Environment Of Software Industry Essay, Research Paper

Environment of Software Industry The software industry continues to expand in 1998 based on the need for year 2000 solutions, increased number of PC s purchased, shift to client/server applications, and expanding economy, technology improvements, and the ever changing internet. The recent foreign financial crisis was the only event sited as slowing the growth of the industry. The market for enterprise resource planning(ERP), a name given to the automation of back office business processes by new software applications, will grow by 36% annually to create a $16 billion software market in 2001. ERP leaders include Peoplesoft, SAP AG, Oracle Corp., and Bean Co. Growing systems management needs have increased as the move from mainframe technology to client/server applications has increased. Computer associates leads this area of the industry. Windows and Win NT software growth continues dramatically as PC sales go up about 8% each year. Microsoft is the dominant PC software vendor. All other major shipper s of PC operating systems continue to lose market share. Win NT has helped by proving it can run complex software applications and large networks. Windows NT is gaining ground on UNIX and Novell in the corporate server market. Windows 98 and the upcoming Win NT 5.0 assure Microsoft a secure place in the PC operating system area of the software industry. The database market has slowed with recent slower sales growth from Oracle, Sybase, and Informix, the leaders in this area.The computer aided design software classification continues to grow slowly with 12% annual growth expected by 2002.Software suites that combine word processing, data base management, spreadsheets, and other business applications into one package have gained popularity with the help from lower prices.The PC software education and entertainment segment is experiencing exceptional growth. Lower software and hardware prices should help to grow the gaming software segment 30% by the end of fiscal year 1998. Software companies are creating new ways to exploit the internet for marketing software and at the application level.Antivirus software is one of the fastest growing categories with the increase in virus outbreaks and media to disperse viruses with. Symantec and Network Associates lead the industry.

Browser wars continue with Netscape holding about 50% of the market and Microsoft IE holding 50%.Microsoft is expected to square off with the Department of Justice sometime in October, 1998. Along with other anti-trust claims, the Department of Justice alleges that MS violated a 1995 consent decree. Both sides are debating the definition of integrated products as used in the decree. Most experts agree that the suit will take a couple of months to work out but will have little affect on the business dealings of MS.During the difficult financial times abroad, software companies should focus on cutting costs and increased productivity. Some companies are reporting strong sales in Asia where increased speed in manufacturing and specialty software is needed. Oracle, however, reported that sales have fallen in Asia as companies put off new investments. Five Forces Threat of Substitutes -buyer s have had a propensity to substitute with Microsoft s image of big business, recent legal action, and the availability of quality substitutes like Netscape in the browser area, Lotus in the Office Suite Area, and strong competitors in Enterprise Networking like Novell and UNIX -in comparing price all competitor s offer close pricing-Microsoft is in a position to offer lower prices because of industry dominance Buyer Power Price Sensitivity-costs of purchases are relatively low in comparison to the total costs of doing business-people who buy Microsoft products have increased profit potential; industry dominance and name recognition salesquality is assumed and built in with most MS products Bargaining Power-Microsoft dominates the industry in some categories and is the supreme source of certain products like Operating Systems-buyers can compare competitors costs as companies specialize, lower price, and struggle to compete with MS-buyers have increased information on software and will buy competitor s products if they prove superior despite market dominance by MS-MS has proven, with some exception, that most of their products are backward compatible and are even compatible with certain competitor s products