Technology Seen as a World of Duopolies

The merger of Activision (ATVI) and Vivendi to create a video game juggernaut on par with Electronic Arts was the big news over the weekend, but from a high level it’s more of the same: Another tech sector and another duopoly in training.

The Activision-Vivendi deal, announced Sunday, is being analyzed for its impact on the gaming market (Guitar Hero meets World of Warcraft) and the financial mumbo jumbo (it’s complicated). See the statement and Techmeme.

Video games aren’t ZDNet’s bailiwick, but we do know about duopolies. And technology increasingly seems to be headed toward duopoly-ville.

Let’s go around the horn and look at the major technology sectors. But first a few disclaimers:

• Where there isn’t a secure duopoly I take an educated leap and make a projection.
• The market is U.S. for my purposes.
• I don’t claim to cover every market.
• I apologize in advance for excluding companies that didn’t make the cut. I also apologize in advance for not taking your PR calls as you try and make the case that you matter.

Now on to our duopoly tour:

First stop is hardware…

PCs: Dell (DELL) and Hewlett-Packard (HPQ). Yes, we know there is Acer and perhaps Asia’s juggernaut buys Dell as the dollar falls to peso territory. But for now the U.S. PC market is ruled by HP and Dell.

Networking: Cisco (CSCO) and Juniper (JNPR). Lucent (LU)? Nortel (NT)? Spare me. For the stuff you need to really run your next generation network you wind up going to Cisco and Juniper. This is a bit of a projection given there are more players, but if I were to place a bet today the duopoly would be Cisco and Juniper.

Hard drives: Seagate (STX) and Western Digital (WDC). The consolidation along these lines has already taken place in many respects. Seagate acquired Maxtor. Western Digital has gobbled up Komag.

Semiconductors: Intel (INTC) and AMD (AMD). Intel has been on a tear so it’s clearly the lead dog. But AMD is a perfect pain in Intel’s rear end. And therefore AMD will always have customers.

To the right there’s the software enclave…

Operating systems (enterprise): Windows and Linux. A no brainer duopoly as Linux usurps Unix in the enterprise. The big question is what will be the split between Windows and Linux. My guess: It’ll be 50-50 in a few years. After that the gains will diminish for Linux. As for the consumer market, duopoly discussions are futile. There’s Windows and there’s Apple’s (AAPL) OS X. The latter is gaining share and picking up as Apple expands, but we’re no where near duopoly chatter.

Enterprise software: SAP (SAP) and Oracle (ORCL). Sure, HP and IBM (IBM) are rapidly beefing up their software units. But once that dance of music chairs ends a mid-level software company can take comfort (or not) in the belief that it’ll be a subsidiary of Oracle someday.

Software as a service: Salesforce.com and ?. The question mark is a pure hedge at this point, but the SaaS market is fluid. Some folks would say it’s Salesforce and NetSuite today. However, looking out behind a year could find Salesforce.com and SAP in a duopoly. How’s that for a projection? Or Oracle buys Salesforce.com and NetSuite and we wind up with the same situation in enterprise software.

Security software: Symantec (SYMC) and Cisco. One side of this equation (Symantec) is secure. The other side is pretty murky. IBM has been acquiring security firms. EMC bought RSA. In the end, security will be part of a larger software package. Since Cisco is the OS for the network I reckon the networking giant will become a massive security player. You could also make a similar argument about Microsoft. Wild-card: Check Point Software, which is going to be a takeover target at some point.

Virtualization: VMware (VMW) and Citrix (CTXS). VMware is clearly the big dog in the virtualization market. The question: Who’s going to ride shotgun? Given that Microsoft (MSFT) is entering the virtualization market the software giant would be a natural pick. But let’s reserve judgment. Citrix, which recently bought Xensource, has a nice set of products that could put virtualization in more corners of the enterprise.

And to the left there’s that trendy neighborhood we call the Internet…

Search: Google (GOOG) and Microsoft. What!?! Is Dignan nuts? Stupid? (Actually it’s all of the above but I digress). When all the dealing is done there will be two search players: Google and Microsoft. What about Yahoo (YHOO)? Over time, it won’t focus as heavily on search. The search game is a marathon not a sprint and Microsoft is one of the few companies to spend heavily only to try and catch Google. Besides, we all know Microsoft will buy Yahoo at some point.

Browsers: Microsoft and Firefox. Sorry, Opera fans but the browser market has largely solidified. That could change, but it’s hard to compete with browsers that are distributed with Windows (Microsoft) and bankrolled by Google (Firefox). All that’s left to be decided is the bickering over security.

Social media: MySpace and Facebook. Yes, there are other social media players, but the duopoly–and the haters that come with them–has already arrived. The wild card: Facebook could fall from its perch if it keeps its current PR practices going.

Rich Internet Applications: Adobe (ADBE) and Microsoft. Adobe clearly has the platform to be declared half of an eventual duopoly. I reckon Microsoft will be a fast closer–not anytime soon though–based on its established developer relationships.

Ahead we have wireless ville…

Carriers: AT&T (T) and Verizon Wireless (VZ). There are other carriers–Sprint and T-Mobile–that may be trendier, but based on sheer girth it’s a two-horse town.

Mobile operating systems: Microsoft and Symbian. Microsoft Windows is clearly a big mobile OS player and it’s too early to see how Google’s Android plan works out. However, Symbian has quietly become a dominant U.S. player. Google won’t usurp that lead overnight. Research in Motion could have some mojo down the road.

That concludes are tour for today.

There are other categories worth expanding on–productivity software (Microsoft and a Web-based field as long as my arm), enterprise 2.0 applications, storage and data centers–but those markets are too fluid right now to make any definitive calls.

One thing is certain though. Those markets are likely to be duopolies at some juncture in the future.

Comments

[Vinz Klortho]

In the programmable semiconductor market (FPGA's), the duopoly is Xilinx and Altera.