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Global Software Top 100 Edition 2011: The Highlights
Written by Michel van Kooten   
Tuesday, August 23 2011 14:15

The largest software companies in the world together generated software revenues of over $235 billion in 2010, an increase of 7% compared to 2009 ($220 billion). The top 10 companies, lead by Microsoft (#1), accounted for over 60% of that huge amount. Microsoft is by far the largest software company in the world, as it has been ever since the first publication of the Global Software Top 100 list in 2003. Last year, Microsoft alone increased its software revenues another $5 billion to a world record of $54.3 billion.

The Top 10

TOP 10 LARGEST SOFTWARE COMPANIES
Rank Company
1 Microsoft
2 IBM
3 Oracle
4 SAP
5 Ericsson
6 HP
7 Symantec
8 Nintendo
9 Activision Blizzard
10 EMC
While Microsoft fortified its leading position with strong results, Oracle (#3) posted a growth percentage of 12.8%, the highest in the top 10, further strengthening its 3rd place. Sun Microsytems was added to its long series of acquisitions and Oracle now challenges IBM's second place in the Global Software Top 100. IBM is still an allround IT company with leading positions in software, IT services and hardware. The Big Blue company embarked on a 5-year software expansion mission in 2009, aiming to double its software revenues, but despite several acquisitions IBMs software division grew only 5.1% last year.

In 2010, SAP (#4) decided in February 2010 not to extend the contract of CEO Leo Apotheker. SAP’s software revenues grew 11% compared to 2009. Apotheker signed on as CEO of HP (#6 on our list) in November 2010.

Ericsson is still the fifth largest software company in the world, despite 4% lower software revenues in 2010. Other telco software companies like Nokia Siemens Networks and Alcatel-Lucent experienced similar software revenue decreases due to lower telco network investments. Nokia Siemens Networks dropped out of the top 10 because of this decrease. Storage giant EMC took over its postion in the top 10.

Gaming powerhouse Nintendo lost a few places and is now 8th on the list. Nintendo saw the largest revenue decline of all companies, this was however not unexpected and not uncommon in the highly cyclical gaming market. Nintendo grew amazingly in 2008 and 2009 because of the Wii successes. This trend could not be continued, but Nintendo remains the largest gaming company in the world.

Countries

SOFTWARE PRODUCING COUNTRIES
Country Number of companies
United States
 63
Japan 10
France 6
United Kingdom
 4
Germany 3
China 2
Canada 2
Netherlands 2
South Korea 2
Other 6
Most large software companies are headquartered in the USA, 63 companies in this year's Global Software Top 100 are US based. But non-US software companies are on the rise – big time. Last year, the list counted 35 non-US companies (now 37), and two years ago only 26 companies were headquartered outside of the US. Japan and France are 2nd and 3rd on the list of software-producing countries. Canada now has two companies in the top 100 with the entry of Constellation Software (the other one is RIM, the blackberry maker).

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 departures

Eight new entries made it to the Top 100 this year; Informatica is the highest new entry of the list at position 74. Other new companies include Tibco (#89), Emerson (#93), Blackboard (#94), Micro Focus (#95), and Constellation Software (#98).

Among the departures are Sun Microsystems and Sybase after being acquired by Oracle and SAP respectively. Real, PGi, Acision and FICO did not make the revenue threshold this year.

A few acquisitions have taken place recently that will affect next year's Software Top 100, but the companies remained in this list because the deals were closed after year-end 2010. Intergraph (#69) for instance was recently bought by Swedish company Hexagon, and will not return in the 2012 list.

Fast growing software companies

FAST GROWING SOFTWARE COMPANIES
Company Growth
Intel Corporation 54.8%
NetEase.com
 51.8%
Misys
 45.3%
Google
 42.5%
F5 39.5%
Giant technology companies Intel (#58) and Google (#79) use their large resources to diversify activities. Even with software accounting for less than 2% of total revenues, Intel and Google have quickly established a prominent place in the software top 100.

Intel is of course primarily a hardware company (see: hardware top 100). The company entered the software top 100 last year as a result of the Wind River acquisition. This year, Intel is the fastest growing company in the top 100. The acquisition of security software maker McAfee (closed on February 28th 2011) will boost software revenues even further.

Google has also expanded the activities beyond internet search. Advertising provides the bulk of total revenues,  other revenues, including software revenues have risen sharply in the last 3 years.

NetEase.com has been one of the fastest growing software companies in recent years, as online gaming became very popular, especially in Asia. Last year, growth halted for NetEase, and the company did not make the threshold for the top 100. In 2010, NetEase got back on the growth path and re-enters the fast growth list and the global software top 100 as #100.

Outlook

As financial institutions are by far the largest customer segment for the software industry, generating an estimated 30% of all software industry income, the credit crisis impacted software companies around the globe. However the impact was not as severe as some analysts expected.

The general assumption that the software industry is a very cyclical industry  implies that software companies would see a decline even bigger than the financial industry, but that assumption is wrong. Software companies nowadays depend mostly on recurring subscription, support and maintenance revenue streams.

