Lane: U.S. Software Faces Loss of Global Dominance
U.S. software companies face more global competition than ever, with both India and China working ceaselessly to expand their domestic software industry and graduate more software engineers, the former Oracle president says.SANTA CLARA, Calif.The U.S. software industry is losing its dominant position in the global market as India and China graduate far more software engineers than U.S. universities produce, says Ray Lane, general partner with venture capital firm Perkins Caulfield & Byers. U.S. software firms are not only facing more global competition than ever, but also face the daunting task of generating truly innovative new product ideas if they are going to survive amid the dominance of the three largest software companies, SAP AG, Oracle and Microsoft, said Lane, former Oracle president and CEO. "I believe the enterprise software industry is at a crossroads. Its economic structure may be unsustainable," because most software companies can no longer afford to plow 50 to 60 percent of their revenue into sales and marketing or 25 percent into R&D, said Lane as he kicked off the Software 2006 conference here.
The profit pool for software companies has shrunk over the past five years, Lane said.