Global Application Software Industry Profile
Reference Code: 0199-2007 Publication date: April 2009
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EXECUTIVE SUMMARY
EXECUTIVE SUMMARY Market Value The global application software market grew by 11.2% in 2008 to reach a value of $78.4 billion. Market Value Forecast In 2013, the global application software market is forecast to have a value of $131 billion, an increase of 67.1% since 2008. Market Segmentation The Americas form 40.1% of the global application software market's value. Market Share Microsoft accounts for 13.9% of the global application software market's value.
Global - Application Software Š Datamonitor (Published April 2009)
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CONTENTS
TABLE OF CONTENTS
EXECUTIVE SUMMARY
3
CHAPTER 1
7
Market Overview
1.1
Market Definition
7
1.2
Research Highlights
7
1.3
Market Analysis
8
CHAPTER 2
Market Value
9
CHAPTER 3
Market Segmentation
10
CHAPTER 4
Market Share
11
CHAPTER 5
Five Forces Analysis
12
5.1
Summary
12
5.2
Buyer Power
13
5.3
Supplier Power
14
5.4
New Entrants
15
5.5
Substitutes
17
5.6
Rivalry
18
CHAPTER 6
Leading Companies
19
6.1
Microsoft Corporation
19
6.2
Oracle Corporation
22
6.3
SAP AG
25
Global - Application Software Š Datamonitor (Published April 2009)
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CONTENTS CHAPTER 7 7.1
Market Forecasts
Market Value Forecast
CHAPTER 8
Appendix
28 28
29
8.1
Methodology
29
8.2
Industry Associations
30
8.3
Related Datamonitor Research
30
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CONTENTS
LIST OF TABLES Table 1:
Global Application Software Market Value: $ billion, 2004-2008 .........................9
Table 2:
Global Application Software Market Segmentation: % Share, by Value, 2008..10
Table 3:
Global Application Software Market Share: % Share, by Value, 2008 ..............11
Table 4:
Key Facts: Microsoft Corporation......................................................................19
Table 5:
Key Financials: Microsoft Corporation ..............................................................21
Table 6:
Key Facts: Oracle Corporation..........................................................................22
Table 7:
Key Financials: Oracle Corporation ..................................................................24
Table 8:
Key Facts: SAP AG ..........................................................................................25
Table 9:
Key Financials: SAP AG ...................................................................................27
Table 10:
Global Application Software Market Value Forecast: $ billion, 2008-2013 ........28
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MARKET OVERVIEW
CHAPTER 1
1.1
MARKET OVERVIEW
Market Definition The market value in this report represents the business applications software market only. Business applications are defined as software products that enable end users and their organisations to carry out their day-to-day work, including core business applications (eg, ERP, CRM), office applications (eg, word processing, spreadsheets) and applications for specialist segments (eg, computer-aided design, telecoms billing). It excludes infrastructure software; information management software and any software products bought by non-business users.
1.2
Research Highlights The global application software market has enjoyed steady growth, posting double digit growth rates since 2004. The global application software market generated total revenues of $78.4 billion in 2008, representing a compound annual growth rate (CAGR) of 11% for the period spanning 2004-2008. Americas accounted for 40.1% of the global application software market’s value, generating revenues of $31.4 billion.
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MARKET OVERVIEW
1.3
Market Analysis The global application software market has enjoyed steady growth, posting double digit growth rates since 2004. This trend, with only minor deceleration in growth, is expected to continue towards 2013. The global application software market generated total revenues of $78.4 billion in 2008, representing a compound annual growth rate (CAGR) of 11% for the period spanning 2004-2008. Americas accounted for 40.1% of the global application software market’s value, generating revenues of $31.4 billion. In comparison, Europe generated total revenues of $25.1 billion, equivalent to 32% of the market's overall value. The performance of the market is forecast to follow a similar pattern, with an anticipated CAGR of 10.8% for the five-year period 2008-2013, which is expected to drive the market to a value of $131 billion by the end of 2013.
