Scaling up

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While other computer makers are being tempted by the massive consumer market - which Apple used to grow revenue 45% last year - Palmisano says emphatically: "IBM is an enterprise-focused company. It is not our strength or intention to participate directly in consumer markets."

Nor is IBM pushing into applications, as some prognosticators once presumed it would. The company views its role as process integrator.

That's just as well for Oracle, Microsoft, Siebel Systems and others because, to hear Oracle tell it, there are too many application players as it is. The company just reduced that number by one through its long, hostile takeover of PeopleSoft.

Oracle's fiscal year ends in May, but even the end-of-year, TTM view doesn't include the addition of PeopleSoft revenue because the deal wasn't finalized until January. Nonetheless, the company once again reached the $10 billion sales mark after achieving that in 2001 and then slipping back in 2002 and 2003.

Oracle is one of two software companies in the elite NW200 $10 billion-plus club. The other is Microsoft (No. 7), which is almost four times Oracle's size and growing at a respectable 12% year over year (TTM).

But Microsoft's most remarkable characteristic is still its ability to generate profits. For the third year in a row the company tops the profitability list, taking home almost $10 billion in profits (TTM), $1.5 billion more than IBM, which is two and a half times the size of the Redmond mint.

Telecom tumble

Profits are one thing that eluded many of the big telecom companies last year. The four largest losses posted by NW200 companies were from AT&T ($6.5 billion), MCI ($4 billion), Qwest ($1.8 billion) and Sprint ($1 billion).

Viewed that way, the recent flurry of merger activity comes as no surprise. When this list is compiled next year, Sprint and Nextel will be one, AT&T will be part of SBC and MCI will have been swallowed by either Verizon or Qwest.

If Verizon ends up with MCI, it will create a company with revenue around $90 billion, a colossal new force in the telecom world with assets that span the country.

So, while 2004 did show that the network industry's rebound is for real, it hasn't benefited all comers. More consolidation and realignment are in the cards, and this time next year the NW200 will be a different animal, proving once again it is a living, breathing thing.

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Copyright © 2005 IDG Communications, Inc.

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