Being Market Leader, Industry Leaders Not the Same

When you look out across the computer industry, it becomes apparent that there are 10 companies that have amassed enough raw capital to be considered market leaders. In alphabetical order, these companies are Cisco Systems Inc., Compaq Computer Corp., Dell Computer Corp., Hewlett-Packard Co., IBM Corp., Intel Corp., Microsoft Corp., Oracle Corp., SAP AG, and Sun Microsystems Inc..

But if you were to rank them in terms of their industry leadership, it's clear that not all of them are leaders in every sense of the word -- especially with respect to developing new technologies. If industry leadership is the ability to drive acceptance of new technologies that help drive IT forward, both Sun and Oracle immediately rise to the top.

Sun has been the primary driver behind the adoption of Java, and has probably contributed more key technologies to the Internet than anyone else on this list. Following behind Sun is Oracle, which is credited with helping pioneer a lot of concepts that eventually take hold in one form or another. The concept of the network computing device, for example, has been pretty much a bust, but the server-based computing architecture that Oracle espoused as part of that effort is becoming the standard IT architecture for the Web.

After Sun and Oracle, the pack begins to bunch up in terms of contributions. HP and IBM are probably third and fourth because of the time they spend on innovation. But seldom is either company the beneficiary of those efforts.Others usually take their ideas and turn them into market winners. IBM's patent portfolio is one of its key assets.

Coming in fifth and sixth are Intel and Microsoft. Occasionally Intel comes up with innovative technology breakthroughs, but its claim to fame is solid engineering combined with raw manufacturing muscle.

The software equivalent of that approach goes to Microsoft. Without question, Microsoft has assembled a talented set of engineers, but their primary focus is on taking technologies that were pioneered elsewhere and making them easy to use by embedding them tightly within Windows environments. This approach is good at spearheading mass adoption of a technology, but doesn't score highly in terms of creativity and innovation.

After Intel and Microsoft comes Cisco. Although Cisco is clearly the network backbone of the Internet, it lives off the work of others. Cisco is clearly willing to pay the price to acquire companies that spur innovation. But playing the network start-up lottery is a far cry from inspirational leadership.

Next up is Compaq, which has reacquired an interest in innovation. This is good for the industry as a whole, but for the past few years Compaq's primary focus has been on out-manufacturing its rivals -- with mixed results.

SAP holds the ninth slot, receiving credit for driving the integrated suite for ERP (enterprise resource planning) apps. But that concept is more than 10 years old, and in this Web age, most of SAP's applications are still firmly rooted in an aging client/server methodology.

Finally we come to Dell. Although Dell is an industry powerhouse with one of the most aggressive business models extant, the company's adoption rate of new technologies is anything but swift. Similar to Intel, Dell relies on manufacturing muscle and aggressive pricing for its place among the industry's market leaders. But a reluctance to take chances places the company at the back of the pack.

In the old days, the difference between a market leader and an industry leader didn't matter. Most people still prefer to be safe rather than sorry. But in today's e-business economy, even a little edge in innovation leads to a sustained competitive advantage because the technology is increasingly the business.

How far down the curve you are toward making technology a core part of your business, vs. a support function, should influence your vendor selection process.

Just remember, Budweiser, Ivory Soap, and Wonder Bread are all market leaders. But these brands are losing market share to a diverse range of specialty products. The same will be true in the technology sector as e-business increasingly becomes the business.

Michael Vizard is editor in chief at InfoWorld.

Market leaders in the computer industry

In alphabetical order, these companies are considered market leaders.

* Cisco

* Compaq

* Dell

* Hewlett-Packard


* Intel

* Microsoft

* Oracle


* Sun

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