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MARKET VALUE
CHAPTER 2
MARKET VALUE
The global application software market grew by 11.2% in 2008 to reach a value of $78.4 billion. The compound annual growth rate of the market in the period 2004-2008 was 11%. Table 1:
Global Application Software Market Value: $ billion, 2004-2008
Year
$ billion
% Growth
2004 2005 2006 2007 2008
51.5 56.9 63.2 70.4 78.4
10.40% 11.00% 11.50% 11.20%
CAGR, 2004-2008:
11.0%
Source: Datamonitor
Figure 1:
DATAMONITOR
Global Application Software Market Value: $ billion, 2004-2008
% Growth
90 80 70
11.6% 11.4% 11.2%
60 50 40 30
11.0% 10.8% 10.6% 10.4%
20 10 0
10.2% 10.0% 9.8% 2004
Source: Datamonitor
2005
2006
2007
% Growth
$ billion
$ billion
2008
DATAMONITOR
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MARKET SEGMENTATION
CHAPTER 3
MARKET SEGMENTATION
The Americas form 40.1% of the global application software market's value. Europe accounts for a further 32% of the market's global value. Table 2:
Global Application Software Market Segmentation: % Share, by Value, 2008
Geography
% Share
Americas Europe Asia-Pacific Rest of the World
40.10% 32.00% 22.90% 5.00%
Total
100.0%
Source: Datamonitor
Figure 2:
DATAMONITOR
Global Application Software Market Segmentation: % Share, by Value, 2008 Rest of the World 5% Asia-Pacific 22.9%
Americas 40.1%
Europe 32%
Source: Datamonitor
DATAMONITOR
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MARKET SHARE
CHAPTER 4
MARKET SHARE
Microsoft accounts for 13.9% of the global application software market's value. SAP holds a further 6.8% of the market's global value. Table 3:
Global Application Software Market Share: % Share, by Value, 2008
Company
% Share
Microsoft SAP Oracle Other
13.90% 6.80% 6.70% 72.60%
Total
100.0%
Source: Datamonitor
Figure 3:
DATAMONITOR
Global Application Software Market Share: % Share, by Value, 2008
Microsoft 13.9% SAP 6.8%
Oracle 6.7%
Other 72.6%
Source: Datamonitor
DATAMONITOR
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FIVE FORCES ANALYSIS
CHAPTER 5
FIVE FORCES ANALYSIS
The application software market will be analyzed taking producers of application software as players. The key buyers will be taken as small and medium-sized organizations and enterprises, governmental agencies, and similar bodies, and employees, hardware devices and software development tool providers as the key suppliers.
5.1
Summary Figure 4:
Forces Driving Competition in the Global Application Software Market, 2008
Intensity of competition
Buyer Pow er 5 Weak
Strong
4 3
Degree of Rivalry
2
Supplier Pow er
1 0
Threat of Substitutes
New Entrants
Score for each force is mean of scores for its drivers. Total area & color indicates intensity of competition overall. Source: Datamonitor
DATAMONITOR
Customers in this market include small and medium-sized organizations and enterprises, governmental agencies, and similar bodies. Market players have a wide variety of potential buyers. Some of these buyers are large companies who have greater powers of negotiation, although application software is often crucial to the smooth running of any modern day to day business and an ever-important area of the IT industry. Supplier power is strong in this market since success requires skilled developers/programmers. Entry to the market requires a high level of technical expertise and significant investment in R&D activity. The application software market is fragmented, although it contains a number of large players such as Microsoft and Oracle. Cost cutting and consolidation are commonplace in this market.
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FIVE FORCES ANALYSIS
5.2
Buyer Power Figure 5:
Drivers of Buyer Power in the Global Application Software Market, 2008
Strength of buyer power
Weak
Strong
Product dispensability
Buyer size 5 4
Oligopsony threat
3 Buyer independence
2
Low -cost sw itching
1 0 Backw ards integration
Undifferentiated product
Financial muscle
Tendency to sw itch Price sensitivity
Scores: 1= weak driver...5=strong driver Source: Datamonitor
DATAMONITOR
Some buyers are large companies that have greater negotiating power, and the loss of such customers may have a detrimental effect on market players’ revenues. However, market players have a wide variety of potential buyers, and large firms are unlikely to rely on any one buyer for the majority of their revenues. This weakens buyer power to an extent. Application software is often crucial to the smooth running of any modern day business and an ever-important area of the IT industry, thus weakening buyer power further. Moreover, switching costs for a number of buyers are high since this can include re-training staff on new applications. In some cases, application software is custom-made for a buyer, often requiring training and support. Switching costs in this case are likely to be higher. Brand awareness in this market is high, although customers are more likely to be interested in the quality and specifications of application software. Despite the size of a number of customers, their reliance on market players means that buyer power within this market is assessed as weak overall.
