When Elephants Mate: An Eagle's View of HP's Autonomy Acquisition
Several people have asked me lately what HP's acquisition of Autonomy means for Mimecast. The first few seemed to feel that "nothing" was an inadequate response, so I've been trying to understand why someone might think it relevant to us.
I recently had the pleasure of reading yet another of Geoffrey Moore's deeply insightful business books, Dealing with Darwin: How Great Companies Innovate at Every Phase of Their Evolution. The very first distinction he makes, in taxonomizing businesses, is whether their products are designed to be sold in large quantity, as lower-priced commodities, or in small quantities, as more expensive, highly customized products. The two models lead to radically different strategies in almost every aspect of business. For products aimed at business customers, this mostly corresponds to the distinction between the small-to-mid-sized business market and the enterprise market.
If a company is large enough, it needs nearly every feature you can imagine, and it can afford to pay handsomely for feature-rich products. Vendors targeting that market are well-advised to invest in large teams for rapid development, and can charge a premium for doing so.
But vendors focusing on the midsize market or below need to be more selective and thoughtful, prioritizing features based on the breadth of demand. They seek to offer the richest, most powerful set of features that they can make affordable to this kind of customer.
HP's acquisition of Autonomy is a transaction between elephants -- large software vendors focused primarily on large customers. By market cap and dry weight, Autonomy and HP outweigh Mimecast in about the ratio that elephants outweigh eagles. By and large, eagles needn't care about elephants mating unless they find themselves crushed underneath.
Eagles don't need to pretend to be elephants. They watch carefully for opportunities rather than trampling whole forests. When they spot an opportunity to perform specific valuable services for less-than-giant customers, they may end up in a tiny fragment of the elephant's territory, but the elephant is unlikely to compete with them directly except by random accident.
So, HP bought Autonomy. A giant that does a whole lot of things for large businesses, a few of which my company does much more efficiently for somewhat smaller businesses, has been successfully wooed by another giant. It's hard for me not to yawn. With my eagle eye, I take note of the evolution of the giant family next door, and then return to scanning the forest from above, looking for other parts of the giant's territory that I can exploit for my modestly-sized customers.