Preliminary Classification of the Top 50 Software Companies

Business Definition, Customer Sharing, Competitor Sharing

This post outlines a preliminary classification of the 50 largest software companies. This time I'm using Google Finance's Software & Programming category as the data source. I'm again using market capitalization as the measure of size. I've excluded six companies (VMW, GA, SAI, STV, OMTR, SLH) which do not have any Related Companies listed by Google.

The Related Companies lists on Google Finance help to describe a sort of clustering of the companies. In the chart below, a solid line between two companies indicates that each is on the other's Related Companies list. There are also a few Top 50 companies which did not appear on the lists of any other companies; in these cases if there was a one-directional relationship then that relationship is indicated on this chart with a dotted line.

I have tentatively identified four clusters that seem to emerge out of these relationships. Each cluster is highlighted in a different color in the chart, and can be identified with a different type of customer group.



The first group consists of companies who sell primarily to video gamers. These are indicated in light purple.

The second group consists of companies who sell primarily to general business managers. These are dominated by the ERP, CRM, and Business Intelligence vendors. These are indicated in green

The third group consists of companies who sell primarily to engineering and design professionals. These are indicated in yellow

The fourth group consists of companies who sell primarily to IT and E-Commerce professionals. These are indicated in blue. This is a rather diverse group, including such companies as security software makers, middleware vendors, and Indian IT development shops, and will almost certainly need to be subdivided further

The categorization is not comprehensive. Several companies did not clearly fall into any of these categories; these companies are indicated in white on the chart. Additionally, MSFT seems to participate in at least three of the four categories

My next steps will be (1) to compare the sizes of these categories and (2) to select one of the categories for more detailed industry analysis. After analyzing the first industry, I expect to revisit the overall classification scheme