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FIVE FORCES ANALYSIS
5.3
Supplier Power Figure 6:
Drivers of Supplier Power in the Global Application Software Market, 2008
Strength of supplier power
Weak
Strong
Forw ard integration
Differentiated input
Supplier size 5 4 3 2 1 0
Importance of quality/cost No substitute inputs
Oligopoly threat
Sw itching costs
Player independence Player dispensability
Scores: 1= weak driver...5=strong driver Source: Datamonitor
DATAMONITOR
Companies offering application software require various inputs including suitably skilled employees, hardware devices and software tools. Success in this market requires skilled developers/programmers and other employees. If players are unable to retain key employees, their ability to develop and deliver successful products and services may be adversely affected. Effective succession planning is also important to long-term success. Failure to ensure the effective transfer of knowledge and smooth transitions involving key employees could hinder strategic planning and execution. These factors can be viewed as imposing a high switching cost for these suppliers of skilled labor. Inputs such as hardware components are often purchased from sole suppliers. Such suppliers are often large companies offering differentiated products, resulting in significant supplier power. There is some possibility for vertical integration backwards in this market, in that applications can be written using development tools that are made by the same company. For example, Microsoft produces implementations of programming languages such as C++, as well as applications written using such languages. Supplier power in this market is strong overall.
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FIVE FORCES ANALYSIS
5.4
New Entrants Figure 7:
Factors Influencing the Likelihood of New Entrants in the Global Application Software Market, 2008
Likelihood of new entrants
Low -cost sw itching 5 Market grow th Undifferentiated product 4 3 Weak brands Scale unimportant 2
Weak
Strong
Little IP involved
Suppliers accessible Distribution accessible
1 0
Low fixed costs
Little regulation Incumbents acquiescent
Scores: 1= weak driver...5=strong driver Source: Datamonitor
DATAMONITOR
Application software development is labor intensive, since it ultimately depends on highly skilled software architects and coders. Ownership of key intellectual property is immensely important to the success of companies and, furthermore, success in this market is heavily dependent on technical expertise. In a market where new products and new versions of existing products - are frequently launched, R&D investment is important. Short product life cycles within the industry necessitate constant innovation and R&D spending. R&D is key to creating differentiated products, as innovations can be sold at premium prices. However, access to distribution channels has been made easier in recent years through the development and uptake by end-users of broadband Internet access. This allows software to be purchased, delivered, and updated without the need for physical media. Software companies may concentrate on developing expertise in a relatively narrow market, hoping to dominate and then expand their niche, and the entry of a small company may be made possible by developing applications in small niches or producing custom products for individuals.
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FIVE FORCES ANALYSIS
Established companies, relying on an existing business image, may be unwilling to trust smaller, less established companies, offering larger market players an advantage. Regulation in this market is not particularly onerous. Also, although major players such as Microsoft have been embroiled in anti-trust lawsuits in Europe, there are few specific regulatory requirements for software companies. Overall, there is a moderate likelihood of new entrants to this market.
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FIVE FORCES ANALYSIS
5.5
Substitutes Figure 8:
Factors Influencing the Threat of Substitutes in the Global Application Software Market, 2008
Threat of substitutes
Low -cost sw itching 5 Weak
Strong
4 3 2 1 0
Beneficial alternative
Cheap alternative
Scores: 1= weak driver...5=strong driver Source: Datamonitor
DATAMONITOR
Substitutes in this market are open source and similar software products. Rather than fund their business on big-ticket license contracts, some open source companies such as Red Hat receive revenues from services and maintenance. Open source software is a beneficial alternative for many end users. This is because most of it allows users to redistribute the software and adapt it themselves, and it is often a lower cost alternative. However, Microsoft insists that the open source business model is anti-competitive, and will cause traditional players such as themselves to lose revenue. Piracy is a further alternative that can have a detrimental effect on player revenues. Overall, the threat of substitutes is moderate.
