There’s been a lot of talk these days about “Stack Wars.” The enterprise stack refers to the combination of hardware, software and services intellectual property (IP) that is owned by a specific competitor. Oracle’s acquisition of Sun, HP’s moves to acquire EDS, 3Com and Palm and IBM’s acquisitions over the years (e.g. Lotus, PWC, Cognos, etc) have left and enterprise landscape depicted in this infographic.

Competitors have a choice to vertically integrate throughout the stack or virtually integrate through partnerships. For example, Oracle and IBM have the ‘tallest’ stacks spanning hardware, software and services. The only missing piece of their portfolio is networking. HP also has a highly vertically integrated stack and unlike Oracle and IBM has heavily invested in networking to compete with Cisco. Oracle, IBM and HP have pursued a strategy to own IP throughout the enterprise value chain. Microsoft on the other hand has primarily stayed focused on its software stack for the enterprise, choosing to partner with hardware companies such as Intel and HP.

The most interesting development occurring in the stack wars is the virtual integration that’s occurring with some vendors. EMC’s acquisition of VMware has put the company in the center of the conflict, allowing it to partner closely with Cisco and services firms such as Accenture, CSC and Deloitte. EMC and VMware are betting on Intel hardware and as such Intel becomes a de facto member of the virtual stack. The VCE coalition and EMC, VMware, Cisco joint venture called Acadia are further examples of virtual integration and most recently, EMC and SAP have announced a tighter partnership. With SAP announcing it is acquiring Sybase, the virtual stack is now more complete.

The pending enterprise stack wars pit highly vertically integrated companies against a virtually integrated whole. In theory, the vertical approach can be more easily managed because its owned by a single company. However the virtual approach is more open and potentially has more industry reach.

Microsoft remains the king of market valuation at more than $250B however excluding Intel, the enterprise virtual stack rivals the size of Microsoft and is larger than either Oracle, HP or IBM; underscoring the potential power of a virtual partnership enabled by VMware. Relative newcomers Google and Amazon are shown for context, particularly because these companies are driving the move to cloud computing.

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