(Via Bweek) While there are signs of broad industry consolidation, the $190 billion software industry is expanding,not contracting and definitely not reaching maturity or commodity status. Hundreds of new software companies quietly enter the market every year, boosting the industry's overall size. Private-equity firms invested $1.1 billion in first-time funding for more than 200 software companies in 2004.
Software did not stop being essential to streamlining and integrating strategic business operations. The typical enterprise has deployed thousands of software applications. Making them all work together is a profound challenge. Enterprises need the horizontal integration of varied systems, combined with sophisticated software tools and business intelligence analysis programs to allow the real-time use of all the information software generates. This desire to integrate is creating pressure - and strong incentives - for software providers to expand beyond their traditional areas of expertise or acquire smaller players. Rather than reaching maturity, the industry has come to an "inflection point." By and large clients may not buy software just to boost productivity. Instead,they'll invest in software (and services) to redesign business models and the way work gets done.
That shift is creating opportunities across an industry as a complex "ecosystem" of newer, small companies align with more established players. Expansion of the software market is fueled by programming standards and open-source software, lowering the entry barriers.Although company names and products will continue to change over time, the software industry will evolve to meet ever-growing customer demands.We shall see an influx of innovative new players, private and corporate investment, and a healthy expansion of the industry. The need for software and services would keep improving for times to come. Gartner's predicts 5% growth for the industry while J.P.Morgan estimates growth to be at 4% for 2005. These are significant numbers considering the huge base of existing business.
Category :Software, Emerging Trends.