We face competitors in several broad categories, including business intelligence software, analytical processes, query, search and reporting tools. We compete with large software corporations, including suppliers of enterprise resource planning software that provide one or more capabilities that are competitive with our products, such as IBM (which acquired Cognos in 2008), Microsoft, Oracle (which acquired Hyperion Solutions in 2007) and SAP AG (which acquired Business Objects in 2008), and with open source business intelligence vendors, including Pentaho and JasperSoft. Open source software is software that is made widely available by its authors and is licensed “as is” for a nominal fee or, in some cases, at no charge. As the use of open source software becomes more widespread, certain open source technology could become competitive with our proprietary technology, which could cause sales of our products to decline or force us to reduce the fees we charge for our products. We also compete, or may increasingly in the future compete, with various independent competitors that are primarily focused on business intelligence products, such as Actuate, Information Builders, MicroStrategy, the SAS Institute and TIBCO. We expect additional competition as other established and emerging companies or open source vendors enter the business intelligence software market and new products and technologies are introduced.
Many of our competitors have longer operating histories, significantly greater financial, technical, marketing or other resources and greater name recognition than we do. In addition, many of our competitors have strong relationships with current and potential customers and extensive knowledge of the business intelligence industry. As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sale of their products than us. Increased competition may lead to price cuts, fewer customer orders, reduced gross margins, longer sales cycles and loss of market share. We may not be able to compete successfully against current and future competitors, and our business, operating results and financial condition will be harmed if we fail to meet these competitive pressures.
So why do I think Qlik deserves the tag of #1 tech-sector acquisition target? Four reasons:
1) IBM itself has acquired a slew of BI companies in the past several years in addition to Cognos, and in so doing has triggered related buyouts by competitors and would-be competitors. IBM continues to emphasize the strategic importance of BI in its future plans, and in so doing has raised the profile of the entire category significantly.
2) The rise of the highly optimized and engineered system: From IBM's workload-optimized systems (including one built around Cognos) to Oracle's Exadata to appliances from Netezza and Teradata and others including Hewlett-Packard SAP, SAS, EMC, and more, the market is seeing an explosion on purpose-built and preconfigured systems tailored for high-scale tasks such as BI and related applications. Qlik could be ideal for this new type of highly integrated and optimized system. (Hello, Dell?)
3) Its mobile expertise. While some of the big BI companies are trying to figure out their mobile strategies, Qlik's got lots and lots of smartphone-based solutions out in the market on all the major mobile platforms—this is hugely attractive to the big software (and hardware) companies.
4) It's astonishing growth rate, particularly in the nuclear IT winter of 2009. While many software companies in 2009 regarded flat revenue as a big achievement, Qlik cranked up its revenue by about 33% last year, and for the first quarter of this year it's revenue is up 66% of Q1 of 2009. That's a record of real-world performance that's impossible to ignore.
So hats off to Qlik for a great few years and a successful IPO, and we shall see what the future brings. My bet is that it'll bring Qlik some big fat acquisition offers, and sooner rather than later.
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