Joe Francica posted an interesting article a few days ago in which he looks at the competitive landscape for GIS products currently, and specifically the effect that Google has had on it.
He basically sees the main challenge for smaller GIS companies to be maintaining their relevance. He writes that “it’s now a matter of scale.” I agree, and would even take this thought to its logical conclusion, which is that the GIS industry is ready for a consolidation phase, at the end of which there will be fewer, but larger, companies.