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SaaS Way Up while Licensed Software Drops a Whopping $7 Billion  [ ReadWrite Cloud ]
October 20, 2010 07:57 PM

By Alex Williams / October 19, 2010 8:30 PM

The recession gets blamed for the losses of thousands of jobs. But rarely do we hear about what it has done to make new markets possible.

The SaaS marketplace may be one of the economy's clearest examples of how recessions clear away old practices for new ones that are modern, more exciting and a lot less expensive.

As reported by Network World, the software market is going through a massive shift. According to IDC, the SaaS market is growing six times faster than all of software. Through 2014, the SaaS market is expected to grow 26 percent on an annual rate. 

In contrast, the market for perpetual licensed software dropped $7 billion in 2009.

The fall shows how markets change when tight budgets force managers to look at lower cost alternatives. The strained economy is part of the story but the innovative developments by SaaS providers is without doubt another reason for the market's rise.

There is still plenty of resistance to SaaS offerings. About 26% of companies said they have no plans to use cloud computing technologies.

Abour 71% of the market is here in the United States. SaaS continues to grow in international markets.

Hardest hit is the ERP category with projects or reneals being cancelled. It has an expected growth of only 5%.

How this shakes out for the larger providers will be a big story in the next year. Who will come out ahead? Who will be left behind?