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November 8, 2009

Enterprise software spend in Asia Pacific to grow 10.2% in 2010, says Gartner

Volatile market impacts application software more than infrastructure software segment

By CBR Staff Writer

Enterprise software market revenue for the Asia Pacific region is expected to increase by 10.2% to $22.1 billion in 2010, according to IT research and advisory firm Gartner.

The increase represents an upturn from the expected 6.6% growth in 2009, compared to 2008 growth of 13.8%. Within the region, the volatile economy is impacting application software segment more than the infrastructure software segment.

Asia Pacific still has a positive outlook over the five-year forecast period from 2008 through to 2013, achieving a compound annual growth rate (CAGR) of 10.8%. For the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6%, 12.4% and 10.7% respectively). Markets in Australia and Singapore will also have attractive CAGRs of 9.5% and 9.4%, respectively, according to the report.

The report showed that China and India continue to benefit from a large domestic customer base and government stimulus packages and low market penetration. Australia and Singapore’s revenue is supported by a consistent maintenance revenue stream and a strong vendor channel and service infrastructure and positive expectations for end-user software budget increases in 2010.

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China is expected to lead software demand with growth rate of 12.2% in 2009 and 14.5% growth in 2010 while Australia is the next largest market with 5.4% growth rate in 2009 and 8.2% growth in 2010. South Korea remained the third largest market with an expected growth rate of 6.5% in 2010 and India gained the fourth spot with an expected growth rate of 10.1% in 2009 and 11.8% growth in 2010.

The firm said that infrastructure software represents 64.4% of enterprise software spending in Asia Pacific in 2010. The bulk of infrastructure software spending is made up of operating systems, database and security software segments. Data integration tools and virtualisation software will have the fastest CAGRs in the next five years.

According to Gartner, application software spending will have a slower growth rate than infrastructure software spending, during the next five years and is projected to grow at a solid 9.9%. ERP and office suites will remain the largest segments throughout the forecast period, while web conferencing and project and portfolio management (PPM) will have the fastest CAGRs.

Yanna Dharmasthira, research director at Gartner, said: “Some Asia Pacific markets have been traditionally more price-sensitive, a situation that is even more pronounced in the downturn. We expect to see more intense vendor competition in Asia Pacific, from multinational vendors as well as prominent local country vendors.”

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