Gartner downgrades enterprise application revenue forecast

Sales in 2012 will be $120.4 billion, the analyst firm predicts

Analyst firm Gartner on Wednesday said it has lowered its 2012 growth estimate for the global enterprise applications market to US$120.4 billion, citing "limited signs" of economic improvement in the short term.

Global spending on business applications will rise 4.5 percent from last year's $115.2 billion total, Gartner said. The firm had previously predicted a 5 percent uptick this year.

"The global marketplace is still experiencing a series of conflicting and contrasting economic news reports, and the full impact of the economic uncertainty on the enterprise software markets may not be readily assessable until the end of the first half of 2012," Gartner analyst Tom Eid said in a statement.

Gartner expects buyers to focus spending on industry applications, SaaS (software as a service) projects that replace or augment existing systems, as well as "upgrades to established, mission-critical software," according to its announcement.

Oracle reported its fourth quarter and year-end results on Monday, saying that new software license sales in the quarter had jumped 7 percent to $4.0 billion. For the year, new license revenues also rose 7 percent, to $9.9 billion, Oracle said.

While new license sales are considered a key indicator of a company's growth as well as the mood of IT buyers, Oracle's results may not reflect the entire market, because its aggressive acquisition strategy helps the company constantly drive that number higher.

Software customers are "evaluating their options" now, and more of them will choose SaaS when they make decisions, according to Gartner. SaaS revenues are expected to account for 16 percent of application revenue in 2015, compared to 11 percent in 2010, Gartner said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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