IDC: $5.6B Application Server Software Market Forecasts 2005-2010

The worldwide application server software revenue is expected to grow under 5% CAGR between  to reach $5.6 billion in 2010 from $4.5 billion in 2005, according to a latest IDC study. However IDC estimates that the number of servers handling workload associated with application server software will increase at a compound annual growth rate of nearly 11% over the 2005-2010 forecast period. 
  • Distributed application servers accounted for nearly 56% of the overall ASSP market, with $2.5 billion in revenue in 2005.
  •  By 2010, the distributed portion of the market will account for nearly 63% of total ASSP revenue. 
  • IBM was the overall ASSP market leader in 2005 with 43% market share, followed by BEA and Oracle. 
  • The top 3 vendors (IBM, BEA, and Oracle) accounted for 72% of the overall ASSP market in 2005, while No.4 Microsoft registered the fastest growth.

Here is the full IDC release on Worldwide Application Server Software 2006-2010:

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Application Server Software Platform Deployments Expected to Outstrip Revenue Growth, According to IDC

FRAMINGHAM, Mass., December 20, 2006 – The worldwide market for application server software platforms (ASSPs) grew nearly 6% in 2005 to reach $4.5 billion in revenue, according to a new report from IDC. Looking ahead, IDC forecasts the number of servers handling workload associated with application server software will increase at a compound annual growth rate of nearly 11% over the 2005-2010 forecast period. ASSP revenue growth, however, is expected to grow at less than half that pace, reaching $5.6 billion in 2010.

"There are several trends driving revenue growth in the ASSP market going forward, as well as negative trends that will slow growth," said Maureen Fleming, program director, Business Process Automation and Deployment at IDC. "Factors that will encourage growth include increased transaction volumes from applications built on BPM and SOA, adoption of application server virtualization, introduction of application server appliances, and the sale of deployment software bundles in the midmarket. Meanwhile, factors such as extreme transaction processing, adoption of higher-performance servers, and commoditization of application server software will dampen the market's revenue growth."

The ASSP market includes application server software and transaction processing server software, which often perform similar functions. To provide better visibility into market trends, IDC reclassified the market into legacy and distributed platforms, based on the following criteria: distributed platforms are built on J2EE, .NET, or Windows programming models while legacy platforms are built on older programming models, such as CICS or CORBA. Transaction processing software was classified as legacy. This change also enabled the inclusion of Windows Server 2003 revenue where Windows Server 2003 is used as an application or Web server by Microsoft customers.

At $2.5 billion in revenue in 2005, distributed application servers accounted for nearly 56% of the overall ASSP market. By 2010, the distributed portion of the market will account for nearly 63% of total ASSP revenue. In comparison, the legacy market held a 44% share of the overall market in 2005 with only slight growth expected over the forecast period.

Key highlights from the 2005 ASSP market include the following:

  • IBM was the overall ASSP market leader in 2005 with 43% market share, followed by BEA and Oracle. The top 3 vendors accounted for 72% of the overall market in 2005.
  • Microsoft, appearing for the first time in IDC's ASSP vendor share study, had the fastest growth (29.7%) among the top vendors in 2005 and captured the number 4 position in the overall market.
  • The distributed application server software market was led by BEA in 2005 with 24.2% of the market, followed closely by IBM and Oracle. The top 3 vendors dominated the market with 67% of total revenue. Microsoft was the number 4 vendor with all of its revenues coming in this market segment.
  • The $2 billion legacy market grew faster than the distributed market and was nearly the same size in revenues in 2005. The legacy ASSP market was dominated by IBM with 68% share, followed by BEA and Micro Focus. Growth was led by Borland and Hitachi.

The IDC study, Worldwide Application Server Software 2006-2010 Forecast and 2005 Vendor Shares (IDC #204706), provides 2005 vendor shares and a 2006-2010 forecast for the application server software platform markets, as well as a detailed look at the two functional markets within the ASSP segment. In addition, this study assesses the growth impact of several key market trends.

The study reflects changes that were made to IDC's software taxonomy at the beginning of 2006. The changes include the removal of the functional market previously called Web server software, which is now counted in the ASSP market, and the addition of the functional market called industry-specific application deployment software. IDC sizes the ASSP market based on sales of freestanding application server software – applications bundled with another type of software are not measured in this model. Market share is based on software revenue, which includes new license revenue and maintenance revenue.

 

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