Spoke with Jefferies & Co. Paul Deninger yesterday about the year in tech M&A activity. Here’s the full story and here’s what he had to say specifically about what the current M&A climate means for CIOs and network pros:
What I would say to CIOs is: Be careful what you ask for, you might get it. I believe that your readers and the companies they serve have benefited dramatically from the innovation cycle that we have come through. It has been driven by young entrepreneurial companies. I remember the early 1980s when IBM’s innovation was dead. IBM had so much account control that they could basically say yeah, we don’t need to bring this innovation to market, sort of like the automakers. Customers will buy what we tell them to buy. But technology innovation shook that status quo and it was good because enormous productivity came out of it. Massively changed business processes and improved global competitiveness came out of it. Incredible ways to access new customers in new ways to drive revenue came out of it. CIOs are more aggressively now than ever saying we don’t want to buy from small companies, we want to buy from large companies, so find yourself a partner. And I just would throw a little caution to say in an environment like we’re going into where the natural economic activity is going to be to drive consolidation be careful what you ask for, you might get it. If it becomes increasingly hard to sell to the customer base, if it becomes increasingly hard to get the revenue traction to go public, then the innovation engine on which you rely will die. And how far away from Cisco is IBM in 1984? The challenge and question I would put in front of your readers is that.
