16 October 2000
For many, Microsoft is the company synonymous with the new media industries. Bill Gates may have been late to the "noo meeja" party, but he has done everything short of growing a ponytail to fit in. He has aggressively gone for the browser market and the streaming media standard. He has thrown his considerable reach and capital into the portal building game, and even has a Citizen Kane-esque plan for a virtual Xanadu of digital art. The talk may be of dotcoms, start-ups and new players with silly names like Yahoo, Excite and lastminute.com, but the Microsoft shadow lies across the networked landscape just as it does across the PC market. Just ask the US Justice Department.
But other IT giants are not sitting back and letting Big Bill ride the plains alone. IBM has come a long way. Its new range of sleek, sexy and oh-so-modern ads position it as a "solutions provider". They've even adopted and effectively trademarked "e", the most important letter in the alphabet. But more importantly than this public posturing is the private positioning the company is engaged upon.
Last week IBM announced that it will invest up to $65m (£44.9m) during the next 18 months, to build partnerships with internet consulting firms and system integrators across Europe. These include companies such as MarchFIRST, Agency.com, Organic, Icon Medialab in Brussels and Nettec in London. The company is looking to form relationships with consulting firms, systems integrators and web-design shops.
Given the size of IBM's consulting business, this is not earth-shattering expenditure, but when seen in the light of another traditional IT giant's movements, it signals a clear trend. Hewlett-Packard (HP), the third-largest computer maker and services provider, has said it is in talks to acquire PricewaterhouseCoopers' consulting division for some $18bn (£12.4bn). If successful, such a deal would lift HP's services group closer to the size of IBM's.
Last year HP took in $6.2bn (£4.3bn) in services revenue, while IBM's global services unit brought in $32.2bn (£22.3bn). But this is not about money. Well all right, of course it's about money, but it's about potential money. Just as Gates gives away software to guarantee his future server software business, and during the heady days of the dotcom bubble (remember them) VCs bought potential audience, so too these old-fashioned IT companies are staking claims in the consulting space in all its guises - technology, strategy, management, even down to the nitty-gritty of web design.
This process will impact on firms. First, as they seek strategic IT or e-advice, they will find the market dominated by multinational networks in much the same way as the advertising and marketing businesses are. But there are other things to note, things that may generate business potential rather than just fears of higher consultancy costs. IBM and HP have identified that their clients are demanding integrated approaches. They intend to create that favourite staple of marketing strategies, the one-stop shop. But they have realised that in the fast-moving e-conomy they are not expert in all areas, and rather than trying to play catch-up or spinning their way into expertise, they are pulling together a network of niche powers offering an integrated and expert package. Such a lesson may be one that the more arrogant firms may look at carefully and the sharper and more agile of firms may seek to become a part of.