The maintenance/subscription revenue stream is generally based on multi-year contracts and hence a very stable source of income. This explains why the credit crisis did not cause much mayhem among the Software Top 100, although there were many instances of modest single digit revenue declines due to decreased license sales.

With a looming dollar crisis ahead, we expect to see a similar financial picture in the coming two years as we did during the credit crisis.

During the past 12 months we've seen an increase in software patent deals and software patent battles. As most of the new patent requests being filed at the US Patent Office are software patents, patents have become a business themselves.

As the industry has matured, and innovation has become incremental instead of disruptive, new patents generally have less meaning then the ones posted in the early days. Hence the patent war has shifted from filing as many patents as possible to buying as many patents as possible.

Recent multi-billion dollar patent deals can be seen in this light, and we expect them to be only the beginning. Buying patents will become a regular item in the software industry, and it will be a major cash outflow in coming years. As patents are seen as investments, they will not have an immediate effect on company profits, however in the long term this effect will be undeniable.

More information

The full 2011 list of largest software companies in the world >>
The previous (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 >>
 
Top 100 software companies in the United States 2010
Written by Balder Verberne   
Largest software companies in USA
Rank Company Revenues
1 Microsoft 49,090
2 IBM 21,396
3 Oracle 18,582
4 HP 6,183
5 Symantec 5,565
Source: US Software Top 100

The largest software companies in the United States are Microsoft, IBM and Oracle. Together they also form the Top 3 software firms in the world. The ten largest software companies in the US made close to 120 billion USD revenues from software in 2009.

Microsoft is unrivaled as the largest software company in the list, raking in twice the software revenues of IBM. Oracle held on to its acquisitive strategy and strengthened its 3rd position. Oracle and CA were the only companies in the top 10 to increase software revenues in 2009. In the rest of the list, there are companies with impressive growth rates.

Fast growing US software companies

Fast growing software companies in USA
Rank Company Growth
1 Intel 67.8%
2 Salesforce.com 24.2%
3 McAfee 21.3%
4 Blackboard 20.8%
5 Rosetta Stone 20.3%
Source: US Software Top 100
Intel is the fastest growing software company in the United States. The processor-maker decided to go software a few years ago, and every year a software company is added to its ranks. Intels recent growth spurt can be attributed to the acquisition of Wind River, an embedded software gem that had been shining in several editions of the Software Top 100. The 2010 acquisition of anti-virus software maker McAfee will Intel into the Top 25 US Software makers. And as Intel continues to earn billions in free cashflows from its successful chip business, we predict more large acquisitions in the near future: with Intel's buying power, a Top 10 position is among the possibilities.

Salesforce.com has been one of the fastest growing software companies in the last 3 years. Now reaching over 1 billion USD software revenues, the company continues to show stellar performance, driven by its successful online business model. The online CRM company, that says it is not a software company but a services company, is now the 20th software company in the US.

Security software was one of the sectors that grew modestly in 2009, despite the economic downturn. McAfee managed to increase revenues with more than 20%, partly as a result of takeovers and partly organic. In 2009, the main acquisition concerned MX Logic, a deal worth 140 million USD. In August 2010 McAfee itself was acquired by Intel.

Blackboard and Rosetta Stone, both active in educational software were also among the fastest growing software companies last year. Blackboard went public in 2004 and has more than threefolded revenues since then by automating schools from front-end to back-end. Its stock price doubled, and Blackboard software is now used in 5,000 educational institutions worldwide.

Rosetta Stone makes world leading language learning software for 31 languages. The company went public on the NYSE in 2009. In 2010, Rossetta Stone expects revenues to increase with around 7%.

Red Hat is just outside the fast growth top 5, nevertheless the company showed strong growth of 18.3%. The world's largest Linux distributor in terms of revenues, and a leading open source company, Red Hat is now the 37th largest software company in the US.

Largest employers

Largest software employers in USA
Rank Company Employees
1 IBM 398,455
2 GE 300,000
3 HP 172,000
4 Emerson 140,000
5 Oracle 80,219
Source: US Software Top 100
Despite layoffs in the sector during the crisis, the technology companies are important employers. Four companies employ over 100,000 people worldwide. IBM leads the list, employing close to 400,000.

During the last three decades, the IT industry has been the fastest growing industry in terms of employee headcount, and IT jobs generally pay premium salaries as qualified IT personnel is hard to find. For those interested, a short list of software employers currently hiring can be found on our jobs page.

Outlook

Roughly 75% of the world's largest software companies have their roots in the United States. Although we expect the software industry in Europe and Asia to grow at a faster pace, this will not impact the hegemony of the US in the world of software, because the American giants have enough free cashflow to buy attractive fast-growing software companies in Europe and Asia, and pick up some US neighbours as well. That said, 2011 will be a year with many acquisitions.

