

Plattner isn't the only senior SAP executive to wave the warning flag about China. "You have to respect the fact that China has become a leading providing of products in many industries," Leo Apotheker, SAP board member and president of customer solutions and operations, said in a separate interview. "So why shouldn't the country be capable of building a leading software industry?"

Apotheker called Kingdee International Software Group Company, SAP's largest competitor in China, "a meaningful company."

The views of Plattner and Apotheker, however, differ slightly from those of Chief Executive Officer Henning Kagermann who, in a separate interview, said he doesn't view China as a global competitor in the near future.

"Chinese software companies will become bigger because as their home market grows, they're going to grow," he said. "But I don't view them as companies that will compete globally."

Kagermann doubts Chinese business software vendors will be able to expand far beyond their Chinese-language borders, if at all. "Asia is like Europe -- it's a fragmented, complicated market," he said. "It will not be easy for a Chinese company to go into Japan or even Korea for that matter."

Assuming Kagermann is wrong and his two colleagues are right, could low-cost Chinese companies put price pressure on high-cost SAP?

The emergence of a competitive Chinese software industry "is not a pricing issue," he said. "It's a capability issue, a distribution issue and a customer service issue."

SAP has been steadily increasing its research and development operations in China, a country often accused of abusing intellectual-property rights. But Apotheker doesn't appear to be overly concerned about sharing SAP's know-how with hired Chinese engineers who could take the secrets and run.

"If you're a company that didn't have rapid cycles of innovation like SAP, then you should be concerned," he said. "Not only that, our applications run the heart and soul of companies. It's too risky to run with a copycat."

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