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IBM and Oracle fortunes hit by rapid growth of PaaS, Gartner claims

Gartner’s application infrastructure market tracker reveals how PaaS growth is shaking up the supplier landscape

The growing use of platform-as-a-service (PaaS) offerings have hit IBM and Oracle’s revenue, as enterprises shift their application infrastructure investments to the cloud.

According to Gartner’s latest worldwide application infrastructure and middleware (AIM) software tracker, the use of PaaS is steadily rising across the globe, with enterprises shunning traditional on-premise tools on business agility grounds.

“While older technology remains the first choice for the most demanding application scenarios, the evolving maturity of cloud application infrastructure now offers greater agility, scalability and efficiency than traditional on-premises technologies,” said Gartner, in a statement.

“This ongoing transition to cloud services and the emerging wave of innovation surrounding the internet of things further pushes application infrastructure spending away from older models towards event-driven analysis and processes.”

The rapid growth of the PaaS market during 2015 is largely responsible for the 7.8% year-on-year rise in revenue Gartner claims the AIM market enjoyed in 2015 when dealing in constant currency terms.

When factoring in the strength of the US dollar, the AIM market’s year-on-year revenue growth amounts to 0.1%, Gartner added, and totalled $23.9bn.

“The PaaS segment showed the most impressive growth, not just in the AIM market, but across the entire enterprise software market,” said Gartner research director Fabrizio Biscotti.

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The knock-on effect of this trend on the fortunes of the older, application infrastructure giants – such as IBM and Oracle – in 2015 is notable, said Gartner.

IBM, the market leader, saw its share of the market drop to 25%, while its revenue fell by nearly 13% between 2014 and 2015. Second place Oracle secured a 13% share of the market, on the back of a 4% revenue drop.

Microsoft – whose Azure cloud platform provides enterprises with PaaS capabilities – was the only one of the top three application infrastructure suppliers to achieve revenue growth, which was in the region of 5%.

Cloud customer relationship management (CRM) firm Salesforce retained its fourth place position, with Gartner flagging the firm as a major source of disruption in the overall AIM market.

“Salesforce continues to disrupt the AIM market, with its revenue growing more than 36% to just over a billion dollars,” said Biscotti.

“Salesforce’s strong performance, as well as steady growth in the ‘others’ category, underlines the trend of cloud-only firms and smaller specialists picking up market share at the expense of traditional suppliers in this space.”

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