IDC Expects App Server Shipments to Grow Faster Than Sales

Published: January 11, 2007

by Timothy Prickett Morgan

As you might expect, the advent of popular and open source Web application servers as well as the integration of such components within operating systems is causing some downward pricing pressure. But, according to research from IDC, it appears that vendors will still be able to make it up in volume.

IDC reckons that the worldwide market for application server software grew by 6 percent in 2005 to hit $4.5 billion in sales. (Hard figures are not yet available for 2006, but IDC has put together projects for 2006 through 2010.) IDC is projecting that between 2005 and 2010, the number of application servers that are shipped will grow at a compound annual rate of almost 11 percent, but that sales will grow by half that rate, pushing worldwide application server revenues to $5.6 billion in 2010.

IDC is very precise in its language, calling these licenses "application server software platforms," or ASSPs. And it doesn't just include Web application servers based on Java or .NET protocols, but other kinds of application servers as well as legacy transaction monitoring software--such as CICS monitors, CORBA brokers, and the native 5250 data streams that are buried at the heart of mainframe, Unix, and OS/400 applications, respectively.

Following IBM's own lead when it talks about middleware, the most recent IDC data breaks the market into two pieces--distributed platforms (based on Java and .NET) and legacy platforms. The Windows and .NET figures put together by IDC include licenses of Windows Server 2003 operating systems where that software is used by customers as an application or Web server. In 2005, distributed ASSPs accounted for $2.5 billion in sales, or 46 percent of the market, and IDC is projecting that distributed application servers will increase their share to 63 percent, or about $3.5 billion, by 2010. The legacy platforms are expected to only show tiny growth, from $2 billion to $2.1 billion from 2005 to 2010.

"There are several trends driving revenue growth in the ASSP market going forward, as well as negative trends that will slow growth," explained Maureen Fleming, program director of the business process automation and deployment practice at IDC. "Factors that will encourage growth include increased transaction volumes from applications built on BPM and SOA, adoption of application server virtualization, introduction of application server appliances, and the sale of deployment software bundles in the mid-market. Meanwhile, factors such as extreme transaction processing, adoption of higher-performance servers, and commoditization of application server software will dampen the market's revenue growth."

In 2005, IBM had the biggest share of the overall ASSP space, according to IDC, with 43 percent of sales, followed by BEA Systems, Oracle, and Microsoft; the latter company had the fastest growth in 2005, with an increase in revenues of 29.7 percent compared to 2004. BEA has the biggest piece of the distributed ASSP space, with a 24.2 percent of this piece of the pie, followed by IBM, Oracle, and Microsoft. On the legacy side of the ASSP house, which grew faster than the distributed side in 2005, IBM held sway with a 68 percent share, followed by BEA and Micro Focus. Borland and Hitachi posting the highest growth in the legacy ASSP market according to IDC's rankings in 2005.

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