CEO Supper Club: Will Cloud Companies Consolidate or Be Consolidated?

By Sarah Lacy , written on June 19, 2012

From The News Desk

It's time for part two of ourĀ excuse to get various tech CEOs drunk and ply secrets out of them CEO Supper Club.

As a reminder, the guests for our initial dinner were some of the biggest names in the budding cloud computing movement: Aaron Levie of, Tony Zingale of Jive, Jay Simons of Atlassian, and long time software analyst Jason Maynard, now of Wells Fargo. One of those is public, and two have been making noises about filing. (See part one where we make fun of Maynard's "phablet" and talk about Apple's role in the enterprise here.)

In this segment we talk about consolidation. Enterprise software may go from mainframes to desktops to the cloud but one thing is for certain: There will always be a cycle of fragmentation and consolidation. We've recently left a big period of some $30 billion or more in consolidation -- mostly done by Oracle, mopping up the old, best-of-breed players from the late 1990s, and recently some of the early SAAS players of the early 2000s.

Theoretically, we're in a period of fragmentation, where companies are so frustrated by the big vendors' total lack of innovation that they're willing to try out new vendors, like NetSuite, Salesforce, Box, WorkDay, Jive, Asana, Atlassian, or a handful of others. Zingale says it's "way too early" to talk about consolidation of this guard.

Well, no one told Yammer that. According to many reports for the last week, the company is the first one of the pack breaking ranks and selling out for a reported $1.2 billion. That says two things: Old stodgy software companies know they need these new tools, and it's possible that if enough cash is flashed all of this excitement over changing the way people work could get siloed inside uninspiring, has-been software companies.

Most of us at the table (including me) hope that's an anomaly, and that if this whole field is destined to consolidate, that a new giant will emerge to do the consolidating.

Maynard seems to think Box is the one to watch, characterizing files as "the photos of enterprise," which all social enterprise companies are going to need to be organized around.

We'll be posting clips from this dinner all week. We're warning you: These videos get more ridiculous the later in the night they go.