Enterprise Software Revenues Flat in 2009: Gartner

Worldwide enterprise software revenue will continue to be flat in 2009, growing at a miniscule 0.3 percent, according to research firm Gartner in a report issued on March 30.

In dollar amounts, Gartner forecasts that enterprise software revenue will hit $222.6 billion, compared to 2008 revenues of $221.9 billion.

The numbers represent a marked contrast to Gartner’s March 2 report on 2009 PC unit shipments, which were predicted to decline sharply by 11.9 percent from 2008. The one bright spot in that report was mini-notebooks, which nearly doubled their 2008 total in units shipped.  

The research firm suggests that the numbers are indicative of the major recession currently gripping the global economy.

"The fourth quarter of 2008 was the turning point in creating an uneasy selling environment that may usher in several difficult quarters for the enterprise software markets," Tom Eid, an analyst at Gartner, said in the report. "Current expectations are for a slow economic recovery, mirrored by software spending upturn starting no earlier than the first half of 2010."

However, the report also suggests some guarded optimism, citing vendors' balance of channel, new license and maintenance revenue streams as a key factor in weathering the downturn. In addition, it also noted larger vendors' ability to price aggressively and maintain their sizable maintenance streams as reducing their vulnerability.

Revenues for operating systems, office suites, middleware, storage and digital creation are predicted to have negative growth rates, while segments such as Web conferencing, security information and event management, and archive software will experience mildly positive ones.

Enterprise software revenue has also been affected on a global scale.   

"All geographies felt the impact to some degree of a slowdown in software spending in the fourth quarter of 2008 and will again through 2009," Fabrizio Biscotti, an analyst with Gartner, said in the report. "Most mature countries will feel the greatest impact, while emerging regions will also have slower growth rates than previously forecast, in particular Eastern Europe whose prospects have been deteriorating remarkably."

In sum, though, nobody can predict the twists and turns of the current economic climate; and the report is quick to add that deteriorating conditions leading to 1 to 2 points of negative growth could, in turn, lead to a negative full-year 2009 forecast.