Gartner

Newsroom

Sydney, Australia, July 6, 2010 View All Press Releases

Gartner Says Application Development Software Market in Australia and New Zealand Will Grow 6.7 Percent in 2010

Analysts to Examine the Future of Application Development at Gartner SOA & Application Development and Integration Summit 2010, 28-29 July in Sydney



Application development (AD) software revenue in Australia and New Zealand is forecast to reach US$144.5 million, an increase of 6.7 percent from 2009 revenue of US$135.4 million, according to Gartner, Inc. This is a solid increase compared with the overall forecast for worldwide growth of 0.7 percent.

"There is pent up demand for AD products and 2010 should see the return of higher growth for Australia and New Zealand," said Asheesh Raina, principal research analyst at Gartner. “One of the main reasons for solid growth is the relative insulation from the worldwide economic downturn, as well as sustained domestic consumption. Many markets across the globe continue to be in decline.”

As two of the more mature and stable IT markets in Asia Pacific, the main strengths of Australia and New Zealand are their long term experience in software development, as well as being advanced users of IT in various vertical markets, such as healthcare, finance and insurance. Australia is an attractive research and development centre for software vendors because of its rich demographics. Apart from growth opportunities, it also offers vendors long-term stability and the highest forecast compound annual growth rate (CAGR) for AD software for the five year period to 2013.

According to Gartner, the ongoing need to invest in security testing is one of the top drivers of the application development market. Despite the restrictions imposed on AD spending due to the worldwide economic downturn, this segment grew fastest in 2009 as security breaches continued to highlight the need for good testing, making up for some of a lack of spending on more mature and less dynamic tools.

Worldwide, application development software revenue declined 2 percent in 2009 — the first negative showing for the entire market since 2002 – driven by a "wait and see" attitude which put new projects on hold and extended life for old development tools.

In 2009 AD market share results for Australia and New Zealand, IBM held the largest market share of 26.3 percent (see Table 1). This performance was helped by strategic acquisitions such as Watchfire 2007 and Ounce Labs 2009, which provided growth in the security testing market. In addition, IBM's 2008 acquisition of Telelogic continued to bring moderate growth in areas such as requirements management.

HP’s share of the market in remained fairly constant, whereas Microsoft’s market share grew slightly given the company's preannouncement of Visual Studio 2010, which meant that many companies decided to postpone any upgrades in 2009 and wait for the new version. Some large vendors’ decline was due to a subscription-based business model that causes a delay in revenue recognition while some smaller vendors were acquired.

Table 1: ANZ Application Development Software Revenue Estimates for 2009 (millions of $US)

Vendor

2008

2009

Share 2008

Share 2009

Growth 2009

IBM

33.50

35.64

25.3%

26.3%

6.4%

HP

20.24

20.70

15.3%

15.3%

2.3%

Microsoft

16.76

18.18

12.7%

13.4%

8.5%

CA

12.83

13.20

9.7%

9.7%

2.8%

Compuware

10.28

11.34

7.8%

8.4%

10.3%

Micro Focus International

8.58

8.05

6.5%

5.9%

-6.1%

Total

132.18

135.44

100.0%

100.0%

2.47%

Source: Gartner (April 2010)

Despite strong growth in Australia and New Zealand, vendors should not be complacent — the need remains to do more for the same cost. Open source offerings in the AD market remain attractive, frequently delivering good-enough functionality in a flexible manner. Software vendors need to ensure that they can provide value-add with flexible deployment options.

Java platform and Dynamic Web application tools will continue to see the biggest impact from open source alternatives. Consolidation of this market will continue with larger vendors acquiring pure play and point products to round out their suits and portfolio offerings.

Additional detail about 2009 market share is available in the Gartner report "Market Share: Application Development Software, Worldwide, 2009." The report is available on Gartner's website at http://www.gartner.com/resId=1353333.

Gartner analysts will discuss application development and other software trends during the Gartner SOA & Application Development and Integration Summit, 28-29 July 2010 at the Sydney Convention Centre. The Summit gives a complete view of service oriented architecture (SOA), application development, application integration, and the future of software including trends such as cloud computing and agile development. Additional details are available at www.gartner.com/ap/soa. Members of the media can register by contacting Susan Moore at susan.moore@gartner.com

Contacts
About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. We deliver the technology-related insight necessary for our clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, we are the valuable partner to clients in over 9,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 6,400 associates, including more than 1,480 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.

Gartner Insight
Gartner Webinars