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Market analysis

By the end of 2013 there was clear evidence that enterprise software buying is increasingly shaped by the nexus of the disruptive forces of cloud, mobile, social and analytics which will reach mainstream status in 2014 and create new software technology requirements, drive new purchasing and establish new competitive realities. Cloud and SaaS popularity and adoption have continued to increase. Emphasis over the next few years will be on providing enterprise-class support for mobile data and applications that sit on top of existing enterprise mobile architectures. This will be driven by key technologies, such as enterprise mobile management systems (EMMSs), mobile containers, enterprise application stores and mobile collaboration.

Tablet and mobile users are demanding mobile device applications that exploit the capabilities of these devices and that can integrate into existing corporate systems. This trend is pushing the application software market in a new direction, and a mobile application product strategy has become a strategic imperative for all application vendors.

Further, the converging forces of social, mobile, cloud and analytics are helping to push forward successful collaboration and social software initiatives.1

Big data and analytics (BDA) has become a top agenda item and investment priority for a growing number of retail companies. No stranger to massive, time-sensitive data volumes, retail is at the epicenter of emerging BDA opportunities in enterprise data, social media, digital and mobile advertising, mobile metadata and instrumented store operations.2

SAP delivered strong revenue growth in 2013 due in large part to their fast-growing cloud business. Cloud subscription and support revenue was €787mn at constant currencies, which exceeded the company’s full-year 2013 guidance of €750mn (2012: €343mn). Full-year non-IFRS software and cloud subscription revenue increased 11% at constant currencies (6% at actual currencies to €5.28bn). Non-IFRS software and software-related service revenue grew 11% at constant currencies (6% at actual currencies to €14.03bn). Non-IFRS total revenue grew 8% at constant currencies (4% at actual currencies to €16.90bn).

Microsoft reported revenue of US$24.52bn for the quarter ended December 31, 2013. Gross margin, operating income, net income and diluted earnings per share for the quarter were US$16.24bn, US$7.97bn, US$6.56bn and US$0.78 per share, respectively. Windows OEM revenue declined 3%. Though Windows OEM Pro revenue posted strong 12% growth, it was more than offset by continued softness in the consumer PC market, leading to a net decline for Windows OEM. Surface revenue more than doubled sequentially, from US$400mn in the first quarter to US$893mn in the second quarter. The company sold 7.4 million Xbox console units into the retail channel, including 3.9 million Xbox One consoles and 3.5 million Xbox 360 consoles. Bing US search share grew to 18.2%, compared to 16% in December 2012, and search advertising revenue grew by 34% compared to 15% in December 2012.

  1. Gartner Press Release, December 2013
  2. IDC Press Release, February 2014
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Mark McCaffrey
Global leader
Software & internet
Tel: +1 (408) 817 4199