IBM Maintains Top Spot in Packaged Software Market Amid Growth and Shifts

Strategic Insights -

The global packaged software market experienced significant growth in 1997, with a 15% increase to nearly $122 billion, according to IDC. IBM held on to its number one position, despite a modest growth rate of 2.3%. SAP recorded the highest growth rate of 61%, while Microsoft posted a 39% growth rate, solidifying its second-place ranking. The market growth is attributed to factors such as globalization, the availability of better software solutions, and the Y2K threat. The continued integration of businesses and partners in areas like collaboration, supply chain, and electronic commerce is expected to drive growth in the 12-15% range across all software segments.

Key Takeaways:

  • The worldwide package software market grew 15% to nearly $122 billion in 1997, according to IDC.
  • IBM maintained its number one position, despite a 2.3% growth rate, the smallest increase among the top 20 vendors.
  • SAP recorded the highest growth rate in 1997 with a 61% increase.
  • Microsoft posted a 39% growth rate, maintaining its 2nd place ranking and closing in on IBM's leadership position.
  • The primary drivers of market growth include globalization, the availability of better software solutions, and the Y2K threat.
  • The integration of businesses and partners in areas like collaboration, supply chain, and electronic commerce is expected to drive growth in the 12-15% range across all software segments.
  • Oracle Corp. overtook IBM for the number one position in the application development tools market with a 12.2% market share.
  • The Java phenomenon, component-based development, and Web-related tools are expected to contribute to a 12-13% CAGR in the application development tools market through 2001.
  • Substantial increases in the client/server enterprise applications segment contributed to the overall applications solutions software market growth.
  • Internet applications, customer management applications, "analytic applications," and the reengineering of business processes are expected to drive a 15% CAGR in the applications solutions software market through 2001.

Statistics:

  • The 1997 worldwide revenue for system infrastructure software reached $35.1 billion, an increase of 13.2% (IDC).
  • IDC expects the system infrastructure software market to exceed $53 billion by 2001 (IDC).
  • The overall application development tools market is estimated at $31 billion, 12.6% over 1996 revenues (IDC).
  • Oracle Corp. holds a 12.2% market share in the application development tools market (IDC).
  • The Java phenomenon, component-based development, and Web-related tools are expected to contribute to a 12-13% CAGR in the application development tools market through 2001 (IDC).
  • The client/server enterprise applications segment experienced substantial growth, contributing to the overall applications solutions software market growth (IDC).
  • The applications solutions software market is expected to grow at a 15% CAGR through 2001, driven by factors like Internet applications, customer management applications, and "analytic applications" (IDC).

Sources:

  • International Data Corp. (IDC)
  • The Packaged Software: 1997 Worldwide Performance Preliminary Results (IDC bulletin)