September 2001, Vol. 12, No. 9

Television soap operas seem to require divorce, death, breakups and a not-infrequent evil twin. The publishing systems supplier world may turn, but I've yet to encounter an evil twin (though that may explain at least one supplier’s behavior).

Nonetheless, our suppliers have taken us on a bumpy road in the last few weeks, with two of the leading suppliers being sold and two taking on new chief executives.

Just before NEXPO in June, Unisys announced that it was moving Steve Dienna into the leadership of its media group; Dienna, a longtime industry fixture (Atex, SII, even business software supplier Insi), had been handling IBM’s media group since 1995.

But it was the month of August that had more things happen than have ever happened in 30 days in this business: the top three executives at Net-Linx Publishing Solutions resigned, Geac Computer Corp. Ltd. sold off its publishing systems division, Harris Corp. sold off its publishing systems division and Net-Linx brought in an industry neophyte to run its publishing systems division.

This turmoil and upheaval was all abetted by layoffs at other suppliers (Atex said farewell to a handful of people in late July and Open Pages bid adieu to another handful in August), in addition to layoffs at Geac and Harris. All told, probably 100 supplier employees were let go in five weeks.

Inside, I detail the sales of Geac and Harris, and I assist Correspondent George Powell in trying to make sense of the Net-Linx situation. Correspondent Steven E. Brier chats up Dienna and gives us an overview of Unisys' product line as well.

(We have, though, shoehorned in some non-supplier news: Correspondent Jason Zappe gives us the lowdown on relational databases and why some suppliers pick, for example, Oracle over Sybase, or Informix over Oracle.)

But what do all these changes mean?

While it would be easy to say that the current economic times set off these changes, that would be wrong. As I detail inside, we need to understand that aside from some of the layoffs, none of these changes was triggered by the recent downturn in system sales. The seeds for the executive turnover at Net-Linx and Unisys, and the sales of the publishing groups at Geac and Harris, were planted months -- if not years -- ago.

These changes pretty much are all reverberations from the shift that started more than a decade ago, when we required that our suppliers become software-and-services businesses, rather be than hardware-oriented. In the ’70s, ’80s and even early ’90s, we bought systems that were handcrafted, frequently down to the printed circuit boards.

All we ask of the suppliers is that they write custom software that binds these easily available components into publishing systems (no small task).

Adjusted for inflation, a hypothetical, traditional, most-modern system sold in 1990 went for $1.3 million; today, a similar system would go for anywhere between $300,000 and $500,000 (including hardware, software and installation services).

Where did the $1 million go? Not to the suppliers.

And in 1990, there were more than 1600 daily newspapers in the United States; today there are right around 1400. That’s 200 fewer customers.

No, the changes at Geac, Harris, Net-Linx and Unisys are all ramifications of a business model change and a change in the market. These changes also represent consolidation. Remember, these four companies in fact represent at least a baker’s dozen of predecessor companies (including, but not limited to, Baseview, Collier-Jackson, CompuText, CText, Cybergraphic, Deucalion, Gazette Technologies, Harris, Integrated Software Systems, Matrix, Publishing Partners, System Integrators and Unisys).

And consolidation, our economist friends tell us, is a response to a shrinking sales market.

So, while these changes weren't set off by this summer’s slow sales, they were set off by a chain of events that, it must be assumed, will continue to spark changes in the industry.

As Bette Davis said in that wonderful film soap opera, All About Eve, "Fasten your seatbelts ... it’s going to be a bumpy night."

-- David M. Cole, dmc@colepapers.net