The software business is entering a period of consolidation, says research outfit Gartner, and companies should seize the chance to get bought (or indeed, to buy) while they still have the chance. Since 1998 Gartner says 25 per cent of leadfing software companies have been involved in mergers, acquisitions or divestitures, and this will climb to 50 per cent by 2004.

"The demise of software vendors will... become more common as the assets left by some failing companies do not attract new owners - however low the cost to acquire them. Vendors should be actively seeking merger, acquisition or divestiture opportunities while they still have substantial residual or purchasing value."

This climate of dwindling resources for both the acquirer and the target will be reinforced by a market where buyers are cautious, worldwide software licence sales will only grow 4 per cent in 2002, while worldwide application software licence sales will fall 1 per cent. Notice the impact of the Redmond OS franchise in those figures?

This will level out to an even 8 per cent for both in 2003, but there will be sectors which are more clearly prosperous. Infrastrucure software will grow 6 and 8 per cent, while security (Redmond again, but indirectly) will positively soar 18 and 16 per cent. ®

Related link

Gartner report