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Egham, U.K., April 14, 2016

Gartner Says Market Leaders Failed to Capitalize on PaaS Growth in 2015

Strong Dollar Weighing on the Wider Software Market

iPaaS and aPaaS Markets Grew 55 Percent and 40 Percent Respectively

Worldwide application infrastructure and middleware (AIM) software revenue totaled $23.9 billion in 2015, a 0.1 percent increase from 2014, according to Gartner, Inc. The considerable appreciation of the U.S. dollar in 2015 masked growth in the market. In constant currency terms the market grew 7.8 percent, driven by rapid growth in the platform as a service (PaaS) segment.

"The PaaS segment showed the most impressive growth, not just in the AIM market but across the entire enterprise software market," said Fabrizio Biscotti, research director at Gartner. "Integration PaaS (iPaaS) grew 55 percent in U.S dollars, while application PaaS (aPaaS) grew 40 percent, despite headwinds from the appreciating U.S. dollar."

While older technology remains the first choice for the most demanding application scenarios, the evolving maturity of cloud application infrastructure now offers greater agility, scalability and efficiency than traditional on-premises technologies. This ongoing transition to cloud services and the emerging wave of innovation surrounding the Internet of Things (IoT) further pushes application infrastructure spending away from older models toward event-driven analysis and processes.

"Market concentration among the largest vendors is diminishing under pressure from specialists, and open source and cloud providers," said Mr. Biscotti. "The growth of iPaaS and aPaaS has, largely, not worked out to the benefit of the market incumbents."

In 2015, the largest vendors retained their market positions, but market leader IBM suffered a revenue decline of nearly 13 percent, falling to 25 percent of the total AIM software market (see Table 1). Oracle's revenue also dropped, by nearly 4 percent, capturing 13 percent of the total market. Microsoft's 5 percent revenue growth meant it was the only one of the top three players to grow its revenue. Salesforce retained the fourth spot, while Software AG dropped out of the top five — switching places with TIBCO Software.

"Salesforce continues to disrupt the AIM market, with its revenue growing more than 36 percent to just over a billion dollars," said Mr. Biscotti. "Salesforce's strong performance, as well as steady growth in the ‘Others’ category, underlines the trend of cloud-only firms and smaller specialists picking up market share at the expense of traditional vendors in this space."

Table 1
Worldwide Vendor Revenue Estimates for Total AIM Software, 2015 (Millions of U.S. Dollars)

Company

2015 Revenue

2015 Market

Share (%)

2014 Revenue

2014-2015

Growth (%)

IBM

6,043.2

25.2

6,926.5

-12.8

Oracle

3,173.1

13.3

3,298.2

-3.8

Microsoft

1,114.8

4.7

1,058.8

5.3

Salesforce

1,010.2

4.2

740.4

36.4

TIBCO Software

593.0

2.5

640.9

-7.5

Others

12,006.6

51.1

11,260.4

6.6

Total

23,941

100.0

23,925

0.1

Source: Gartner (April 2016)

This trend is consistent with AIM buyers' pursuit of innovation — not necessarily from a technology perspective, but most of all from go-to-market, business model and delivery channel perspectives.

"2015 was the year that iPaaS became a serious alternative to traditional software-based integration approaches," said Keith Guttridge, research director at Gartner. "Buyers are choosing iPaaS due to its lower entry costs, reduced operational demands and improved productivity. Vendor interest in this space is also growing rapidly, with the number of offerings doubling in the past 12 months."

More data is available in the report "Market Share: All Software Markets, Worldwide, 2015."

Gartner analysts will further examine application architecture and development trends at the Gartner Application Architecture, Development & Integration Summits 2016, May 23-24 in London and July 25-26 in Sydney, and the Gartner Application Strategies & Solutions Summit 2016, December 6-8 in Las Vegas.

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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