IBM outpaces competitors with new server licences

IBM recorded more revenue growth from new licences than any other application server software vendor last year, according to...

IBM recorded more revenue growth from new licences than any other application server software vendor last year, according to research from Gartner Dataquest.

The worldwide application server market suffered a severe slowdown last year as companies curtailed IT spending. New licence revenue grew 20%, to £810m in 2001 but the rate of year-on-year growth was down from 92% in 2000, Gartner Dataquest said.

IBM outpaced the market with new licence revenue growth of 71%, giving it a 31% share of the market, up from 22% in 2000. Rival and market leader BEA Systems increased its market share by 1% to 34% in 2001, with revenue growing 23%, according to the research.

"The net result of the IT spending slowdown and the more cautious tone for emerging new software companies made IBM a safe bet and helped it pull in more application server revenue," Joanne Correia, vice-president of Dataquest's Software Industry Research Group, said.

BEA and IBM are clear market leaders. Sun Microsystems, Iona Technologies and Sybase are next in line with 9%, 3% and 1% of the market, respectively.

Gartner Dataquest highlighted two trends in the market. The first is a split with IBM and BEA offering high-end products that can handle millions of transactions per minute, while other vendors cater to those with lesser needs.

A second trend is a move by vendors to follow the likes of Oracle and Fujitsu and bundle application servers with other products, creating a new segment Dataquest refers to as "application platform suites".

The trend of packaging application servers with other technologies will "increase dramatically" in 2002, Correia said.

Dataquest predicts that the application server market will grow at a 22% compound annual growth rate to be worth just under £2.2bn by 2006.

Research group IDC, which also released its application server software platform market forecast this week, expects the market to reach almost £3bn by 2006.

IDC agrees with Dataquest that the market "failed to show the phenomenal growth in 2001 that it showed in the previous two years," but sees significant opportunities for vendors as the economic situation improves.

IDC also says the gap between market leader BEA and IBM has "narrowed significantly," but gives the two companies a smaller share of the market with 47.8% of the market in terms of revenue.

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