Are we heading towards vendor consolidation in Web Analytics?

I noted at the beginning of the year in my predictions that we’d see some amalgamation among the vendors. This was confirmed a few weeks ago when Visual Sciences announced that they were looking at a number of offers with the assistance Goldman, Sachs & Co. Not surprising:

• Omniture seems to be going gangbusters these days with new client announcements almost daily, their move earlier to acquire Touch Clarity and strong tactics to create certified analysts and resellers.
• The free tools: Google, soon-to-launch Gatineau, etc. seem to be taking the small market users out of the mix. You might also see some amalgamation across some non-traditional tools like RobotReplay, Clicktale, Tapefailure and CrazyEgg if there isn’t sufficient revenue models maintained.

My thinking at the time was that WebSideStory (now Visual Sciences) would look to takeover their major competitor (Omniture) as a way of maintaining growth — as it seemed to be losing sales opportunities. But according to Tech Confidential it looks like continuing financial pressures at Visual Sciences, combined with lower than expected revenue for the balance of 2007, could result in the company being gobbled up by someone else.

Without a doubt, their flagship products — Visual Platform 5 and HBX — are attractive, as is Bid 2.0. Not sure where the search and content side acquired from Atomz will fit with anyone who acquires.

We’re a Visual Sciences client, so naturally this concerns me:

• First, when talk like this begins, you often see people looking for the exit sign and that means turnover in account management, technical support, etc. as well as a loss of knowledge. Lack of continuity with a vendor is challenging.
• Second, talk of merger/acquisition stalls sales opportunities. No one wants to enter into a contract with an ASP vendor that soon may not be on the horizon. So the downward spiral continues.
• Third, the issue of data access always rears it’s head. What will things look like should they be taken over? Will the company’s tools still exist post-acquisition? Will costs change? On the other hand some things excite me: better service, perhaps better tools, more opportunities to ensure the metrics/standards are the same across tools.

Not that Visual Sciences is the only prospective target. Coremetrics could also be an interesting acquisition for a company like WebTrends or as a leap into bigger markets for IndexTools or Clicktracks.

Seems to me that we could end up with just a couple big guys who look after the major enterprise clients (read Fortune 500 or Fortune 1000), then lots of space for existing mid-tier players like IndexTools and Clicktracks to gobble up customers that can’t afford the annual costs of an enterprise tool, but need the in-depth analysis capabilities that you don’t get with the free tools.

Your thoughts on this change? Any other amalgamation you see on the horizon?