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01 Dec 2016

Software Markets Related to Digital Transformation Blossom in Europe, According to New IDC Software Tracker Release

LONDON, December 1, 2016 — The Western European software market increased 4.6% year over year in constant currencies during the first half of 2016, according to the latest release of International Data Corporation's (IDC) Worldwide Semiannual Software Tracker. Total software revenues in Western Europe reached $48 billion during the first six months of 2016. IDC forecasts full-year revenues for the Western European software market to exceed $100 billion in 2016 for the first time.

On-premise software sales grew 0.9% year over year, while software revenue from public cloud services grew 33.2%. As a share of total software, public cloud services went from 11.6% of software in 1H15 to 14.7% in 1H16.

Eight of the ten largest software vendors in Europe are U.S.-based, while fourth place is held by Germany-based SAP and seventh place by France-based Dassault Systemes. The software market is highly fragmented and the top 10 vendors control less than half of the total market. Among the top vendors, some fared well in 1H16, while others did less well. Microsoft did well in most areas but overall revenue declined as IDC deferred revenues due to the Windows 10 upgrade policy. SAP experienced strong growth in excess of 10% and Adobe and VMware both saw double-digit growth in 1H16. The strongest performance came from Salesforce.com, whose 29% growth spurred its entry into the top 10 list of software vendors in Europe.

Western European Top 10 Software Vendors, 1H16:

Vendor

1H16 Market Share

Microsoft

13.5%

IBM

7.4%

Oracle

7.1%

SAP

6.6%

VMware

1.3%

Adobe

1.2%

Dassault Systemes

1.2%

Hewlett Packard Enterprise

1.2%

Salesforce.com

1.1%

SAS

1.1%

Others

58.5%

Source: IDC Worldwide Semiannual Software Tracker, 1H16

The fastest-growing software markets in Western Europe during 1H16 with year-on-year growth rates in excess of 20% included dynamic data management systems, enterprise social networks, file synchronization and sharing software, network infrastructure software, security and vulnerability management, software-defined storage controller software, and problem management. Interestingly, these markets spanned applications, tools and databases, and infrastructure software. IDC believes the performance of a particular software is tightly related to its relevance in supporting digital transformation and IT transformation around what IDC calls the 3rd Platform (cloud, mobile, social, and analytics). For example, digital business models and the exposure of company systems directly to customers leads to new security threats and drives security software spending.

"We're seeing work patterns in Europe being transformed by new collaborative technologies enabling many types of work to be done anywhere, anytime. As a reflection of that, collaborative applications experienced double-digit growth in Europe during the first half of 2016. The transition to digital business models and focus on customer experience in Europe is also reflected in growth rates, where the CRM markets experienced an overall growth rate of 13% in constant currencies," said Bo Lykkegaard, associate vice president for the Software Tracker and Public Cloud Services Tracker at IDC.

From a country perspective, the best performers for overall software growth were Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. The U.K.'s decision to withdraw from the European Union (commonly known as Brexit) did not affect software sales in the country as the referendum took place at the end of first half of 2016, on June 23. Compared with the previous release of the IDC Worldwide Semiannual Software Tracker in 2H15, IDC has lowered its software forecast for the U.K. slightly, as the Brexit implications on software spend remain uncertain. Forecasts for Italy and Norway were revised upward after in-depth reviews with local country analysts.

IDC's Worldwide Semiannual Software Tracker provides unmatched market coverage and forecasts for the entire packaged software space, covering 80 distinct functional software markets and over 950 vendors in more than 50 countries — providing fast, essential, and comprehensive market information.

For more information on IDC's EMEA Semiannual Software Tracker or other IDC software research services, contact Associate Vice President Bo Lykkegaard on +45 2883 0884 or at blykkegaard@idc.com.

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For more information, contact:

Bo Lykkegaard
blykkegaard@idc.com
+45 2883 0884