As I said last week, there is not a lot new happening in enterprise software in 2011. So from an investment research point of view, it's time to look out a year or more (a good way to think of all investment research, no?) and see if there are any investment implications in the "next hot thing?" One of the next hot things is HTML5. Techcrunch had a good discussion February 9 on how HTML5 affects consumer apps and the strategies of Apple (APPL), Facebook, and Google (GOOG). Or not in the case of Apple.
But what is HTML5? And how does it affect enterprise software companies?
Simplistically HTML5's just the next iteration of the Hypertext Markup Language that launched the worldwide web almost 20 years ago (skip to section 1.4 of the linked web page). Usually rev. 5's of anything are pretty ho-hum. But when development of a standard takes a hiatus for a decade and then re-emerges, that means there probably is some market demand. As W3C, the lead standards group responsible for HTML, says:
"The main area that has not been adequately addressed by HTML is a vague subject referred to as Web Applications. This specification attempts to rectify this, while at the same time updating the HTML specifications to address issues raised in the past few years."
So the Techcrunch article, as thorough as it is on the consumer side of the software market, might make it sound that this is all about releasing a better version of iFart. But enterprise application suppliers such as IBM, Oracle (ORCL) and SAP have long struggled in getting key parts of their collaboration, ERP and similar applications running on the web in a non-jury-rigged fashion. And these three (numbers 2-4 in the software market) have long had similar issues with middleware's fit on the web. For example:
- IBM has the emerging standard covered with its Boilerplate project.
- Oracle, as with the way Google is described in the Techcrunch article, is playing both sides of the fence -- HTML5 and its own Java (which is the reason it bought Sun, remember)
- So far, SAP seems to be depending on its developers network but that might not be a bad play given that its R&D efforts need to be tied up in the core for the next few years.
Can an HTML5 development tool supplier come out of nowhere and provide a great investment opportunity the way Powersoft did in the 1980s and Borland did in the 1990s for other programming tools? It's highly unlikely because of the way the development tool market has declined since those good old days. Now all the leaders mentioned above and others give away the tools to sell the platform or the app. Instead watch for an IT services oriented company -- a latter-day CSC -- to make a big HTML5 play. Just Google or Bing "HTML5" every other week or so to see what's brewing.
Of course there is that one other small company that crosses both consumer and enterprise like no other, the software market leader, Microsoft (MSFT). It's been all over HTML5 almost since the beginning of HTML's new beginning and Microsoft might have the most corporate representatives on the standards working committee (I didn't count them but they appeared to have more than Apple and Google). Microsoft has been trying to better webify Dynamics since way back in Great Plains days with project like Marco Polo and some other "explorer" (get it?). According to betanews, Microsoft is also putting a big marketing push behind the standard.
-- Dennis Byron
(No financial interest in companies mentioned)