Wednesday, April 29, 2009

consolidation across industries now starting: the cases of Pepsico and Oracle

I have argued for some years now, that consolidation ACROSS industries is inevitable, and that the failure of attempts such as AOL-TimeWarner and
should be seen in the same light as (earlier) failed attempts to scale Mt. Everest. That is, people will continue to try, some will succeed, and those who succeed will reap the rewards.

In spite of the current economic crisis, or perhaps because of it, we are seeing moves in quite disparate areas that may signal that we are at the Second Attempts to scale this particular mountain, or accomplish this particular sets of consolidations.

First, Pepsico has offerred to take full ownership of its two biggest bottlers. This is, in a sense, simply supply-chain consolidation. But in another sense, it marks an important departure for Pepsico and opens up significant expansion opportunities, should it be able to make a success of these acquisitions and expand further in this sort of direction.

Second, Oracle is now in process of acquiring Sun Microsystems, which of course complements Oracle's software portfolio but also secures hardware customers that typically run Oracle software. The question is: will Oracle keep Sun as a whole? If so, then it will be part of the pattern to watch (in my scenario of cross-industry consolidation). However, if at some stage Oracle sells Sun's hardware part of the business then, we can forget Oracle in terms of my scenario and watch for OTHER "swallows" to see if there really is a "summer" ahead soon. Sphere: Related Content

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