Microsoft’s still top dog in the software game, but the cloud’s giving Salesforce a massive boost

Microsoft’s failings in the hardware space might’ve lost it a lot of cool, but it’s still seriously dominant in the software space.

In fact, the Redmond-based giant’s software revenue grew six percent over the past year to US$65.7-billion cementing its place at the top of the US$407.3-billion global software market. According to technology research company Gartner, the market is primarily being driven by developed economies with emerging markets relatively sluggish.

Most of the top 10 are established players, with Salesforce being the only entrant into the group that wasn’t there last year. It also achieved the highest growth (33.3%) in the group as it racked up over US$3.8 billion in revenue during 2013.

The research company also reckons that global trends around big data, cloud services and the Internet of Things could be one reason Salesforce has seen such impressive growth.

“The software market has been changing shape over the past five years, and cloud is driving the bulk of this change as software vendors acquire and provide applications and infrastructure technology to support the cloud and the Internet of Things (IoT) movement,” said Joanne Correia, research vice president at Gartner. “A clear indicator of this is that for the first time we have a pure cloud vendor in the top 10.”

Another beneficiary of these trends, it says, is Oracle:

“There is a shift in vendor rankings from 2013 at the top of the worldwide software market,” said Chad Eschinger, research vice president at Gartner. “This is the first time in Gartner’s global software market share research that Oracle has ranked second in terms of total software revenue with $29.6 billion and capturing 7.3 percent of the global market. Global trends around big data and analytics with business investment in database and cloud-based applications helped to drive Oracle’s top-line growth.”

In the face of those figures, it makes sense that Microsoft is likely to keep pushing its Cloud agenda. The most notable recent example of this is it bring Office to the iPad for the first time.

According to Gartner, the software industry is in the middle of a multiyear cyclical transition as companies are focusing investment on technologies to support existing system structure, in order to maintain competitiveness, while still taking advantage of cloud/subscription-based pricing where it makes sense to grow and advance the business.

“At this point,” says John Rizzuto, research vice president and Invest analyst at Gartner, “the new and emerging technology markets in software, such as digital marketing and public cloud computing, are so nascent that investors are favoring those companies that are early and aggressive in grabbing both market and mind share — in many cases dismissing progress on earnings and cash flow in hopes that they will one day follow.”