View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Technology
July 8, 1990

OVUM SEEKS EC AID FOR EUROPEAN SOFTWARE HOUSES TRYING TO BREAK US MARKET HOLD

By CBR Staff Writer

Ovum Ltd, the London information technology consultancy and publisher, has called for intervention from the European Commission to help European firms break US dominance in the European software product market. Ovum has published a report that predictably has US companies dominating in a top 40 list of software product suppliers in Europe. Software products are defined as systems or applications software. US companies account for 64% of sales and take 60% of software product revenues, which includes maintenance revenues. After the US in sales terms, is West Germany with 15%, France with 9% and the UK with 8%. The top 40 companies, headed by IBM, Siemens and Nixdorf, account for half the European market, according to Ovum. After the top three, the top 10 list continues, in descending order, with ICL, Bull, DEC, Olivetti and Unisys, while Computer Associates and Microsoft jointly hold ninth place. Ovum’s chairman, Tim Johnson, believes that if European companies are to obtain a significant part of the market, larger, panEuropean companies must be created, and for this to happen the European Commission needs to provide help in terms of information, selffunding facilities and perhaps help for joint purchasing programmes. He rejected the notion of subsidiaries for European companies or import tariffs for US companies. Johnson admitted that an alternative strategy for European software firms is to capture the American market first, then from a strong US base push in to Europe. But he maintained that Commission help is a better strategy for taking advantage of the Single European Market. Ovum concedes that its primary role is to highlight the problems through research, rather than come up with finite solutions.

Future lies with software

It said more discussion was needed to explore various plans, but stuck to the European Commission strategy. Although European companies are strong in custom software, the products market offers faster growth, bigger profits and better export opportunities according to Johnson. Ovum estimates the European market for software products to be worth $11,000m per year. As hardware becomes more standardised, Ovum’s Keith Hales, coauthor of the report, reckons that companies will not be able to make profits selling hardware alone and that more of them will start concentrating on developing software packages and selling total solutions. The profit breakdown of large companies already shows a shift in main profit areas from hardware to software, one example cited by Ovum being ICL. Ovum reckons this change in emphasis is set to continue to the point where hardware companies migrate to software altogether. But while acknowledging that that change will not be easy or fast, Hales is adamant that the future lies with software, and although IBM tops the Ovum list, maintains that firms focussed on software will do better than those that are not. The Ovum 40, part of Ovum’s Software Europe UKP1,000-a-year service is available from Ovum at 7 Rathbone Street, London W1P 1AF.

Content from our partners
Why food manufacturers must pursue greater visibility and agility
How to define an empowered chief data officer
Financial management can be onerous for CFOs, but new tech is helping lighten the load
Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy Policy for more information about our services, how New Statesman Media Group may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU