Enterprise Software Spending to Grow in 2010
Asia Pacific’s enterprise software market revenue is being predicted to reach US $22.1 billion in 2010. According to Gartner, this will be a growth of 10.2 percent. The expected growth in 2009 was pegged at 6.6 percent. Even though the new growth forecast is more than what was earlier predicted, it is still lower than the 2008 growth of 13.8 percent. Gartner reported that the volatile economy is impacting the application software segment more than the infrastructure software segment.
However, despite the recent slowdown in growth, Asia Pacific still bears a positive outlook over the five-year forecast period from 2008 through to 2013, with a compound annual growth rate (CAGR) of 10.8 percent. This is the highest of any region worldwide.
According to Gartner, for the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6 percent, 12.4 percent and 10.7 percent respectively). Australia and Singapore will also have reasonable CAGRs, of 9.5 percent and 9.4 percent respectively.
China and India will continue to benefit from a large domestic customer base and government stimulus packages, as well as a relatively low market penetration. Australia and Singapore’s revenue is supported by a consistent maintenance revenue stream, a strong vendor channel and service infrastructure, as well as positive expectations for end-user software budget increases in 2010.
Gartner’s research added that Asia Pacific will have a more positive outlook in comparison to regions like Europe and North America. There will be intense vendor competition in Asia Pacific due to price-sensitive nature of some regions.
China’s high dependency on exports is supposed to be significantly impacting its economic growth in 2009. But the government’s stimulus package has been able to cushion this negativity. The country will continue to lead software demand in the region, with a 12.2 percent growth rate in 2009 and 14.5 percent growth in 2010.
Australia is the next-largest market with a 5.4 percent growth rate in 2009 and 8.2 percent growth in 2010. South Korea is still the third-largest software market in Asia Pacific at only two percent. This is despite experiencing the slowest growth in 2009 among the region’s four largest markets. Software growth improvement is expected at 6.5 percent in 2010.
India is the fourth-largest market in the region with an expected growth of 10.1 percent in 2009 and 11.8 percent growth in 2010. Its economy has been affected by the economic downturn but has the advantage of being less dependent on exports than China. A largely untapped market, combined with a strong pool of IT skills, is expected to uphold local software demand.
Infrastructure software represents 64.4 percent of enterprise software spending in Asia Pacific in 2010. This spend is made up of operating systems, database and security software segments. It has been predicted that data integration tools and virtualization software will have the fastest CAGRs in the next 5 years.
In comparison, application software spending will have a slower growth rate. Over the next five years it is projected to grow at 9.9 percent. ERP and office suites will remain the largest segments throughout the forecast period. Web conferencing and project and portfolio management (PPM) will have the fastest CAGRs.
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