MarketLine Blog

China sets the pace in the global software industry

Despite continued piracy issues, the seemingly perpetual innovations in the technology sector and the spread of internet usage both help to drive solid growth in the global software market.

The global software market grew by 6.1% in 2013, to reach a value of $554.5bn, representing a compound annual growth rate of 11.3% for the period spanning 2009-2013.

Although growth has largely been seen across the board, increases were primarily driven by growth in the Asia-Pacific and Americas regions, as some European economies stagnated and demand for software remained relatively stable. Asia-Pacific’s growth was firmly led by China’s continued dynamic economic development, which led to strong growth in demand across all software segments. Furthermore, reductions in piracy rates have helped China develop a much larger market.

Competition in Europe to become the regional technology hub is strong with numerous cities competing for talent and investment, including London, Berlin, Paris and Madrid. On a global scale, the Zhongguancun region of Beijing is seeking to usurp Silicon Valley as the leading software centre.  Nevertheless, US companies continue to dominate the global software industry.

Following various cases involving Microsoft, Google, Oracle and Sap, litigation continues apace in the software industry with on-going wrangling between Apple and Samsung in relation to mobile software. The importance of patents has also been highlighted by the development of ‘patent trolls’, which simply seek to obtain license fees through patent litigation rather than developing and manufacturing their own products.

Key trends in the industry include the move towards open-source software, cloud technology and data analytics. The open-source model has been adapted by companies such as Red Hat to obtain revenues through support services rather than software sales, and continues to spread given the ease of application download on the internet. Cloud technology has also allowed companies to make some inroads into Microsoft’s dominance in office-based software, with Google Apps for business being a potential threat.

For more information, see our Industry Reports on the Software Industry and our recent case study on Life after Steve Jobs at Apple.

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