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FIVE FORCES ANALYSIS
5.6
Rivalry Figure 9:
Drivers of Degree of Rivalry in the Global Application Software Market, 2008
Degree of rivalry
Weak
Competitor size 5 Zero-sum game? Number of players 4 3 Storage costs Low -cost sw itching 2 1 0 Similarity of players Undifferentiated product Strong
Lack of diversity Hard to exit
Low fixed costs Easy to expand
Scores: 1= weak driver...5=strong driver Source: Datamonitor
DATAMONITOR
The application software market has a small number of large market players such as Microsoft and Oracle, although it is fragmented overall. Consolidation is commonplace in this market, with major deals including the $10.3 billion takeover of PeopleSoft by Oracle Corporation in 2005. Microsoft also continues to acquire smaller operators and forge partnerships. Advances in technology mean that products are continually being introduced to the market, enhancing rivalry as players struggle to compete. A number of market players operate in a diverse range of markets; Microsoft has expanded into other markets such as video game consoles, servers and storage software, and digital music players. Such diversification eases rivalry to an extent. Overall, rivalry in this market is moderate.
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LEADING COMPANIES
CHAPTER 6
6.1
LEADING COMPANIES
Microsoft Corporation Table 4:
Key Facts: Microsoft Corporation
Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:
1 Microsoft Way, Redmond, Washington, 98052 6399, USA 1 425 882 8080 1 425 936 7329 www.microsoft.com June MSFT NASDAQ
Source: Company Website
DATAMONITOR
Microsoft Corporation (Microsoft) develops, manufactures, licenses, and supports software products for many computing devices. Its software products consist of operating systems, server applications, information worker productivity applications, business solution applications, high-performance computing applications, and software development tools. Microsoft also develops the MSN network of Internet products and services. The company primarily operates in the US. It is headquartered in Redmond, Washington and employs about 91,000 people. It provides consulting and product support services; and trains and certifies computer system integrators and developers. The company sells the Xbox 360 video game console, the Zune digital music and entertainment device, PC games and peripherals. Online offerings are delivered through its Windows Live, Office Live, and MSN portals and channels. Microsoft divides its business into five segments: Microsoft business, client, server and tools, entertainment and devices,, and online services business. Microsoft's business division consists of Microsoft Office system and Microsoft Dynamics business solutions. Microsoft Office system products are designed to increase personal, team, and organization productivity through a range of programs, services, and software solutions. Microsoft Dynamics products provide business solutions for financial management, customer relationship management, supply chain management, and analytics applications for small and mid-size businesses, large organizations, and divisions of global enterprises.
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LEADING COMPANIES The client segment provides technical architecture, engineering and product delivery for the Windows operating system family, and maintains relationships with personal computer manufacturers, including multinational and regional original equipment manufacturers (OEMs). It also undertakes the delivery of Windows products to individual and commercial clients. This segment covers products like Windows XP Professional and Home, Media Center Edition, Tablet PC Edition, and other standard Windows operating systems. The company released Windows Vista, the most recent version of the Windows operating system, in FY2007. Windows Vista includes advances in security, digital media, user interfaces, and other areas that enhance the user and developer experience. Server and tools segment develops and markets software server products, services, and solutions. Windows Server-based products are integrated server infrastructure and middleware software designed to support software applications and tools built on the Windows Server operating system. Windows Server-based products include the server platform including targeted segment solutions, database, storage, management and operations, service-oriented architecture platform, and security and identity software. The segment also builds standalone and software development lifecycle tools for software architects, developers, testers, and project managers. The company offers a broad range of consulting services and provides product support services and industry solutions. The company also provides training and certification to developers and information technology professionals about its Server and Tools and Client platform products. Major releases from Server and Tools in FY2008 included Windows Server 2008 and Visual Studio 2008. In FY2009, the company is planning to release Microsoft SQL Server 2008 which will deliver advances in database scalability, performance, security, and policy-based management. The entertainment and devices division (EDD) is responsible for developing, producing, and marketing the Xbox video game system, including consoles and accessories, third-party games, games published under the Microsoft brand, and Xbox Live operations, as well as research, sales, and support of those products. In addition to Xbox, the company offers the Zune digital music and entertainment device; PC software games; online games; mediaroom, Internet protocol television software; mobile and embedded device platforms, Surface computing platform; and other devices.
