day 32

the end of microsoft 4: to soak in

When overpowered, one strategy is to soak in. Here we see the strategy in action. Is it possible to overpower Microsoft? According to Musashi, when you realize you cannot advance, you soak in -- meaning you become one with the enemy. You bide your time while you wait for the opposite side to make a mistake. In the Book of Five Rings, Musashi advises, "Research this well." Who is the competitor that is soaking in? Consider SAP AG, the German wunderkind that is soaking into the Great Client/Server marketplace with astonishingly high market-share growth rates, and with equally astonishingly little PR. SAP had overall sales of only $0.5B in the first quarter of 1996, but sales have been increasing at a rapid pace. With sales up 62% from last year, SAP AG is the European equivalent of Microsoft. CEO Paul Wahl says, "There is still very strong demand for our products." Could SAP topple Microsoft? Yes, and no. First, SAP doesn't compete on commodity-priced software. Its R/3 is a multi-million- dollar commitment. Second, SAP has no shrink-wrapped operating system or office products. Instead, SAP's R/3 requires lengthy and difficult installation and support. R/3 is a configurable system, but someone has to do the configuring. The cumbersome installation and configuration requirements of R/3 have given SAP a bad reputation in the enterprise computing world, but the product keeps gaining converts every month. SAP only proves one thing: it is still possible to compete against Microsoft and make lots of money doing it. But, soaking in is not going to make you a household name. SAP AG will probably have to be satisfied with making its German programmers as wealthy as Microsoft programmers, although not nearly as famous. There is one company who can make the commodity software business a sword fight. Who is this company?

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