1. Inherent problem with online support – Using electronic media for support greatly helped improve customer service in the past decade. This new medium of services also brought in potential new strategies for “competition”.
2. Enterprise Applications market is mature; it is a game of market share. It is obvious the consolidation binge of Oracle is to buy into new market with brand names. SAP has been the 800-pound gorilla in this segment – Now we have two of them and some puppies.
3. SAP and safe passage – Establishes pipeline for long sales cycle – 5 to 10 years long. The inherent nature of enterprise software market is maturity, high switching costs, relationship selling. With safe passage, SAP is establishing a long term pipeline and establishing relationships. When it is time to renew license, SAP has an opportunity to switch them to their own products.
4. Services – the Cash Cow - Oracle, SAP or any other product companies make more money on services than on product licensing. They are going after “Services” $$$.