TechWeek: Growth by the Numbers

Even so, the success -- or lack thereof -- of the flagship product will do much to determine the shape of the business intelligence software market for the foreseeable future.

Like the rest of the software world, the business intelligence companies are under pressure to consolidate as customers tire of buying from -- and paying high maintenance fees to -- a multitude of vendors. The big dogs, such as Oracle, Microsoft and SAP, have been moving onto their turf, offering at least rudimentary (in the case of SAP, very rudimentary) BI capability. But now the world's largest software company is poised to make a serious dent in the $4.7 billion market with the release of its new database -- SQL Server 5.

Cognos 8's claim to fame is a new architecture that combines the functionality of nearly all of its products into one package. Although that sounds like a simple bundling tactic, it's actually quite a bit more sophisticated.

IDC analyst Dan Vesset says Cognos "did a great job with Cognos 8 and have they are very good at executing on new products." Even so, the product is not "game changing," and we'll likely see a similar move when rival Business Objects(BOBJ Quote) updates its major products later this year. Although few analysts expect Microsoft's product to be as robust as those offered by the "best of breeds," it certainly has the ability to offer great prices and a lot of convenience for companies already running its database.

Vesset, added that Cognos' ReportNet, a product that shares the underlying technology in Cognos 8, has been an exceptional money maker, driving some $100 million in revenue last year,

Cognos 8 won't be available until sometime in November; the company won't give an exact date, so it isn't likely to have a large impact on revenue in the current quarter. How quickly it will, isn't clear.

That's because the best targets -- existing customers who already are paying maintenance fees -- will get the upgrade for free.

But CFO Tom Manley says that Cognos 8 contains a variety of features customers will want to deploy after the initial upgrade -- and those cost money.

Cognos has had a tough year on Wall Street. Despite a run-up of about 10% in September, the stock is still down about 8% for the year, while Business Objects has appreciated by 38%.

This month's action is likely in anticipation of the company's second-quarter earnings release next week and hopes that Cognos 8 will be a home run.

TechWeek Scorecard
Index	Closing	Change
Nasdaq Composite	2160	-0.7%
Philadelphia Semiconductor	475	-1.5%
Goldman Sachs Software	168	0.0%
TSC Internet	203	-0.5%