The successes of Software-as-a-Service and Open Source software are likely to continue for many years ahead, giving momentum to the likes of Salesforce.com and Red Hat, and resulting in higher positions in the next edition of the US Software Top 100.

Links

The previous edition of the US Software Top 100.
The article accompanying the previous edition of the US Software Top 100.
 
Global Software Top 100 Edition 2010: The Highlights
Written by Balder Verberne   
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.
In one of the most difficult years for the software industry to date, 46 of the 100 largest companies had lower software revenues than in the previous year. Still, the average revenue growth of the Software Top 100 was 3.2%, as some companies continued to post healthy growth figures.

Leaders

TOP 10 LARGEST SOFTWARE COMPANIES
Rank Company
1 Microsoft
2 IBM
3 Oracle
4 SAP
5 Ericsson
6 Nintendo
7 HP
8 Symantec
9 Nokia Siemens Networks
10 Activision Blizzard
A record number of 38 software companies made over a billion dollars of software revenue in 2009. For comparison, seven years ago, only 15 software companies posted revenue figures above one billion.

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.

Countries

SOFTWARE PRODUCING COUNTRIES
Country Number of companies
United States
 65
Japan 10
France 6
United Kingdom
 4
Germany 3
China 2
Netherlands 2
South Korea 2
Other 6
Most large software companies are headquartered in the USA, 64 companies in this year's Global Software Top 100 are US based*. But non-US software companies are on the rise – big time. Last year, the list counted 26 non-US companies, this year the number grew to 35! Japan and France are 2nd and 3rd on the list of software-producing countries. Both countries have 2 companies more in the top 100 than last year.

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 departures

Forteen 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

FAST GROWING SOFTWARE COMPANIES
Company Growth
NCSoft 99,6%
Nexon Corporation 70,3%
Intel Corporation 67,8%
Square Enix 62,1%
Totvs 51,1%
Autonomy 47,2%
Shanda Interactive 40,2%
Kaspersky Lab 33,3%
Capcom 31,8%
Sopra Group
 26,3%
The 10 fastest growing companies achieved impressive growth percentages. Software revenues of these companies are range in revenues from $400 million to $900 million. Two companies from South Korea lead the way.

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.

Sectors

The 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.
More about the Top 25 gaming companies >>

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.
More about the top security software companies >>

Outlook

Although 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 information

The 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 >>
 
Top 25 gaming companies 2010
Written by Michel van Kooten   
Tuesday, August 03 2010 07:45
Nintendo leads the ranking of gaming companies, based on software revenues. Gaming has become big business, especially during the last decade: the industry grew at double digit rates until last year. The online gaming segment is still booming, resulting in fast growth of the leading companies in this market.
Read more...
 
The top 25 companies in the world
Written by Balder Verberne   
Monday, August 02 2010 12:01
This list of the 25 largest companies in the world is evidence of the enormous size of today’s oil and gas companies: they hold 11 positions in the list. High oil prices have boosted their revenues – and their profits. Automotive companies and finance companies follow, each with 4 companies between the world’s top 25.
Read more...
 
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LISTS AND RESEARCH

  • list Global Software Top 100 - Edition 2011
    • The Global Software Top 100 is a list of the world's largest software companies, ranked by annual software revenues. The list is based upon revenue information of 10,000+ IT companies worldwide.
  • Software industry trends (2011)
    • This research article (accompanying the Global Software Top 100) describes changes in the software industry playing field. It analyses trends and key players and forecasts future developments.
  • Top hardware companies
    • A list of the world's largest hardware companies.
  • What happens in the hardware industry?
    • Trends and analysis of the hardware industry and its key players.
  • Top IT services companies
    • A list of the world's largest IT services companies, ranked by annual services revenues. This link will take you to www.servicestop100.org.
  • IT services companies: healthy growth
    • What is happening in the IT services industry? Read this research publication to find out about trends and key players in the IT services industry.
  • Top gaming companies (2010)
    • Entertainment is good business, and gaming software companies are growing faster than the rest of the software industry. This research article discusses trends and key players in the gaming business.
  • Top ERP companies
    • A research publication about the world's leading players in enterprise software.
  • Top security software companies
    • A research publication discussing the world's leading publishers of security software: antivirus-, spamfiltering-, intrusion detection- and firewall software.
  • The fastest growing software companies
    • This research publication reveals the fastest growing software companies in the world.
  • CRM companies: a short list
    • A short list of the leading software companies selling Customer Relationship Management software; aimed at IT managers looking to purchase CRM software.
  • Top software companies in the US (2010)
    • A list of the largest software companies in the United States, ranked by annual software revenues. 2010 Edition, posted 15 December 2010.
  • U.S. software industry trends (2010)
    • A research publication discussing the trends and the key players in the software industry in the United States. Posted 15 December 2010.
  • Top companies in the world (not just software)
    • A general list of the largest companies in the world, ranked by revenues. Not just software companies; in fact, there are no software companies in it...
  • Top IT companies
    • A list of the largest IT companies in the world, ranked by annual revenues. Includes hardware, software and services.
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