IDC Puts the Worldwide Packaged Software Market at $154 Billion in 1999 System Infrastructure Emerges as the Fastest-Growing Segment

FRAMINGHAM, Mass.– 01/25/2000 — Packaged software ended the millennium as a $154 billion market — 14.5% larger than it was in 1998. According to IDC, growth in the market will continue in the 14% range as the 21st century gets into full swing.

During 1999, the fastest growth in the market came from the system infrastructure segment. Its revenues jumped 16%, approaching $48 billion. "Much of the growth in the system infrastructure market is being driven by two trends: the concept of a high-volume, low-price market and the need to manage all of the complexities of deploying, securing, and assuring the availability of the many complex and heterogeneous system infrastructures now being used in large enterprises," said Tony Picardi, senior vice president of IDC's global software research.

Both of the packaged software market's other major segments also performed strongly in 1999. The applications development and deployment segment outperformed the overall market with a 14.7% increase, and the market's largest segment, applications, grew 13.3% to $70 billion.

Not surprising, Microsoft is the market's largest vendor, and it grew faster in 1999 than it did in 1998. It

increased its revenues 25.9%, compared with 21.7% growth last year, to $17.4 billion and 11.3% of the market.

While Microsoft was the largest vendor, BMC Software was the fastest growing. It increased its revenues almost 33%. Compuware was the only other vendor to beat Microsoft's growth rate, with a 29.6% jump.

Major trends to keep an eye out for in this market include the Internet's push into the software channel and the emergence of application service providers.

"Application service providers are among the players that have emerged to help redefine how software is delivered and supported, challenging software vendors to either become application service providers themselves or to support this model," Picardi said. "ASP proliferation will occur in 2000, followed by an inevitable shakeout."

IDC recently published Packaged Software: 1999 Worldwide Performance Preliminary Results (IDC #B21248). This report looks at the major trends in the worldwide software market in 1999. It shows vendors' 1999 revenues and market shares for the overall market as well as for each of the following segments: system infrastructure software, application development and deployment, and applications. For each segment, the market's 1999 performance is discussed, key growth drivers are examined, leading vendors are analyzed, and an outlook through 2003 is presented. To order a copy of the report, contact Cheryl Toffel at 1-800-343-4952, ext. 4389 or at ctoffel@idc.com. If you are interested in IDC's Software research programs, contact Pat Duhl at 949-442-4038 or at pduhl@idc.com.

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