IDC: Asia's packaged software market to hit US$13.4B

Heavy investment by both foreign and local vendors in China over the last few years is starting to show strong returns, says the research firm.

The packaged software market in the Asia-Pacific (excluding Japan) region is expected to grow by 11.1 percent this year amid sustained price pressure, increasingly integrated selling strategies, and continuing market consolidation, says IDC.

According to a new study released by the research firm, most countries in the region are expected to register annual growth ranging from 8.1 percent to 11.6 percent in their local markets. Traditionally mature countries including Singapore, Australia, Hong Kong and Taiwan, will see slightly lower growth rates ranging between 6.2 percent and 7.9 percent. Asia's two economic giants, India and China, are set to grow by 20.3 percent and 17.2 percent, respectively.

"IDC views the market consolidation activities as great opportunities for vendors to up-sell their integrated technologies," Wilvin Chee, director at IDC's Asia-Pacific software research division, said in a statement. "We also expect vendors to make greater efforts to improve their penetration rates by reaching the corporate boardroom, in order to better persuade the criticality of IT investment within business operations."

"We expect China to grow its share of revenue at the expense of other large markets like Korea and Australia, primarily,” said Chee. "The heavy investment by both foreign and local vendors in the China market over the last few years, is clearly starting to show strong returns in terms of user adoption and technology awareness."

Within specific software industries, IDC expects product supply chain applications to lead the industry applications market, which it says will draw a lot of attention from global vendors who will pursue the acquisition of successful local vendors in order to establish firmer footprints in the region. Product supply chain applications are expected to lead the strong growth in this market segment with an annual growth of 13.6 percent.

IDC also predicts the content management applications market to be a hot button, due to the expansion of information management, and has forecast this market to grow at 14.4 percent.

In the security software market, identity and access management is expected to experience the highest growth at 19.8 percent. Underpinning this growth will be increased concerns around large-scale identity thefts, data control and compliance issues, and the business plus legal consequences that may ensue following unauthorized access of data, according to IDC.

In addition, the analyst expects the business performance management (BPM) analytics and business intelligence software market to grow 10.6 percent this year.

And as more companies, especially small and midsize businesses (SMBs), consider deploying the subscription-based, 'software as a service' business model, IDC believes that SMBs will contribute 28.4 percent of the US$13.4 billion packaged software market in the region this year.