2 April 2003 Oracle co-founder and CEO Larry Ellison has warned that the technology industry is facing an unprecedented era of consolidation. When it is over, just a few big-name survivors will remain, he said.

The reason, he says, is because there are too many companies which either have too few products — even just a single product — or that are simply too niche. With prices continuing to fall and many elements of the computer industry becoming commodity, these companies will not be able to compete, he said.

“We think there is at least 1,000 Silicon Valley companies that need to go bankrupt,” Ellison told Dow Jones Newswire.

The top five companies already account for the lion’s share of the computer industry’s profits, he said. Furthermore, the world’s largest software vendor Microsoft is more profitable than the next 49 biggest put together — including Oracle.

Ellison’s forecast mirrors that of analysts Gartner that suggested that half the computer vendors around in 2002 will have been acquired or gone out of business by the end of 2004.

Speaking at another event, Ellison forecast that the rising popularity of the open source operating system Linux would destroy Microsoft’s data centre ambitions.

One open source software product, the Apache web server, had already “slaughtered, wiped out, taken from market dominance to irrelevance” Microsoft’s Internet Information Services (IIS) product.

That might be over-dramatic. In March 2003, analysts Netcraft estimated Microsoft’s share of the market at around 27% compared to Apache’s 63%. The rest is shared between Zeus Technology and Sun Microsystems.

But Ellison suggested that once a viable alternative to Microsoft Office is released on Linux, “all hell will break loose”. However, Ellison believes that the Linux-based OpenOffice office applications suite is still not good enough.

The boom in Linux on the desktop would start in the most price-sensitive regions of the world, particularly China and India, before spreading globally, he said.