Businesses expected to boost software sales
By J. Kyle Foster
Bloomberg News Service
SAN JOSE, Calif. — Computer-software spending will rise 3.5 percent in 2003 after two years of declines as companies buy applications to boost security and manage employees, Gartner Inc.'s Dataquest research unit said.
Software sales will rise to $76.2 billion this year from $73.5 billion in 2002, Dataquest said in a statement. Sales fell less than 1 percent last year.
Demand is starting to recover as businesses buy programs to help curb costs. Sales of workforce-management software that handles employee data will increase 15.9 percent this year, and revenue from systems- and network-management security software will rise 8.3 percent this year, Dataquest said.
"We believe we've seen the bottom, so we don't expect it to go any lower," said Tom Topolinski, one of the authors of the report.
Software sales rose 15.8 percent to $78.2 billion in 2000, then fell 5.4 percent in 2001 to $74 billion and to $73.5 billion the following year, Dataquest said.
"We're not seeing this explosive growth any longer, and we're not expecting it to return to that," Topolinski said.
Companies aren't spending as much because they are concerned about the economy and are skeptical about new software products based on disappointment with previous purchases, he said.
"The most prudent planning assumption is that, at least for the next 12 months, overall global demand for software licenses will remain as static as it is today," Dataquest said.
Sales of software licenses are expected to increase this year in all areas except enterprise resource planning, which provides data on internal operations such as manufacturing, finance inventory and human resources; and supply chain management, which links companies with suppliers.
Companies that sell a variety of programs will fare better than those that focus on one line, Dataquest said. There will be half as many software companies in 2004 as in 2000, it said.
Microsoft Corp., International Business Machines Corp., Oracle Corp., SAP AG and Computer Associates International Inc. are the world's five biggest software sellers.
