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| KN72013 |
| KEY NOTE COMPUTER SOFTWARE : June 2003 |
| Overview |
Editor: Dominic Fenn
ISBN:
1-84168-515-1
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This report covers: computer
software, software market, system software, applications software, application
tools,
Companies covered include:
Hewlett-Packard, IBM United Kingdom, LogicaCMG, Microsoft, Misys, Novell,
Oracle, The Sage Group, SAP, SchlumbergerSema, Torex,
Download A4 print-size PDF version of these pages (with order
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Executive Summary Table of Contents
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Engine| Executive Summary 1 |
| 1. Market Definition 7 |
| REPORT COVERAGE 7 |
| Licence Agreements 7 |
| MARKET SECTORS 8 |
| Systems Software 8 |
| Infrastructure Systems Software 8 |
| Applications Tools Software 8 |
| Applications Software 9 |
| MARKET TRENDS 9 |
| Large-Scale Projects On Hold 9 |
| Software Must Prove Its Value 9 |
| E-Business Drives Demand 10 |
| ECONOMIC TRENDS 10 |
| MARKET POSITION 11 |
| The UK 11 |
| Table 1: Share of the UK Computer Market Taken by Spending on Software ( percent), 1999-2003 11 |
| Overseas 12 |
| Table 2: Share of the European and World Software Markets Taken by the UK ( percent), 2002 and 2003 12 |
| 2. Market Size 13 |
| THE TOTAL MARKET 13 |
| UK Market Value 13 |
| Table 3: The UK Computer Software Market by Sector by Value (£m at final selling prices), 1999-2003 13 |
| Software Piracy 14 |
| Table 4: UK Software Revenue Lost to Piracy, and the UK Piracy Rate (£m at msp, percent and $m at msp), 1999-2003 14 |
| Market Shares 15 |
| Table 5: The Largest Software Companies in the UK by Market Share by Value ( percent), 2002 15 |
| BY MARKET SECTOR 16 |
| Systems Software 16 |
| Table 6: The UK Systems Software Market by Value (£m at final selling prices), 1999-2003 16 |
| Market Shares 17 |
| Table 7: The Leading Systems Software Suppliers in the UK by Market Share by Value ( percent), 2002 18 |
| Applications Software 18 |
| Table 8: The UK Applications Software Market by Value (£m at final selling prices), 1999-2003 18 |
| Market Shares 19 |
| Table 9: The Leading Applications Software Suppliers in the UK by Market Share by Value ( percent), 2002 20 |
| 3. Industry Background 21 |
| RECENT HISTORY 21 |
| Systems Software 21 |
| Applications Software 21 |
| INDUSTRY SYNOPSIS 22 |
| Table 10: Average Financial Performance of Software Consultancy and Supply Companies† (£000, percent and £), 2001 22 |
| NUMBER OF COMPANIES 23 |
| Table 11: Number of UK VAT-Based Enterprises Engaged in Software Consultancy and Supply by Turnover Sizeband (£000, number and percent), 2002 23 |
| Table 12: Number of Intellect Members Active in Specific Packaged-Software Markets, March 2003 24 |
| DISTRIBUTION 25 |
| The Main Software Distribution Channels 25 |
| Direct Sales 25 |
| Sales Through Resellers 25 |
| Methods of Distribution 25 |
| HOW ROBUST IS THE MARKET? 27 |
| LEGISLATION 27 |
| KEY TRADE ASSOCIATIONS 28 |
| Business Software Alliance 28 |
| Federation Against Software Theft 28 |
| Intellect 29 |
| 4. Competitor Analysis 30 |
| THE MARKETPLACE 30 |
| Market Structure 30 |
| Microsoft versus the Rest 30 |
| MARKET LEADERS 31 |
| Computer Associates UK Ltd 31 |
| Company Structure 31 |
| Current and Future Developments 31 |
| Financial Results 32 |
| Hewlett-Packard Ltd 32 |
| Company Structure 32 |
| Current and Future Developments 32 |
| Financial Results 33 |
| IBM United Kingdom Ltd 33 |
| Company Structure 33 |
| Current and Future Developments 34 |
| Financial Results 34 |
| LogicaCMG PLC 34 |
| Company Structure 34 |
| Current and Future Developments 35 |
| Financial Results 35 |
| Microsoft Ltd 35 |
| Company Structure 35 |
| Current and Future Developments 35 |
| Financial Results 36 |
| Misys PLC 36 |
| Company Structure 36 |
| Current and Future Developments 36 |
| Financial Results 37 |
| Novell UK Ltd 37 |
| Company Structure 37 |
| Current and Future Developments 37 |
| Financial Results 38 |
| Oracle Corporation UK Ltd 38 |
| Company Structure 38 |
| Current and Future Developments 38 |
| Financial Results 38 |
| The Sage Group PLC 39 |
| Company Structure 39 |
| Current and Future Developments 39 |
| Financial Results 39 |
| SAP (UK) Ltd 39 |
| Company Structure 39 |
| Current and Future Developments 40 |
| Financial Results 40 |
| SchlumbergerSema 40 |
| Company Structure 40 |
| Current and Future Developments 41 |
| Financial Results 41 |
| Torex PLC 41 |
| Company Structure 41 |
| Current and Future Developments 42 |
| Financial Results 42 |
| Other Companies 42 |
| OUTSIDE SUPPLIERS 44 |
| Most Activity Remains Inside the Industry 44 |
