Microsoft buys Proclarity
This is all over the blogs today, and with good reason: it’s the biggest news in the Microsoft BI world since, well, the release of OLAP Services. Here’s the press release:
Now, why has this happened, what does it mean and is it a good thing? Well, the first question is fairly easy to answer. Microsoft has for a long time suffered from not having a complete set of tools when it comes to BI: customers had to buy their server from one place (Microsoft, a big, fairly well trusted company) but unless they were willing to use Excel pivot tables (and few were) then got told to go and look at all the other client tools on the market which meant another round of evaluations, another swarm of salesmen to talk to and significant extra expense. It didn’t help that all these other client tool companies were relatively small and unknown and their products were, let’s face it, sometimes lacking in terms of quality and finesse. Certainly some companies appreciated having a choice, but in my experience the majority, especially the enterprise customers, didn’t. So as a result companies like Cognos and Microstrategy benefitted from being seen as the ‘one stop shop’ for BI solutions.
This situation was the result of a professed strategy by Microsoft to deliberately stay out of the client tools market. The thinking was that Excel and the other MS client tools would take the low-hanging fruit and leave the rest of the business to third parties like Proclarity; competition between these third parties would stimulate innovation and provide the customer with choice. In my opinion though this innovation didn’t really appear and the only choice the customer got was between similar tools, so that and the point I made in the previous paragraph about customers having to buy from two vendors is I think why this strategy got dumped. Interestingly, I heard from a Proclarity guy ages ago that MS tried to buy them in 2001 but Proclarity turned them down (MS going on to buy what became Data Analyzer instead); I would imagine that Proclarity changed their mind about being bought when they realised that the new functionality in Office 12 would mean that Microsoft would not only be taking the low-hanging fruit but just about everything edible on the lower-half of the tree, so providing much stiffer competition.
Is this a good thing then? For Microsoft and for its customers, yes. Proclarity is a good tool – I was impressed with what I saw of its latest release when I saw it a few months ago, and it seemed to be the tool on the market that took greatest advantage of the new features of AS2005. It also provides much needed infrastructure which now, presumably, will be much more closely integrated with the rest of Microsoft’s tool suite; I would guess that Microsoft will be investing even more in development to make the tool even better. It will be interesting to see what happens with pricing too – I would guess that licence costs will go down, with the obvious effect of making the Microsoft BI suite even more attractive on that front.
Of course there are going to be some losers in this situation, and in this case its all the other third party tool vendors. Panorama especially seem to be screwed – why buy their stuff when you can buy the equivalent tools directy from Microsoft? I can see that if the integration of Proclarity into Microsoft takes a long time, or if the integration of Proclarity tools with other Microsoft tools is too tight (eg if customers don’t use Sharepoint, or are unwilling to upgrade to Office 12, then they can’t use the other MS BI tools) then there might be some short-term opportunity for them, but in the long run I can’t imagine they’ll prosper. Then there are all the much smaller tool vendors, who carved out niches based on price or specialist functionality or who were tied to consultancies: times will be much harder for them now they’re seen as being in direct competition with Microsoft and their cost advantage is eroded, and many of them will disappear too. Listen out for the sound of wailing and gnashing of teeth in the partner community over the next few months… the comments on Mosha’s blog entry about this are only a start:
It seems a shame that this is happening but at the end of the day Microsoft’s first and only priority is its bottom line and its customers, and as I’ve said from that point of view this is the right move.