Posted by: kenwbudd | September 27, 2009

An Emerging Threat to Oracle and SAP – Barrons.com

An Emerging Threat to Oracle and SAP – Barrons.com

ENTERPRISE SOFTWARE BEHEMOTHS ORACLE AND SAP face a small but potentially dangerous threat that could hurt their profitability over time. But you wouldn’t know it from their shares, which have rallied smartly this year.

Since the advent of business-process software, maintenance fees charged by the software companies for fixing and upgrading clients’ computing systems have been a lifeblood. These recurring fees provide a steady stream of revenue that often proves more lucrative than software sales. Maintenance fees account for more than 51% of Oracle’s total revenue of $23.49 billion and boasts gross margins, including support, north of 90%.

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