Global software sales fell 5 per cent in 2002 to $US152 billion and will continue to fall significantly for the next two years, according to a survey released by Ovum.
This year will see a further 2.5 per cent drop in software spending, although that figure would be even worse if measured solely in US dollar terms, given the 15 per cent fall in the US currency against the euro this year.
Contrary to some market predictions, there would be no growth in the software market this year, Ovum Chief Analyst Julian Hewett said.
Although the market is flat overall, there are several areas where change is happening, according to Ovum.
- Web services have the potential to revolutionise 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 US 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 remains easily the largest vendor with 2002 business software revenues of $US25.9 billion. IBM was second with $US13.1 billion of software sales, followed by Oracle and SAP with sales of $US6.9 billion and $US6.8 billion, respectively.
No other vendor achieved software sales of more than $US3 billion in 2002, according to Ovum estimates.
The company noted that vendor consolidation had already taken place in the database and development tools sectors. Consolidation was now beginning in the business applications sector, as seen by the Oracle, PeopleSoft and J.D. Edwards & Co. takeover struggle.
The software infrastructure market would be next, as instanced by EMC's recent acquisition of Legato Systems, Ovum said.