Open Sources | Rodrigues & Urlocker | InfoWorld | The Demise of Traditional Software - 3Q07 | October 16, 2007 10:26 PM

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The Demise of Traditional Software - 3Q07

October 16, 2007 | Comments: (0)

The Demise of Traditional Software - 3Q07

Some of you know that I've decided to track the demise ;-) of the traditional software market on a quarterly basis using IBM's WebSphere branded revenue as the basis. I use the WebSphere division for no other reason than it's the part of IBM that I report into. Here are the 2Q07, 1Q07, 4Q06 and 3Q06 posts if you fancy. IBM announced 3Q07 results today.

A few points of interest from 3Q07:

IBM Software grew at 6% (or 3% at constant currency: i.e. if currency exchange rates were fixed to equal their 3Q06 rates)

WebSphere branded middleware grew 10%

IBM's other Software families grew 9%, 3%, 5% and 9% for Lotus, Rational, Tivoli and Information Management respectively

WebSphere middleware growth of 10% is the lowest we've reported in the past year. However, considering the growth we attained in 3Q06 (i.e. 30% Y/Y vs. 14% in 3Q05 & 3Q04), it's not surprising that 3Q07 growth wasn't in the 15%+ range. Remember that the 10% is growth off a large revenue base, which unfortunately, IBM does not make public. But, if you have access to Gartner or IDC data, you can easily get to a ballpark number of total WebSphere branded revenue.

WebSphere Branded Middleware Quarterly Revenue Growth:

Quarter	Y/Y Qtr Growth	From:
1Q04	24%	Source
2Q04	N/A	Source
3Q04	14%	Source
4Q04	18%	Source
1Q05	11%	Source
2Q05	18%	Source
3Q05	14%	Source
4Q05	4%	Source
1Q06	26%	Source
2Q06	17%	Source
3Q06	30%	Source
4Q06	22%	Source
1Q07	14%	Source
2Q07	28%	Source
3Q07	10%	Source

Fourth quarter is going to be interesting!

PS: I should state: "The postings on this site are my own and don’t necessarily represent IBM’s positions, strategies or opinions."

Posted by Savio Rodrigues on October 16, 2007 10:26 PM

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COMMENTS

Savio, this would be more interesting if you represented the "demise" of proprietary vendors with more than one data point (IBM). Why is it that proprietary vendors seem to have to consolidate to survive right now? There are very few winners right now: IBM, Microsoft, Oracle, and SAP.

Oracle is succeeding because it's buying customers, but how long will this last? Microsoft's has stalled its growth in new markets and is struggling against open source in its old markets (though I think it will be years before this is seen in its numbers). IBM is doing a good job of co-opting open source but given its stranglehold on CIOs, it will be years before open source bubbles up to compete with it. And SAP is in somewhat of a protected market (for now).

But go ask Documentum, Vignette, etc. if they're starting to feel the effects of open source on their markets. Ask the BI vendors. App servers? Go ask BEA.

It's cute to look at IBM as a bellwether of proprietary health, but I think you're kidding yourself. All I have to look at is the customer wins that my company and others are having. There is a groundswell in motion, and it's foolish to think that it will raise all boats. It will capsize some, and while IBM may not be one of them I will guarantee that others won't be able to sit smugly watching the water lap at their shores.

Posted by: Matt Asay at October 17, 2007 05:01 AM

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