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LEADING COMPANIES EDD also leads the development efforts of the company's line of consumer software and hardware products including application software for Macintosh computers and Microsoft PC hardware products, and is responsible for all retail sales and marketing for Microsoft Office and the Windows operating systems. The online services business (OSB) consists of an on-line advertising platform with offerings for both publishers and advertisers, personal communications services such as email and instant messaging, online information offerings such as Live Search, and the MSN portals and channels around the world. During FY2008, the company launched new releases of Windows Live Search, the Windows Live suite of applications and services, and updated MSN Video Service. In addition, Microsoft launched a new release of adCenter, the company's proprietary advertising platform Key Metrics Table 5:
Key Financials: Microsoft Corporation
Metric Revenues Net Income Profit Margin Total Assets Total Liabilities Employees
2004 36,835.0 8,168.0 22.2% 94,368.0 79,399.0 57,000
2005 39,788.0 12,254.0 30.8% 70,815.0 22,700.0 61,000
2006 48,282.0 12,599.0 26.1% 69,597.0 50,696.0 71,000
2007 51,122.0 14,065.0 27.5% 63,171.0 32,074.0 79,000
2008 60,420.0 17,681.0 29.3% 72,793.0 36,507.0 91,000
All in $ millions, except for employee numbers and margins Source: Company Filings
Revenues & Profitability: Microsoft Corporation
US$ Millions
Revenues
Net Income
Profit Margin
70,000
35.0%
60,000
30.0%
50,000
25.0%
40,000
20.0%
30,000
15.0%
20,000
10.0%
10,000
5.0%
0
0.0% 2004
2005
2006
2007
Profit Margin (%)
Figure 10:
DATAMONITOR
2008
Year
Source: Company Filings
DATAMONITOR
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LEADING COMPANIES 6.2
Oracle Corporation Table 6:
Key Facts: Oracle Corporation
Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:
500 Oracle Parkway, Redwood Shores, California 94065, USA 1 650 506 7000 1 650 506 7200 www.oracle.com May ORCL New York
Source: Company Website
DATAMONITOR
Oracle is one of the world's foremost enterprise software companies. Oracle offers database, middleware, and applications software, related training and consulting services in business strategy, technology and business applications, and software upgradation to customers across a range of industries, government agencies, educational institutions and resellers. The company also provides expertise on Linux operating system to its customers through global support programs like Oracle Unbreakable Linux Support. The company operates in the US, Europe, Middle East and Asia and functions through five main business divisions: new software licenses, software license updates and product support, consulting, on demand, and education. Oracle markets its products through a network of subsidiary sales and service organizations located worldwide. Oracle's globally established subsidiaries license and sell its products in the respective local markets. In foreign markets where it does not have direct sales subsidiary, Oracle supplements its direct product distribution with indirect sales channels which comprise members of the Oracle PartnerNetwork. Partnernetwork is the global network of companies, independent software vendors, system integrators, resellers and distribution alliances, who provide the clients with independent applications supported by the company's software. The company has operations in the US, UK, France, Germany, Japan, and other foreign countries. New software licenses comprise the licensing of database and middleware software that covers Oracle Database and Oracle Fusion Middleware as well as applications software. Oracle's relational database enables secure storage, manipulation and retrieval of all forms of data including structured data in business applications, XML data, analytics data, spatial data and other unstructured data such as documents, spreadsheets and images.
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LEADING COMPANIES Oracle Fusion Middleware is a broad product family that enables development, deployment and integration of business applications and automation of business processes. Oracle's application software enables efficient management of all core business functions including customer relationship management (CRM), enterprise performance management (EPM), enterprise resource planning (ERP) and industryspecific applications. Software license updates and product support provide rights to unspecified software product upgrades, maintenance releases and patches released during the term of the support period. Product support includes internet and telephone access to technical support personnel located in global support centers, as well as internet access to technical content and Oracle's unbreakable Linux support to the customers using Linux platforms. The company's services segment is further classified in to three sub segments: consulting, on demand and education. Consulting services caters to the customer requirements in deploying the company's applications and technology products. Consulting services include business strategy and analysis, business process optimization, product implementation, enhancement, and upgrades and ongoing managed services. On demand services are concerned with the provision of software and hardware management and maintenance services to the customers deploying database, middleware and applications software. Education services include provision of training facilities to the customers, partners and employees through courses covering Oracle's product offerings.