| Manufacturing a Key Outside Activity 44 |
| ADVERTISING AND PROMOTION 45 |
| Main Media Expenditure 45 |
| Table 13: Main Media Advertising Expenditure by Computer Software Companies by Type of Software (£000 and percent), Year to December 2002 45 |
| Table 14: The Largest Main Media Advertisers in the UK Computer Software Industry (£000), Year to December 2002 47 |
| Trade Events 47 |
| Table 15: Selected Major Trade Events for the Computer Software Industry, 2003 48 |
| 5. Strengths, Weaknesses, Opportunities and Threats 49 |
| STRENGTHS 49 |
| WEAKNESSES 49 |
| OPPORTUNITIES 50 |
| THREATS 50 |
| 6. Buying Behaviour 51 |
| CUSTOMER PROFILE 51 |
| Businesses 51 |
| Table 16: Breakdown of Business IT Expenditure by Industry Sector by Value ( percent), 2000 and 2002 51 |
| Consumers 53 |
| Table 17: Ownership and Use of Computers in the UK ( percent of adults), 1998, 2000 and 2002 53 |
| 7. Current Issues 55 |
| THE IMPORTANCE OF THE `THREE I'S' 55 |
| THE ENTERPRISE AND THE DESKTOP MERGE 55 |
| Portal Convergence 55 |
| The Search for the Middle Ground 56 |
| SOFTWARE RENTAL AND SOFTWARE AS A SERVICE 57 |
| Software Rental 57 |
| Application Service Provision 57 |
| Legacy Software a Problem 58 |
| Utility Pricing 58 |
| MICROSOFT'S LEGAL BATTLE 59 |
| LICENSING PROBLEMS 59 |
| 8. The Global Market 61 |
| THE TOTAL MARKET 61 |
| Table 18: The Global Market for Packaged Software by World Region by Value ( percent), 1999-2003 61 |
| THE FUTURE 62 |
| 9. Forecasts 63 |
| INTRODUCTION 63 |
| FORECASTS 2004 TO 2008 63 |
| Table 19: The Forecast UK Computer Software Market by Sector by Value (£m at final selling prices), 2004-2008 63 |
| FUTURE TRENDS 64 |
| 10. Company Profiles 65 |
| COMPUTER ASSOCIATES UK LTD 66 |
| Hewlett-Packard Ltd 68 |
| Ibm United Kingdom Ltd 70 |
| Logicacmg Plc 72 |
| Microsoft Ltd 74 |
| Misys Plc 76 |
| Novell Uk Ltd 78 |
| Oracle Corporation Uk Ltd 80 |
| The Sage Group Plc 82 |
| Sap (uk) Ltd 84 |
| Torex Plc 86 |
| 11. Further Sources 88 |
| Associations 88 |
| General Sources 88 |
| Bonnier Information Sources 89 |
| Government Publications 90 |
| Other Sources 90 |
| The UK computer software market was worth an estimated £7.14bn in 2002, with sales forecast to increase to £7.27bn in 2003. The market is split almost 50:50 between systems software and applications software. |
| The market saw virtually no value growth in 2002, and growth in 2003 is expected to be less than 2 percent. This reflects the contraction in IT budgets over the last couple of years, with major clients increasingly taking a hard-nosed look at the value of new software and buying on the basis of its return on investment. |
| However, there are some bright spots in the market. In particular, demand is being driven by products related to e-business — especially tools that tie together Web-based systems and older systems, and that improve the performance of databases. The `Three I's' — the Internet, integration and intelligence — are becoming top software priorities for IT buyers. The main growth areas in the market are systems software for business-process management, enterprise application integration and Web services (especially integrated enterprise suites), and applications software related to business tasks such as customer service, operational control and human capital. |
| Competition in the software market is intensifying as the markets for desktop products and enterprise products increasingly merge. Vendors that traditionally focused on either the desktop or the enterprise as their main business are now moving into each other's territory. Enterprise portals are increasingly shaping the competitive landscape, and traditional enterprise application vendors are targeting small and medium-sized businesses, an ever more lucrative market, intensifying competition in this area. |
| The software market is also facing changes in its delivery models and licensing structures as the concepts of software rental and application service provision (ASP) start to have an impact on the market. Licensing models are of importance to many client companies — especially as new legislation makes the penalties for the ownership of unlicensed software much harsher, and as major vendors introduce new, often complex, volume licensing deals. |
| The software market is entering a mature phase of growth, in which consolidation and a struggle for market share will be key features. Software development costs are set to rise, and this will result in a growing pressure on companies to either gain in scale or gain in niche focus. The big will get bigger, while the small will either go out of business or target specific niches. |
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