Microsoft revenues hold up on back of maintenance income

Peter Dinham
Tuesday, 14 April 2009 09:13

Business IT - Technology

“And while overall enterprise spending was significantly reduced in 4Q08, Salesforce.com’s 32.1% year-to-year revenue growth in the Americas demonstrates that demand exists for technologies that deliver cost savings. We believe that an expansion of the company’s enterprise customer base will position it well throughout the recession.”

Williams said TBR also found that “enterprise business applications license sales fell off the table in 4Q08 as customers pulled back on new ventures.”

“TBR believes customers are taking a hard look at the traditional software license/maintenance model – much to the benefit of disruptive SaaS and cloud models.”

But, as a consequence of the global recession, TBR says the SMB market is also been attacked by industry giants like IBM and SAP.

With emerging markets no longer represent the low hanging fruit they once did, according to TBR  industry heavyweights like IBM and SAP are turning to SMB market opportunities for growth.

Williams says vendors are also responding to customers’ reduced budgets by offering smaller, packaged, fixed-price, duration and short-term ROI deals.

“In addition, many have undertaken aggressive cost cutting efforts. Microsoft, SAP, IBM, Symantec and others announced layoffs during 4Q08, and many vendors are implementing salary and hiring freezes as well as delaying facility expansion and reducing discretionary spending.
 
These cost reductions appear to have been largely successful, according to TBR, noting that most vendors in the SBQ Benchmark were able to increase operating margins sequentially in 4Q08, even as year-to-year growth slowed.