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LEADING COMPANIES Key Metrics Table 7:
Key Financials: Oracle Corporation
Metric Revenues Net Income Profit Margin Total Assets Total Liabilities
2004 10,156.0 2,681.0 26.4% 12,763.0 4,866.0
2005 11,799.0 2,886.0 24.5% 20,687.0 9,850.0
2006 14,380.0 3,381.0 23.5% 29,029.0 14,017.0
2007 17,996.0 4,274.0 23.7% 34,572.0 17,653.0
2008 22,430.0 5,521.0 24.6% 47,268.0 24,243.0
All in $ millions, except for margins Source: Company Filings
Revenues & Profitability: Oracle Corporation
US$ Millions
Revenues
Net Income
Profit Margin
25,000
27.0%
20,000
26.0%
15,000
25.0%
10,000
24.0%
5,000
23.0%
0
Profit Margin (%)
Figure 11:
DATAMONITOR
22.0% 2004
2005
2006
2007
2008
Year
Source: Company Filings
DATAMONITOR
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LEADING COMPANIES 6.3
SAP AG Table 8:
Key Facts: SAP AG
Address: Telephone: Fax: Website: Financial Year-End: Ticker: Stock Exchange:
Dietmar Hopp Allee 16, 69190 Walldorf, DEU 49 6227 7 47474 49 6227 7 57575 www.sap.com December SAP New York
Source: Company Website
DATAMONITOR
SAP is among the major enterprise software companies of the world. The company specializes in providing enterprise resource planning packages to six industry sectors: process, discrete, consumer, service, financial services and public services. The company primarily operates in 50 countries across the world through its subsidiaries and partners but primarily in Germany and the US. It is headquartered in Walldorf, Germany and employs 43,861 people. The operations of the company are divided into three segments: product, consulting, and training. The company's software solutions and services offerings include SAP solution portfolio, SAP applications and SAP services. The SAP solution portfolio comprises solutions for large enterprises and solutions for small and midsize enterprises. For large enterprises, the company offers more than 25 tailor-made portfolios for industries. Solution portfolios for industries are created by SAP through generalpurpose applications, industry-specific applications, service-enabled composite applications, and partner products. These portfolios support industry-specific business processes using software that is tailored to various roles in a business. For small and midsize enterprises, the company offers the SAP Business One application and SAP All-in-One solutions. SAP Business One targets small businesses with fewer than one hundred employees and offers capabilities for managing a small business such as bookkeeping, reporting, sales and marketing, purchasing, warehousing and inventory. It is developed by SAP and delivered by SAP channel partners who provide local services and support. SAP All-in-One solutions are designed to meet the requirements of midsize companies of up to 2,500 employees, and offer preconfigured industry-specific solutions for rapid deployment. SAP All-in-One solutions are developed and sold by SAP, and deployed and supported by either SAP or an experienced partner.
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LEADING COMPANIES SAP applications are the main building blocks of SAP solution portfolios for industries. They provide the software foundation with which organizations address their business issues. SAP delivers the following types of applications: Generalpurpose applications which include the SAP Business Suite family of business applications comprising SAP ERP (which further consists of SAP ERP Human Capital Management (SAP ERP HCM), SAP ERP Financials, SAP ERP Operations, and SAP ERP Corporate Services); SAP Customer Relationship Management (SAP CRM); SAP Product Lifecycle Management (SAP PLM); SAP Supply Chain Management (SAP SCM); and SAP Supplier Relationship Management (SAP SRM); Industryspecific applications, which perform defined business functions in particular industries. These applications often are delivered as add-ons to general-purpose applications, particularly to the SAP ERP application and SAP xApps composite applications which perform functions spanning multiple applications, departments, and organizations. These applications are designed to reuse, integrate, and orchestrate enterprise services that are provided by SAP NetWeaver. The SAP services portfolio of service offerings include consulting, education, support, custom development, and managed services. The service offerings are categorized into software-related services as well as professional and other services. Softwarerelated services include support services provided by the SAP Active Global Support organization and custom development provided by the SAP Custom Development organization. The professional and other services include consulting, education, and managed services. SAP generates revenues through three business divisions: product , consulting and training.The product segment's operations primarily include marketing and licensing of software products, performing software development services, and maintenance services. The segment's maintenance services include technical support for the company's products, assistance in resolving problems, providing user documentation, updates and other support for software products, new versions, and support packages. The consulting segment assists customers in the implementation of SAP software products. Consulting services also include customer support in project planning, feasibility studies, analysis, organizational consulting, system adaptation, system optimization, release change, and interface setup. SAP's training segment provides educational services on its software products and related topics catering to end-users and partners. Training services include traditional classroom training at SAP training facilities, customer and partner-specific training, end-user training, as well as e-learning. SAP's educational services are supported by its software, services and tools.
