|Global Software Top 100 Edition 2010: The Highlights|
|Wednesday, September 29 2010 13:29|
The largest software companies in the world together generated software revenues of over $220 billion in 2009. The top 10 companies accounted for over 60% of that huge amount. Microsoft is by far the largest software company in the world, as it has been since the inception of the Global Software Top 100 list in 2003.
Microsoft, IBM and Oracle are the top 3 software companies, with Microsoft bringing in more software dollars than IBM and Oracle combined.
Remarkably, no changes have taken place in the top 10 of the Software Top 100 compared to last year. This is does not mean the sector has come to a standstill. Competition between technology giants seems to have increased as Microsoft, Google and Apple started to challenge each other on their traditional terrains. The battle horns sounded in the software arena upon the introductions of Bing, Android, iOS and Chrome OS (coming soon). Even though the impact of some of these introductions are insignificant in sales figures at this moment, they can – and will- stir up the industry in the longer term.
Oracle held on to its acquisitive growth strategy, taking over Sun Microsystems (#53) in a transaction worth $7.4 billion. The takeover formally took effect in January of 2010. In this year's list, Sun is still ranked separately.
In the top 10, Oracle and Ericsson are the only companies that managed to increase software revenues this year. HP and Nokia Siemens Networks retained their positions, despite software revenue declines of close to 15%.
Salesforce.com (#31), the largest software-as-a-service company, made over a billion dollar software revenues and became the fastest growing billion dollar software company.
Companies from developing economies play a minor role in the global software industry, but signs of fast growth are clearly visible in China, Russia and Brazil. South Korean software companies also made great strides on the path towards Global Software Top 100 recognition.
Arrivals and departuresForteen new entries made it to the Top 100, some thanks to revenue growth, some as a result of increased research efforts and better financial disclosure. The new arrivals are: General Electric, Wolters Kluwer, Cerner, NetApp, Nexon Corporation, NCSoft, SAIC, Intel Corporation, Verint, Sopra Group, Epic Sytems, Totvs, Pgi and Inspur.
Among the departures are Lockheed Martin, NEC and Acxiom after editorial re-evaluation and/or better financial disclosure. Omniture, SPSS and Wind River were acquired in 2009. Eight other companies did not make the list as a result of the increased revenue threshold.**
Fast growing software companies
NCSoft is this year's fastest growing company at almost 100%. In the previous list NCSoft fell just outside the Software Top 100: now the company is proudly ranked 71st with software revenues of $549 million. A maker of online games, NCSoft is known for successful titles like Lineage, Exteel, Guild Wars and Aion.
Nexon Corporation is an even larger online gaming company from Korea. The most successful game of Nexon is MapleStory. With sofware revenues of $608 million, the company is now the 65th largest software company in the world.
Autonomy and Kaspersky managed to be in the fast growth top 10 for the second consecutive year.
Intel, one of the largest hardware companies in the world, entered the Software Top 100 after buying Wind River, a producer of embedded software.
Apart from Intel, all companies in the top 10 are from outside the US. This could signal a trend of companies in upcoming markets catching up with the US. Totvs (Brazil), Shanda (China) and Kaspersky (Russia) are all leading software companies growing at high speed.
Totvs is the first South American company in the Software Top 100. The Brazilian software company expanded its operations heavily in recent years, and operates in 23 countries now. Totvs is a top 10 ERP company worldwide.
Square Enix, a Japanese gaming company, took over Eidos in 2009, which contibuted to fast revenue growth. Capcom, the other Japanese video gaming company in this list, also very strong results in 2009.
SectorsThe gaming sector in general operates with mixed results, some of the fast growing video gaming companies of last year saw revenues decline. All gaming companies with revenues of over 1 billion USD saw their sales decrease. On the other hand, their smaller colleagues did extremely well: 5 out of 10 fastest growing companies are gaming companies.
Since gaming has moved onto the internet, online games are quickly becoming big business, and 3 pure-play online gaming companies are in the fast growth top 10. Asian companies lead the online trend.
Security and antivirus software companies performed well, a continued trend of recent years. While Symantec saw revenues decrease slightly (-2,2%), Trend Micro (+4,5%), McAfee (+21,3%), Check Point (+20,7%) and Kaspersky (+33,3%) all grew above average.
OutlookAlthough the economy is dull, 2010 will be a better year for the software industry. Corporate investment budgets are growing again, and corporate cost-cutters are leaving the IT departments alone, resulting in new license sales.
Big cash flows from maintenance contracts continue to finance very acquisitive behaviour among many of the biggest software companies, year after year. Large acquistions that have already taken place in 2010 are: SAP-Sybase, Intel-McAfee, Oracle-SUN. IBM does not buy large companies, but they certainly buy a lot of them. IBMs stated focus on software acquisitions is bound to drive more acquisitions for several years to come. As the number of successful newborne software companies is decreasing year after year, the flurry of acquisitions results in consolidation. The Top 10 companies increase in size, and represent an ever larger share of the world's software sales.
The only sure way not to be acquired is to have a stubborn large shareholder, usually the person who founded the company. Take SAS institute for instance. All its competitors (Cognos, Hyperion, Business Objects) were acquired, but CEO/founder Jim Goodnight will not sell his baby.
The credit crisis abruptly stopped acquisitions by private equity firms. As most PE firms use a limited time frame for their investments (usually seven years), we may see some selling on their behalf, as soon as the price is right. Large software companies owned by private equity are: SunGard and Infor.
More informationThe full 2010 list of largest software companies in the world >>
A list of top US software companies can be found here >>
A full research overview can be found here >>