Global Software Top 100 Edition 2011: The Highlights

The largest software companies in the world together generated software revenues of over $235 billion in 2010, an increase of 7% compared to 2009 ($220 billion). The top 10 companies, lead by Microsoft (#1), accounted for over 60% of that huge amount. Microsoft is by far the largest software company in the world, as it has been ever since the first publication of the Global Software Top 100 list in 2003. Last year, Microsoft alone increased its software revenues another $5 billion to a world record of $54.3 billion.

The Top 10

Countries

Companies from developing economies play a minor role in the global software industry, but signs of fast growth are clearly visible in China, Russia and Brazil. South Korean software companies also made great strides on the path towards Global Software Top 100 recognition.

Arrivals and departures

Among the departures are Sun Microsystems and Sybase after being acquired by Oracle and SAP respectively. Real, PGi, Acision and FICO did not make the revenue threshold this year.

A few acquisitions have taken place recently that will affect next year's Software Top 100, but the companies remained in this list because the deals were closed after year-end 2010. Intergraph (#69) for instance was recently bought by Swedish company Hexagon, and will not return in the 2012 list.

Fast growing software companies

Intel is of course primarily a hardware company (see: hardware top 100). The company entered the software top 100 last year as a result of the Wind River acquisition. This year, Intel is the fastest growing company in the top 100. The acquisition of security software maker McAfee (closed on February 28th 2011) will boost software revenues even further.

Google has also expanded the activities beyond internet search. Advertising provides the bulk of total revenues,  other revenues, including software revenues have risen sharply in the last 3 years.

NetEase.com has been one of the fastest growing software companies in recent years, as online gaming became very popular, especially in Asia. Last year, growth halted for NetEase, and the company did not make the threshold for the top 100. In 2010, NetEase got back on the growth path and re-enters the fast growth list and the global software top 100 as #100.

Outlook

With a looming dollar crisis ahead, we expect to see a similar financial picture in the coming two years as we did during the credit crisis.

During the past 12 months we've seen an increase in software patent deals and software patent battles. As most of the new patent requests being filed at the US Patent Office are software patents, patents have become a business themselves.

As the industry has matured, and innovation has become incremental instead of disruptive, new patents generally have less meaning then the ones posted in the early days. Hence the patent war has shifted from filing as many patents as possible to buying as many patents as possible.

Recent multi-billion dollar patent deals can be seen in this light, and we expect them to be only the beginning. Buying patents will become a regular item in the software industry, and it will be a major cash outflow in coming years. As patents are seen as investments, they will not have an immediate effect on company profits, however in the long term this effect will be undeniable.

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