Global software sales fell 5 percent in 2002 to US$152 billion and will continue to fall significantly for the next two years, according to a survey released Friday by Ovum Ltd.
This year will see a further 2.5 percent drop in software spending, although that figure would be even worse if measured solely in U.S. dollar terms, given the 15 percent fall in the U.S. currency against the euro this year.
Contrary to some market predictions, there will be no growth in the software market this year, Ovum Chief Analyst Julian Hewett said in the survey.
Although the market is flat overall, there are several areas where change is happening, according to Ovum. These include:
-- Web services have the potential to revolutionize the enterprise software business by moving these applications to a services-based architecture
-- there will be continued consolidation among software vendors
-- growth areas include business intelligence (BI), security, portals and content management
-- new U.S. laws such as Basel II and Sarbanes-Oxley are fuelling interest in records management systems
-- open source software continues to make ground
-- wireless technologies to support mobile workers and devices are beginning to attract serious interest.
Microsoft Corp. remains easily the largest vendor with 2002 business software revenues of US$25.9 billion. IBM Corp. was second with US$13.1 billion of software sales, followed by Oracle Corp. and SAP AG with sales of US$6.9 billion and US$6.8 billion, respectively. No other vendor achieved software sales of over US$3 billion in 2002, according to Ovum estimates.
Ovum noted that vendor consolidation has already taken place in the database and development tools sectors. Consolidation is now beginning in the business applications sector, as seen by the Oracle, PeopleSoft Inc. and J.D. Edwards & Co. takeover struggle. The software infrastructure market will be next, as instanced by EMC Corp.'s recent acquisition of Legato Systems Inc., Ovum said.