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Software publishing and distribution
period under the spotlight, the financial constraints placed on British Telecom have, not surprisingly, had an effect on the sector's performance, particularly that of the largest companies. Table 1 shows the tu mover of the industry's leaders. Sales growth rates, returns and profit margins vary considerably, and this underlines the effect of a company's relationship with the sector's major markets on the level of its performances. The two top performers, Plessey and Racal, both have a clear advantage. Plessey is reaping the benefits of 'System X', for which it is now the leading contractor since Standard Telephones & Cables' departure, as well as extending its product range, and gaining itself access to the US market through its recent purchase of Stromberg Carlson. Racal has for some years been strong in the military communications field, where it has benefitted from this market's emphasis on quality rather than price, and will stand to gain in future from this market sector's rapid growth.
Table 1. Turnover of leading companies in UK telecommunications industry, £ M
Racal Electronics Standard Telephones & Cables Cable & Wireless PlesseyTele & Office Systems Pirelli General Bowthorpe Holdings Telephone Rentals Telephone Cables Siemens Pye Telecommunications
Return on capital, %
Profit margin, %
Stk t/over per annum
1981/82
81182
79/80
81/82
81/82
69/80
642
27.0
37.0
16.0
24.2
3.7
3.1
56
568 355
22.8 21.1
18.0 23.1
8.9 27.5
7.7 24.0
4.6 18.0
3.6 12.5
14 18
339 109 64 54 53 51
246.8 9.3 32.9 23.1 48.8 1.2
23.0 4.5 26.9 23.6 28.6 16.5
12.4 7.1 17.8 25.8 16.9 0.1
7.2 2.2 15.3 28.3 7.6 1.9
4.9 2.9 5.1 6.7 14.3 3.8
4.0 2.9 4.1 3.7 14.2 3.6
50 0 13 16
50
13.2
30.2
6.0
10.9
3.3
3.3
5
The private market for telecommunications, that lying outside British Telecom's networks, was worth around £ 2 0 0 M in 1982 and is likely to grow rapidly. This bodes well for the smaller companies, some of whom are already performing exceptionally well. However, in this market more than any other,
Software publishing and distribution IRD, USA (1983) 215 pp, $1 8 5 0 Many apparent benefits are going to end up surprising those in the software industry who welcome them with open arms, warns this report. One example of this concerns the introduction of 'hard' software; software produced on silicon chips. The independent software publishers who are paying any attention to this trend (and many are not paying enoughD tend to view it favoura b l y , chiefly because it seems to promise a reduction in illegal copyin~ which accounts ofr up to 50% of the software in use today. These publishers, however, according to the report, are short-sighted. Hard software does promise to reduce illegal copying, but at what cost? For it will also transfer
vol 7 no 1 february 1984
software publishing power into the hands of the hardware manufacturers. According to the report, machines like Apple's Lisa are the wave of the future. In that new environment, independents will be reduced to OEMing for the hardware suppliers or to looking for niche markets for themselves. Overall, that spells a vastly reduced share of the market. So, while the advent of hard software may be a boon and a blessing for hardware manufacturers, for the independents, it adds up to a potentially fatal danger. The world of software publishing and distribution has more than one monster lurking just out of sight over the horizon. Another is teledistribution, the downloading of
79•80
Annual sales growth rate, %
5 7
the pace of technological change will require great financial agility from companies if they are to fund the required research and development for them to stay competitive in a fast moving market. (ICC Business Ratios, 28-42 Banner Street, London EC1Y 8QE, UIC Tel: 01 253 3906)
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software in lieu of multicopy publication. It is the retailers that are threatened by this. For the short term, teledistribution may make their lives easier, but when highspeed downloading direct to end users becomes widely feasible, it could spell the end of the retail shop. IBM is fast moving into a position of preeminence on the micro hardware side, and chances are good that the company will play an increasingly large role on the software side too. This may not be bad news, however. IBM has a tradition of setting high prices and sticking to them. Perhaps, the report conjectures, I BM's stubborn pricing policies will give the software industry a way out of the price wars that are cutting it to shreds today. (International Resource Development Inc., 30 High Street, Norwalk, CT 06851, USA. Tel: 203 866 6914, Tx: 643452)
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41
Table 1. Turnover of leading companies in UK telecommunications industry, £ M
Racal Electronics Standard Telephones & Cables Cable & Wireless PlesseyTele & Office Systems Pirelli General Bowthorpe Holdings Telephone Rentals Telephone Cables Siemens Pye Telecommunications
Return on capital, %
Profit margin, %
Stk t/over per annum
1981/82
81182
79/80
81/82
81/82
69/80
642
27.0
37.0
16.0
24.2
3.7
3.1
56
568 355
22.8 21.1
18.0 23.1
8.9 27.5
7.7 24.0
4.6 18.0
3.6 12.5
14 18
339 109 64 54 53 51
246.8 9.3 32.9 23.1 48.8 1.2
23.0 4.5 26.9 23.6 28.6 16.5
12.4 7.1 17.8 25.8 16.9 0.1
7.2 2.2 15.3 28.3 7.6 1.9
4.9 2.9 5.1 6.7 14.3 3.8
4.0 2.9 4.1 3.7 14.2 3.6
50 0 13 16
50
13.2
30.2
6.0
10.9
3.3
3.3
5
The private market for telecommunications, that lying outside British Telecom's networks, was worth around £ 2 0 0 M in 1982 and is likely to grow rapidly. This bodes well for the smaller companies, some of whom are already performing exceptionally well. However, in this market more than any other,
Software publishing and distribution IRD, USA (1983) 215 pp, $1 8 5 0 Many apparent benefits are going to end up surprising those in the software industry who welcome them with open arms, warns this report. One example of this concerns the introduction of 'hard' software; software produced on silicon chips. The independent software publishers who are paying any attention to this trend (and many are not paying enoughD tend to view it favoura b l y , chiefly because it seems to promise a reduction in illegal copyin~ which accounts ofr up to 50% of the software in use today. These publishers, however, according to the report, are short-sighted. Hard software does promise to reduce illegal copying, but at what cost? For it will also transfer
vol 7 no 1 february 1984
software publishing power into the hands of the hardware manufacturers. According to the report, machines like Apple's Lisa are the wave of the future. In that new environment, independents will be reduced to OEMing for the hardware suppliers or to looking for niche markets for themselves. Overall, that spells a vastly reduced share of the market. So, while the advent of hard software may be a boon and a blessing for hardware manufacturers, for the independents, it adds up to a potentially fatal danger. The world of software publishing and distribution has more than one monster lurking just out of sight over the horizon. Another is teledistribution, the downloading of
79•80
Annual sales growth rate, %
5 7
the pace of technological change will require great financial agility from companies if they are to fund the required research and development for them to stay competitive in a fast moving market. (ICC Business Ratios, 28-42 Banner Street, London EC1Y 8QE, UIC Tel: 01 253 3906)
[]
software in lieu of multicopy publication. It is the retailers that are threatened by this. For the short term, teledistribution may make their lives easier, but when highspeed downloading direct to end users becomes widely feasible, it could spell the end of the retail shop. IBM is fast moving into a position of preeminence on the micro hardware side, and chances are good that the company will play an increasingly large role on the software side too. This may not be bad news, however. IBM has a tradition of setting high prices and sticking to them. Perhaps, the report conjectures, I BM's stubborn pricing policies will give the software industry a way out of the price wars that are cutting it to shreds today. (International Resource Development Inc., 30 High Street, Norwalk, CT 06851, USA. Tel: 203 866 6914, Tx: 643452)
[]
41