Asia Pacific’s enterprise software market revenue is forecast to reach $22.1 billion in 2010, posting a 10.2 per cent growth, according to Gartner, Inc an information technology research and advisory company. This represents an upturn from the expected 6.6 per cent growth in 2009, which is a notable slowdown compared to 2008 growth of 13.8 per cent. Within the region, the volatile economy is said to be impacting the application software segment more than the infrastructure software segment.
Despite the recent slowdown in growth, Asia Pacific still has a positive outlook over the five-year forecast period from 2008 through to 2013, achieving a compound annual growth rate (CAGR) of 10.8 per cent, the highest of any region worldwide. For the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6 per cent, 12.4 per cent and 10.7 per cent respectively). Mature markets like Australia and Singapore will also have attractive CAGRs, of 9.5 per cent and 9.4 per cent respectively, says the report.
China and India continue to benefit from a large domestic customer base and government stimulus packages, as well as relatively low market penetration. Australia and Singapore’s revenue, according to the report, is supported by a consistent maintenance revenue stream and a strong vendor channel and service infrastructure, as well as positive expectations for end-user software budget increases in 2010.
“Asia Pacific will have a more positive outlook as compared to Europe and North America and as a result, major vendors will continue to target higher-growth markets in the region,” said Yanna Dharmasthira, research director, Gartner. “However, business customers continue to have a strong bargaining power in the region. Some Asia Pacific markets have been traditionally more price-sensitive, a situation that is even more pronounced in the downturn. We expect to see more intense vendor competition in Asia Pacific, from multinational vendors as well as prominent local country vendors.”
India is the fourth-largest market in the region with an expected growth of 10.1 per cent in 2009 and 11.8 per cent growth in 2010. While its economy is also impacted by the economic downturn, India has the advantage of being less dependent on exports than China. India’s largely untapped market, combined with a strong pool of IT skills, is expected to uphold local software demand.
China will continue to lead software demand in the region, with a 12.2 per cent growth rate in 2009 and 14.5 per cent growth in 2010. Although China’s high dependency on exports is significantly impacting its economic growth in 2009, the government’s stimulus package cushions the negativity.
“Asia Pacific will continue to have significant positive potential for future IT investment because of its relatively low penetration and is supported by a large base of domestic uses. With the economic slowdown, end-user organizations will prioritize IT as a way to cut costs and enhance their organizational efficiency and competitiveness, which is critical in the current environment,” said Dharmasthira.
Infrastructure software represents 64.4 per cent of enterprise software spending in Asia Pacific in 2010. The bulk of infrastructure software spending is made up of operating systems, database and security software segments. Data integration tools and virtualisation software will have the fastest CAGRs in the next 5 years, says the report.
Although application software spending will have a slower growth rate than infrastructure software spending, during the next five years it is projected to grow at a solid 9.9 per cent. ERP and office suites will remain the largest segments throughout the forecast period, while web conferencing and project and portfolio management (PPM) will have the fastest CAGRs, says Gartner.
