Research: Independent Software Vendors Partnering with Microsoft More Optimistic About Their Future

New research by independent market analyst Datamonitor reveals that software firms working with Microsoft are more optimistic about the outlook for their firm than those partnering with other major platform/database providers and integrators. Datamonitor's "Global ISV Study," examined over 800 ISVs (independent software vendors) globally in 2004 providing detailed comparative analysis and profiles.

Datamonitor's "Global ISV Study," is a guide for ISVs within the ISV market. The service tracks ISVs by technology usage, partner preferences, opportunities, vertical markets and horizontal industry.

According to Datamonitor, ISVs who indicated that Microsoft was a key partner for them were more optimistic about their own future than those who partnered with IBM, Oracle and others. On a scale of one to four, where one is "poor" and four is "excellent," Microsoft's partners rated their outlook a buoyant 3.5, topping IBM's 3.4 performance for the top spot. Of the other top five most significant partners for global ISVs (based on number of mentions), Oracle came in next at 3.33, followed by HP with 3.23 and trailed by Business Objects at 3.17.

Beyond the better than average outlook for Microsoft's partners, an equally important story emerges: ISVs are feeling more positive about their future these days. While 11 percent expect to be acquired in the next two years, most feel "fairly positive" about the future of their piece of the ISV sector with an average sector rating of 3.0 out of 4.0.  

Kathleen Klasnic, lead analyst of enterprise technology at Datamonitor, noted: "Overall, ISVs are looking more optimistic these days which is important to driving both solution innovation and end-user confidence in the software space. While consolidation is bound to continue and is indeed a good thing, the picture is becoming rosier than it has been since the downturn. Focus will be crucial to successful performance."   
Vertical focus is key to many ISVs' strategies in terms of both development and channel plans. The contested financial services and public sector verticals were, perhaps not surprisingly, seen as key targets with 23.0 percent and 18.1 percent believing that much of their growth going forward would come from each industry respectively.

The SME space is also crucial for growth with 89 percent indicating that between 11-50 percent of their revenues come from small to medium enterprises. "Many ISVs expect the percentage of their business coming from SMEs to grow going forward. This will put substantial pressure on their channel models, driving much of the volume toward indirect channels and increase the push toward hosted solutions," says Klasnic. "In short, things are looking brighter for ISVs particularly those with the right connections."

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