| KN72015 |
| KEY NOTE Market Report : Computer Software : March 2005 |
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This report covers: computer software
Companies covered include: BMC Software, Hewlett-Packard, IBM UK,MIcrosoft, Oracle, the Sage Group, SAP Institute, Symantec, Atos Origin, BEA Systems, EMC Corporation, Fujitsu, LogicaCMC, Misys, Siebel Systems, Unisys, Leisure and Entertainment Software, Activison UK, Atari, Codemasters, Eidos Electornic Arts, Konami of Europe, Nintendo of Europe, Sega Europe, Sony Computer Entertainment, Take-Two Interactive Software, THQ, Ubisoft, Vivendi Universal Games,
| Executive Summary |
| 1. Market Definition |
| REPORT COVERAGE |
| Licence Agreements |
| MARKET SECTORS |
| Business Software |
| Business Systems Software |
| Business Applications |
| Leisure and Entertainment Software |
| MARKET TRENDS |
| New Life in the IT Market |
| Buyers More Hard Headed Than in the Past |
| E-Business — A Driver of Demand |
| Standardisation of Infrastructure Technology |
| Software Piracy |
| Software Rental |
| Application Service Provision |
| Utility Pricing |
| ECONOMIC TRENDS |
| Population |
| Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003 |
| Gross Domestic Product |
| Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003 |
| Inflation |
| Table 3: UK Rate of Inflation (%), 1999-2003 |
| Unemployment |
| Table 4: Actual Number of Unemployed Persons in the UK (million), 1999-2003 |
| MARKET POSITION |
| The UK |
| Table 5: The Share of the UK Computer Industry Taken by Computer Software Expenditure (%), 2000-2004 |
| Overseas |
| 2. Market Size |
| THE TOTAL MARKET |
| Table 6: The Total UK Computer Software Market by Value (£m at final selling prices), 2000-2004 |
| BY MARKET SECTOR |
| Business Software |
| Table 7: The UK Business Software Sector by Value (£m at final selling prices), 2000-2004 |
| Market Shares |
| Table 8: The Largest Business Software Companies in the UK by Value Sales (%), 2004 |
| Leisure and Entertainment Software |
| Table 9: The UK Leisure and Entertainment Computer Software Sector (£m at final selling prices), 2000-2004 |
| Market Shares |
| 3. Industry Background |
| RECENT HISTORY |
| INDUSTRY SYNOPSIS |
| Table 10: Average Financial Performance of Software Consultancy and Supply Companies (£000, % and £), 2004 |
| NUMBER OF COMPANIES |
| Table 11: Number of UK VAT-Based Enterprises Engaged in the Publishing of Software by Turnover Sizeband (number and %), 2004 |
| EMPLOYMENT |
| Table 12: Number of UK VAT-Based Local Units Engaged in the Publishing of Software by Employment Sizeband (number of employees and %), 2004 |
| DISTRIBUTION |
| Direct Sales to Clients |
| Sales Directed Through Resellers |
| HOW ROBUST IS THE MARKET? |
| LEGISLATION |
| KEY TRADE ASSOCIATIONS |
| Business Application Software Developers Association |
| Business Software Alliance |
| European Information, Communications and Consumer Electronics Technology Industry Association |
| Entertainment & Leisure Software Publishers Association |
| Federation Against Software Theft |
| Intellect |
| 4. Competitor Analysis |
| THE MARKETPLACE |
| MARKET LEADERS |
| Business Software |
| BMC Software Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Computer Associates PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Hewlett-Packard Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| IBM United Kingdom Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Microsoft Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Oracle Corporation UK Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| The Sage Group PLC |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| SAP (UK) Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| SAS Institute |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Symantec (UK) Ltd |
| Company Structure |
| Current and Future Developments |
| Financial Results |
| Other Companies |
| Atos Origin |
| BEA Systems |
| EMC Corporation |
| Fujitsu |
| LogicaCMG |
| Misys PLC |
| Research Machines |
| Siebel Systems |
| Unisys |
| Leisure and Entertainment Software |
| Activision UK Ltd |
| Atari United Kingdom Ltd |
| Codemasters Group Ltd |
| Eidos PLC |
| Electronic Arts UK |
| Konami of Europe GmbH |
| Nintendo of Europe GmbH |
| Sega Europe Ltd |
| Sony Computer Entertainment Europe Ltd |
| Take-Two Interactive Software Inc |
| T.HQ (Holdings) Ltd |
| Ubisoft Ltd |
| Vivendi Universal Games UK Ltd |
| OUTSIDE SUPPLIERS |
| Most Activity Remains Inside the Industry |
| Manufacturing a Key Outside Activity |
| MARKETING ACTIVITY |
| Main Media Advertising Expenditure |
| Table 13: Main Media Advertising Expenditure on Computer Software by Type (£000), Year Ending September 2004 |
| Table 14: Main Media Advertising Expenditure on Computer Software by Main Investors by Type (£000), Year Ending September 2004 |
| Exhibitions and Trade Shows |
| Major Exhibitions — 2005 |
| Major Exhibitions — 2006 |
| 5. Strengths, Weaknesses, Opportunities and Threats |
| STRENGTHS |
| WEAKNESSES |
| OPPORTUNITIES |
| THREATS |
