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Time for a high-tech shakeout
Reduced expectations about the appropriate size of the technology industry should have led to a major shakeout of the weaker players—but so far haven't. Executives and board members with close ties are working to keep unsuccessful companies not only afloat but also independent, often long past the time when they should have been acquired or shut down. Fueling this tendency is the idea that most mergers, especially hostile ones, fail to deliver value. The author argues that managers who believe this are misreading the lessons of history and missing out on the benefits of consolidation.
The take-away: The technology industry needs some trimming if companies are to thrive in coming years. Too many players are throwing money at the same functions, from sales and marketing to research and development, in pursuit of the same limited market. The leaders who will push the coming consolidation are likely to come from outside the industry. While they may now be reviled, they could be laying the foundation for the next wave of prosperity.
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