Application developers` recent third quarter results show that the software market`s recovery will continue to be slow with long selling cycles, intense competition and scepticism over value propositions, according to research firm Gartner.
Gartner says in a new report that examination of a sample of application developers` results bear out its forecasts of a compound annual growth rate of 5.2%, or $4.45 billion in 2007. "The most likely growth scenario for 2003 is 3%, which is consistent with vendor financial results, market data and our current forecast."
The sample companies and their results cited by Gartner are:
- Borland Software: Licence revenue grew 2.5% to $47.2 million and total revenue grew 16% from the third quarter of 2003.
- Compuware: Licence revenue was $59.4 million, a 31.7% decline year-over-year; total revenue declined 15.4% year-over-year.
. Embarcadero Technologies: Licence revenue grew 3.2% to $6.8 million, and total revenue grew 9.1% year-over-year.
- Mercury Interactive: Licence revenue grew 7.2% to $47.2 million, and total revenue grew 28.8% year-over-year.
- Segue Software: Licence revenue declined 20% to $3 million; however, total revenue grew 5.9% year-over-year.
- Radview Software: Licence revenue fell 11.9% to $585 000 and total revenue declined 8.7% year-over-year.
Gartner says that while the third quarter results are from a small sample of publicly traded application development software vendors, they do reflect slow software spending as the research firm had predicted in September 2003. Those forecast assumes that recovery from the economic downturn and the roll-out of Web services will unfold slowly and gradually as enterprises start spending cautiously on IT.
Gartner recommends that vendors should strive to show a measurable return on investment (ROI) in six months or less.
"The most attractive ROI proposition is a fast, quantifiable reduction in the cost of the customer`s direct business processes: for example, in its demand chain processes," Gartner says.
Share