| 6. Buying Behaviour |
| CUSTOMER PROFILE |
| Business Customers |
| By Industry Sector |
| Table 15: Breakdown of Business IT Expenditure by Industry Sector (%), 2002-2004 |
| Production Industries |
| Financial Services |
| Public Sector |
| New Business Buying Patterns |
| Consumers |
| Table 16: Penetration of Computer Activities in the Evening and at the Weekend by Sex, Age, Social Grade and Region (% of adults), 2004 |
| PC Ownership |
| Table 17: Ownership and Use of Computers in the UK (% of adults), 1998, 2000, 2002 and 2004 |
| 7. Current Issues |
| NEW CODE OF PRACTICE |
| OPEN-SOURCE SOFTWARE |
| A Growing Competitive Threat |
| Open Source Advantage Begins to Wear Off |
| TAILOR-MADE APPLICATIONS |
| SMES — A NEW BATTLE GROUND |
| LICENSING PROBLEMS |
| 8. The Global Market |
| THE TOTAL MARKET |
| Table 18: Estimated Regional Breakdown of the Global Packaged Computer Software Market by Value (%), 2001-2004 |
| MAJOR COMPANIES |
| 9. Forecasts |
| INTRODUCTION |
| The Economy |
| FORECASTS 2005 TO 2009 |
| Table 19: The Forecast Total UK Computer Software Market by Sector by Value (£m at final selling prices), 2005-2009 |
| Table 20: Forecast Growth in the UK Computer Software Market (%), 2005-2009 |
| FUTURE TRENDS |
| More Strategic Acquisitions and Alliances |
| Open-Source Software |
| Rising Licence Costs |
| 10. Company Profiles |
| Bmc Software Ltd |
| Hewlett-Packard Ltd |
| Ibm United Kingdom Ltd |
| Microsoft Ltd |
| Oracle Corporation Uk Ltd |
| The Sage Group Plc |
| Sap (uk) Ltd |
| Symantec (uk) Ltd |
| 11. Further Sources |
| Associations |
| General Sources |
| Government Publications |
| Bonnier Information Sources |
| In 2004, the total UK computer software market was worth £8.8bn at final selling prices, a rise of 8.3% on 2003. This marked a recovery from the 3.5% decline in sales experienced in 2003. |
| In this Key Note Market Report, computer software covers only packaged software products, which is taken to include both business, and leisure and entertainment software. In contrast with previous editions of this report, games software is also included. Business software can be divided into two main categories: business systems software and business applications. In 2004, business software, which is the main focus of the report, accounted for 84.7% of the total computer software market. |
| Between 2000 and 2003, the market grew relatively slowly, as the business sector experienced difficult trading conditions. Shortened planning cycles within organisations meant that IT budgets were evaluated on a short-term basis. As a result, organisations provided finance only for software products that had the necessary functionality for their tactical projects and larger-scale strategic projects were placed on hold. In 2004/2005, budgets have changed somewhat, with larger-scale strategic projects now coming back into fashion. The IT market is experiencing more new projects from firms to enhance their systems, in terms of both applications and infrastructure. |
| The computer software market is increasingly competitive and the constant need to launch new products and titles, and to develop new technologies is intensifying. In this environment, scale advantages are increasing. Although the market has always been driven by successful new products — which require significant investment in production and marketing — the amount of investment required is growing, primarily as a result of the rising costs associated with the development and marketing of new software. Consequently, the availability of significant financial resources is becoming a more competitive and discriminating factor in the industry. |
| Although businesses are now spending more on IT products, selling into this market has become more difficult. Organisations are taking a more hard-headed and systematic approach to buying software. Fashion and the desire to have the latest products have given way to buying tried and tested products with a track record on delivery, return on investment (ROI) and improvement in operations. In this environment, major organisations have become more willing to consider buying cheaper, open-source software and this willingness is extending into the public sector. |
| Between 2005 and 2009, the computer software market is forecast to increase relatively strongly compared with the growth experienced over the past 5 years (2000 to 2004). Leisure software is expected to expand at a much faster rate than business software. In both the business, and leisure and entertainment sectors of the market, the industry will consolidate, as success will increasingly rely on advantages of scale. In the business software sector, this will mean greater investment and partnering of infrastructure suppliers with vertical application suppliers. In this sector, licensing costs might grow in the 2005/2006 period as multicore chip technology and server virtualisation become mainstream |
Text © 2005Key Note
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Last updated by Amanda Porteous 2005
