"The application integration and middleware market is in a volatile phase because integration design patterns and technology are evolving rapidly," said Joanne Correia, research vice president at Gartner. "Software suppliers are making fundamental changes in their product architectures, embracing standards and verticalising their offerings, new suppliers are entering the market, and weaker players have disappeared at a high rate. This complicates the task of application architects who must deal with shifting technology, supplier turnover and their own learning curves."
In 2005, the top five vendors accounted for 69% of the total worldwide AIM market. IBM maintained a commanding lead in the market, with 37,2% market share in 2005. While IBM is the clear market share leader in message-oriented middleware (MOM), integration suites, portal products and transaction processing middleware (TPM), it faces fierce competition in enterprise service bus (ESB) and B2B software. BEA's continued strength in the application server segment helped solidify its spot as the No. 2 AIM software vendor worldwide. Oracle and Microsoft were the only top-tier vendors to post double-digit growth in 2005.
Table 1. Worldwide 2005 vendor revenue estimates for AIM Software, based on total software revenue (millions of dollars)
Gartner has traditionally measured market share in terms of new licence revenue. However, because of the emergence and increasing popularity of open-source software and buyer consumption models such as hosted and subscription offerings, Gartner has moved to measure market share in terms of total software revenue. This includes revenue generated from new licence, updates, subscriptions and hosting, technical support and maintenance. Professional services and hardware revenue are not included in total software revenue.
In 2005, the United States represented over 41% of AIM spending, followed by Europe, the Middle East and Africa (EMEA) with 35% of the market. Within EMEA, Western Europe accounted for 31% of the market. However, emerging markets, such as Central and Eastern Europe and the Middle East and Africa, are significantly outpacing Western Europe in terms of growth.
"Less than 10% of total AIM revenue is generated by European vendors," said Fabrizio Biscotti, principal research analyst at Gartner in EMEA. "However, several European players such as Capeclear, Iona and Software AG outperformed global players in some emerging segments such as the ESB market, which helped them gain share in the overall AIM market."
Japan and Asia/Pacific represented more than 18% of the market in 2005. In 2006, the worldwide AIM market is expected to grow at similar rates as the outlook for the market remains challenging amid intense competition from the large software and systems vendors.
"Organisations are faced with spinning forces, such as the constant influx of new systems, immovable legacy and internal politics that end up increasing the complexity of IT systems. While integration can simplify complexity to make the IT environment accessible to more users and usable in more contexts, budgets for 'reducing complexity' have been difficult to obtain," said Correia. "Even when the budget holders have been convinced of the need for simplification, it still remains hard to obtain the right budget," Biscotti said. "We are seeing a paradoxical situation. Complexity of IT systems has risen, but historically this has not generated a spree of spending in application integration or new system software. However, we expect software spending to continue to increase because corporations have started their movement of older systems to a service-oriented architecture-based environment."