Could Turing imagine?

Alan Turing, the Turing in the famed 'Turing machine', considered the father of modern computer science, would have become 99 this 23rd June, had the British Government not treated him the way it did. On 8th June, 1954, when he committed suicide, did he or could he imagine that his work created a whole new technology that would propel a multi-billion dollar industry in just fifty years?  Had he not decided to curtail his life at 41, he could have been the first billionaire of the software industry.

But that is one sad truth of human journey of civilization. Many of the history makers were persecuted in their lifetime by the society du jour and it surely did not start with Socrates.
So how big is the software industry today, really? To find an answer I looked at Gartner's latest news flashes. What I found is mind-boggling.

This year worldwide enterprise software revenue would be around $267 billion [US]. The software services revenue in 2010 was whooping $739 billion!  I have provided a chart here that shows what Gartner has projected for next couple of years. As the chart shows, after  negative growth of 2.5% in 2009, industry is growing at around 8-9% Y-to-Y. 

"The market for enterprise software continues to recover well following the 2009 downturn, with signs of ongoing growth on the horizon," said Joanne Correia, managing vice president at Gartner. "Economic recovery is evident across all regions.” 

Gartner says that Enterprise infrastructure software spending is on pace to a $153.3 billion total in 2011, a 9 percent increase from 2010 revenue of $140.6 billion. The market is led by the operating systems (OS) segment in which revenue is projected to reach $32.6 billion in 2011, followed by database management systems (DBMSs) revenue at $25.5 billion.

In fact Microsoft riding on the success of Windows 7 is leading the OS segment [please note that Apple did not figure in this list because they sell combined hardware-software product]. Here is a table from Gartner that provides relative position of worldwide top 5 enterprise software vendors (in Millions of US dollars):

	2010 Revenue	2010 Market Share (%)	2009 Revenue	2009 Market Share (%)	2009-2010 Growth (%)
Microsoft	54,711	22.4	48,650	21.6	12.5
IBM	25,436	10.4	24,073	10.7	5.7
Oracle	23,918	9.8	20,037	8.9	19.4
SAP	12,979	5.3	11,390	5.1	13.9
Symantec	5,655	2.3	5,513	2.4	2.6
Other Vendors	121,945	49.8	115,842	51.3	5.3
Total	244,644	100.0	225,505	100.0	8.5

Source: Gartner (May 2011)

Now if you consider top 25 vendors instead, VMware leads the group with more than 41% growth in 2010, followed by Adobe with more than 29 percent and salesforce.com with more than 28 percent growth. The top 25 vendors, ranked by total 2010 software revenue, grew more than 11.5 percent overall. These vendors accounted for nearly 68 percent share, or more than $165 billion, of the overall software market.

Worldwide enterprise application software spending is forecast to total $114.4 billion in 2011, a 10.2 percent increase from 2010 spending of $103.8 billion. Enterprise resource planning (ERP) is the largest segment within the enterprise application software market. ERP revenue is expected to reach $23.3 billion, followed by office suites with $15.7 billion.

Ms. Correia said. "We have identified a strong correlation between GDP growth and enterprise software spending growth, where software tends to grow 4 to 6 percent above GDP in normal market conditions. However, we do have concerns about the rising cost of commodities, including oil, and its impact on certain regional and country economies."

In contrast , IT services spending grew 3.1 percent to $793 billion in 2010, with IBM, Hewlett-Packard and Fujitsu taking the top three market share berths. 3.1 percen is definitely alarmingly low, however that is lot better compared to the 5.1 percent drop seen during 2009, according to Gartner. 

Wouldn't you be curious about how the Indian software services companies fare in this list? India’s top 10 software services companies, including the biggest Tata Consultancy Services Ltd (TCS) and second biggest Infosys Technologies Ltd, grew nearly 20% last year, outpacing the 5.8% revenue growth of the world’s top 10 companies, according to Gartner. Still, the global market share of the nation’s top 10 software companies, which account for about half the local information industry’s revenue, stood at just 3.6%, highlighting the technology (IT) potential for continued growth, Gartner said.

Agreed that the share of wallet that Indian companies muster is not something that would cheer you up a lot. There could be some upside though. Given that almost all US players from world top 10 list have sizeable presence in India, India's overall share to global software services industry would definitely be more than double the figure quoted by Gartner, although it is quite likely to remain within single digit. That in fact supports Gartner's optimism about Indian software industry: the potential for continued growth. Fact that they show better growth rate, compared to Top 10, is definitely heartening but smaller size of their operation and almost non-existent product-based services portfolio are significant hurdles for them to scale in big way. 
However we must not forget that absolutely none can predict the future absolutely, as sad end of Alan Turing exemplifies. Let us, therefore, just raise our glass and say, "Cheers!" to Gartner's optimism.