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LEADING COMPANIES Key Metrics Table 9:
Key Financials: SAP AG
Metric 2003 Revenues 10,279.3 Net Income 1,575.9 Profit Margin 15.3% Total Assets 9,256.5 Total Liabilities 3,827.9 All in $ millions, except for margins
2004 10,994.9 1,918.3 17.4% 11,098.8 4,376.6
2005 12,456.7 2,189.0 17.6% 13,227.8 4,767.3
2006 13,757.5 2,737.7 19.9% 13,905.3 4,926.8
Source: Company Filings
Figure 12:
2007 14,986.6 2,808.0 18.7% 15,168.1 5,652.5
DATAMONITOR
Revenues & Profitability: SAP AG Revenues
Net Income
Profit Margin
16,000
25.0% 20.0%
12,000 10,000
15.0%
8,000 10.0%
6,000 4,000
5.0%
Profit Margin (%)
US$ Millions
14,000
2,000 0
0.0% 2003
2004
2005
2006
2007
Year
Source: Company Filings
DATAMONITOR
Global - Application Software Š Datamonitor (Published April 2009)
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MARKET FORECASTS
CHAPTER 7
7.1
MARKET FORECASTS
Market Value Forecast In 2013, the global application software market is forecast to have a value of $131 billion, an increase of 67.1% since 2008. The compound annual growth rate of the market in the period 2008-2013 is predicted to be 10.8%. Table 10:
Global Application Software Market Value Forecast: $ billion, 2008-2013
Year
$ billion
% Growth
2008 2009 2010 2011 2012 2013
78.4 87.1 96.7 107.3 118.7 131.0
11.20% 11.10% 11.10% 10.90% 10.70% 10.30%
CAGR, 2008-2013:
10.8%
Source: Datamonitor
Figure 13:
DATAMONITOR
Global Application Software Market Value Forecast: $ billion, 2008-2013
% Growth
140
11.4%
120
11.2%
100
11.0% 10.8%
80
10.6%
60
10.4%
40
10.2%
20
10.0%
0
% Growth
$ billion
$ billion
9.8% 2008
Source: Datamonitor
2009
2010
2011
2012
2013
DATAMONITOR
Global - Application Software Š Datamonitor (Published April 2009)
Page 28
APPENDIX
CHAPTER 8
8.1
APPENDIX
Methodology Datamonitor Industry Profiles draw on extensive primary and secondary research, all aggregated, analyzed, cross-checked and presented in a consistent and accessible style. Review of in-house databases – Created using 250,000+ industry interviews and consumer surveys and supported by analysis from industry experts using highly complex modeling & forecasting tools, Datamonitor’s in-house databases provide the foundation for all related industry profiles Preparatory research – We also maintain extensive in-house databases of news, analyst commentary, company profiles and macroeconomic & demographic information, which enable our researchers to build an accurate market overview Definitions – Market definitions are standardized to allow comparison from country to country. The parameters of each definition are carefully reviewed at the start of the research process to ensure they match the requirements of both the market and our clients Extensive secondary research activities ensure we are always fully up-to-date with the latest industry events and trends Datamonitor aggregates and analyzes a number of secondary information sources, including:
-
National/Governmental statistics International data (official international sources) National and International trade associations Broker and analyst reports Company Annual Reports Business information libraries and databases Modeling & forecasting tools – Datamonitor has developed powerful tools that allow quantitative and qualitative data to be combined with related macroeconomic and demographic drivers to create market models and forecasts, which can then be refined according to specific competitive, regulatory and demand-related factors Continuous quality control ensures that our processes and profiles remain focused, accurate and up-to-date
Global - Application Software © Datamonitor (Published April 2009)
Page 29
APPENDIX 8.2
Industry Associations World Information Technology and Services Alliance (WITSA) 8300 Boone Boulevard, Suite 450, Vienna, VA 22182-2633, USA Tel: 1 571 265 5964 Fax: 1 703 893 1269 http://www.witsa.org
8.3
Related Datamonitor Research Datamonitor Industry Profiles Global IT Consulting & Other Services Global Specialty Retail Global IT Services Global Data Processing & Outsourced Services Global Systems Software Global Computer Storage & Peripherals Global Computers & Peripherals Global Electronic Equipment Manufacturers Global Electronic Manufacturing Services Global Multi-Utilities Global Telecommunication Services
Global - Application Software Š Datamonitor (Published April 2009)
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