Comments on: MSP Software Provider PacketTrap Acquired

By: Doug Wilson

Doug Wilson — Mon, 07 Dec 2009 18:55:41 +0000

Joe – I do think consolidation will happen – at least it did for us at HoundDog. The fact is that this is an exploding market at the junction of three swelling streams: remote management, SaaS and managed services.

I think you’ll see the fast-growing, innovative RMM companies snapped up by other larger players who want to be in this space. We were growing at 300% CAGR over the past 5 years, were profitable and cash-rich, so it wasn’t a matter of desperation for us or, I suspect, PacketTrap.

Nobody will buy the dogs – except in our case! – so expect to see a bunch of the flat-lining bigger players left out to wither while the smaller innovators join up with larger, resource-rich players who can bring both R&D and marketing muscle to the table and spur faster growth.

Doug

By: Joe Panettieri

Joe Panettieri — Mon, 07 Dec 2009 16:21:58 +0000

Stu: Always good to have your 2 cents reflected. Do me a favor: If/when you personally see the credit situation easing let us know. We’re interested in tracking this through ongoing blog entries.
-jp

By: StuFinancesTech

StuFinancesTech — Mon, 07 Dec 2009 15:06:01 +0000

Joe, I see very little evidence that credit is easing at all on the commercial side of things. What is happening to increase the likelihood of consolidation is the fact that some previously well run and profitable small companies are out of credit and running out of cash and thus making themselves a target for a takeover from someone who can absorb them and wait it out til the cycle starts to rebound.

By: Joe Panettieri

Joe Panettieri — Sun, 06 Dec 2009 14:00:39 +0000

Frank, Network Engine: I appreciate you both stepping in and raising skepticism about the “consolidation” theme. I do think the market is poised to consolidate but I’m definitely digesting your feedback and keeping it in mind as we plan future coverage. Thanks again.
-jp

By: Network Engine

Network Engine — Sun, 06 Dec 2009 01:40:12 +0000

I would suggest not to read much into any of this. Quest is a large company that has a history of building their business through aquisition. While PacketTrap has a strong MSP business, they seem to have an even stronger competitive product against SolarWinds, where the big money is – selling directly to end users. This is one off consolidation to benefit a specific business – quest – and not the start of a trend. I agree with Frank, the futre is the cloud and whether it’s Packettrap, Quest, or anyone else, the solution that wins is the one that takes into account that IT is moving to the cloud at a rapid rate. Who the vendor of these cloud management solutions are will be less material – could be anyone.

By: Frank Coker

Frank Coker — Sat, 05 Dec 2009 17:21:14 +0000

I disagree. With all due respect, I think there are more pieces to this equation that are being considered in these comments.

If it was only about economics, availability of funds, and market disaray needing to be rationalized, then I would say the forces are lined up for consolidation. But there are other forces pushing in the opposite direction. For example the push to the cloud is raising significant uncertainty about the future role of RMM. On another front, there are essentially no barriers to entry for companies that want to get into the IT services business. Accounting firms, law firms, marketing agencies (and the list goes on) are getting into the IT services business and are creating many IT service specialty niches – not to mention the many technician/entrepreneurs that have decided they don’t want to play the big company game and are starting their own IT services business. Just to name a few….

Much more could be said here, but I contend that there are as many, if not more, forces pushing in the opposite direction of consolidation. I do think we will see of bunch of consolidation moves in 2010, but in the grand scheme of things, it will be a small part of the overall ecosystem. [just another 2 cents to consider...].

By: Thomas Fox

Thomas Fox — Fri, 04 Dec 2009 16:30:53 +0000

Joe-

I think you’re right on.

A lot of the software vendors in our space (I assume you’re using MSP software to mean RMM, PSA, etc.) operate in a vacuum – they’re each an island on their own. The company/companies that start bringing things together will definitely come out on top.

I do think the economy is turning around, but we’re definitely not out of the woods. But for those companies with a pile of cash (ConnectWise) or access to capital (Autotask), everything is still on sale at low, low prices.

It would be the ideal time to snatch up a few smaller companies and start building a portfolio of tightly (and, perhaps, exclusively?) integrated applications.

Tom

By: Joe Panettieri

Joe Panettieri — Fri, 04 Dec 2009 13:37:46 +0000

Gary:

A few thoughts…
1. Credit crunch is easing. Deal makers ready to open wallets?
2. MSP software industry is highly fragmented
3. Not all MSP software companies are doing well, though, which will force some executives to consider strategic moves for their companies
4. Some MSP software companies have investors who might be getting itchy. 2008-2009 were about closely managing costs for survival or responsible growth. Assuming the global economic storm is easing/ending (is it?), now might be the time for companies to go shopping
5. Some software/IT companies are sitting on mounds of cash…

Readers: Agree? Disagree? To Gary’s point — is MSPmentor and some of its readers over-thinking the consolidation scenario?
-jp

By: Gary Read

Gary Read — Fri, 04 Dec 2009 13:21:47 +0000

Do you think so – I am wondering if we are over-thinking the consolidation scenario?

Why do we believe that consolidation will occur?

By: Thomas Fox

Thomas Fox — Fri, 04 Dec 2009 02:10:00 +0000

Great reporting Joe…

Vlad has been saying it for a year, and we’re finally seeing it: Consolidation.

In 12 months, this industry will look nothing like it does now.