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IDC Gives IBM the Largest Piece of the Life Science IT Pie, but Sun Questions the Numbers

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The Bio-IT beans have officially been counted. During a symposium at the Bio-IT World Conference and Expo held November 12-14 in San Diego, market research firm IDC released its updated data on the life science information technology market. Not only did the firm provide a scaled-back outlook that reduces the total market size down to $30 billion, from a formerly rosy $38 billion, in 2006, but it also it took a stab at ranking the sector’s vendors by market share. IBM, with 11 percent market share ($1.4 billion out of a total of $12.2 billion), came out on top, just ahead of pre-merger Compaq with $1.1 billion (Hewlett-Packard contributed an additional $65 million). The rest of the top ten, in order, are Dell, Sun, HP, Oracle, EMC, Accenture, PriceWaterhouseCooper, and EDS.

Predictably, not everyone at the conference agreed with IDC’s analysis. Some attendees BioInform spoke to said that even the revised forecast appeared overly optimistic, while others questioned the firm’s definition of certain segments of the broad life science market. The most outspoken skeptic, however, was Sun’s director of global life sciences, Howard Asher, who criticized IDC, Gartner, and other market research firms during his keynote the following morning for “misleading IT” with their research methods.

While giving IDC points for trying, Asher had two bones to pick with its numbers. First, he said, IDC didn’t include back-office server support in its calculations. Not coincidentally, this is an area where Sun claims to be entrenched within life sciences. The second problem, he said, is that despite one-off reports on the sector that are just coming out now, market research groups have yet to split out life sciences as a true vertical market in their broader forecasts. For example, he said, support for medical device companies generally falls under “discrete manufacturing,” while all academic research support falls under “education.” Mainstream IT market research reports still “don’t acknowledge that this industry exists.”

The result, he said, is that “[Sun CEO] Scott McNealy looks at one of these reports and says, ‘What’s this thing called life sciences that I’m hearing about?’”

The impact of this isn’t trivial. Sun’s life science group was hit by an overall reduction in workforce of 4,400 people that the company was forced to carry out — an unusual precedent in big IT firms. While Sun, IBM, and HP have all seen massive layoffs over the last year, life sciences has until now remained a safe zone at all these organizations, and most have continued to devote even more resources into the life science market.

Sun’s decision to downsize its life science staff, including former group manager of life sciences Sia Zadeh, was due to the “nondiscriminatory” nature of the company’s staff reduction plan, Asher said. While declining to disclose the current headcount for Sun’s life science team, Asher noted that it is larger than it was when he started at the company nine months ago.

Asher stressed that Sun remains strongly committed to the life sciences. However, he has broadened the organization’s scope and has identified the regulatory arena as a key opportunity. Sun has a strong running start in the area of electronic submissions, he said, because the key software components in the process — Oracle, SAS, and Documentum — all run natively on Solaris.

While acknowledging the strong competition Sun is likely to see from IBM in this arena — IBM has identified e-clinicals as one of four life science market segments it is targeting — Asher said he’s confident that Sun will benefit from its head start since the FDA tends to stick to a core set of technology platforms, which then dictates what technologies submitters must choose.

Asher criticized the industry’s obsession with discovery-based IT. “Read my lips,” he told conference attendees. “It’s not just discovery. The opportunity is 100 times bigger.”

Perhaps that’s one area where Sun and IDC see eye-to-eye. Goldfarb highlighted the regulatory arena, particularly compliance with the FDA’s 21 CFR Part 11 requirements, as a key opportunity for IT firms looking to make their mark in the next phase of growth for the sector.

As far as estimates of that growth go, Goldfarb conceded that the sector has proven to be a tougher beast to pin down than any other vertical. “It’s turned out to be harder than many of us imagined,” she said.

— BT

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