Balder Verberne of softwaretop100.org, the research house based in The Netherlands, released his annual list of the top 100 software companies in the market worldwide in October. John Desmond of Software 500/Software magazine fame came out with his annual list recently too. I like both lists -- and both researchers -- but I am partial to the purity of the Software Top 100. The Software 500 has added non-software-specific services revenue to its ranking methodology in the last few years.
As I've noted elsewhere, as a guy who used to be able to build such lists in his sleep when working for IDC, I like to give such research a quick once-over to see if I agree with the rankings and relative sizes attributed to each enterprise software provider on the list. Everyone -- including the big quant houses such as Dataquest and IDC -- agrees that IBM, Microsoft (MSFT), Oracle (ORCL) and SAP are the leaders in the software market. That's in alphabetical order, not actual ranking.
But I'd have given Oracle a little more revenue than Balder gave it in both 2009 and 2010 and I'd have given SAP a little more credit. I think SAP grew a little in 2009 as opposed to Balder's estimate that it deflated a little. I suspect our differences vis a vis SAP are exchange-rate methodology differences, always a problem in estimating SAP. Relative to Oracle, I suspect the softwaretop100.org group may not be picking up the small but growing amount of Oracle software revenue in its OnDemand segment. In fact, I think Oracle is probably already second to salesforce.com (CRM) in terms of software as a service (SaaS) revenue. (Or possibly Balder does not "backcast" in revenue from the acquired company in the IDC fashion, but uses the suppliers' GAAP reported numbers. That's OK for rankings but causes all kinds of problems with forecasting market size using the totals resulting from the rankings.)
Further down any such list is where it gets interesting. softwaretop100.org has added Ericsson (ERIC), Nokia (NOK) and the like this year and ranks them in the top 10. Although they deserve to be somewhere on the list (one of my best business trips of all time was the four days I spent in Helsinki at Nokia HQ), I'm not sure I'd credit it with software being 25% of its revenue. Software market lists should really measure software sold/bought as software to truly measure market dynamics. But I admit that I have not spent a lot of time studying the issue vis a vis the telecomms.
Primarily for me looking at such lists as the Software Top 100 and Software 500 these days is an "in memoriam" exercise to see which companies are no longer with us as compared to the year before. In the 2010 softwaretop100.org list (rankings for 2009 of course), the only company we say goodbye to is SPSS by my quick reckoning. That may be a sign of advanced software market maturity but in fact we already know that in 2011 we will say goodbye at least to Sterling Commerce, Sun, and Sybase. Maybe software companies are now being acquired in reverse alphabetical order.
By the way, in my opinion softwaretop100.org did a good job of picking up the Sun 2009 total. After the Oracle acquisition was announced there was no more data from Sun but a pretty low software -- and overall total -- has now been confirmed in the proforma section of the Oracle 10-K.
-- Dennis Byron
(no financial interest in companies mentioned)