One development, in response to customer demand, is the open system. These are built to external technical standards that define how software runs on the computer's operating system, regardless of which manufacturer built the machine. The trend to open systems means more bought-in software packages.
A second trend is client/server technology, which combines the use of desk-top personal computers (clients) with more powerful machines (servers) for data storage and so on. More PC usage also means more demand for packages.
The software market is highly fragmented. Most players have a market share of less than 2 per cent.
Coda, which published its pathfinder prospectus yesterday, has convinced the analysts that it has a competitive edge in its niche because it has already launched its open systems product. Others will follow, but it got there first.
The other key to success, apart from the quality of the product, is the follow-up service. Indeed, CFS, which is offering shares on an undemanding price/earnings ratio of 17 and has IBM UK as a 15 per cent shareholder, stresses that it started out as a computer service company before it began licensing software.
Product obsolesence is always the big risk in computer software, so pricing of issues is suitably restrained. The more companies that emerge, the greater the chance of diversifying that risk.Reuse content