Review of China's middleware market

BEIJING, CHINA: CCID Consulting recently released its article on China's middleware market.

Market Review

Market size and growth
As an important component of basic software, middleware software, OS and database formed a huge industry worldwide, a market with the most rapid development in China's software industry. In 2008, the size of China's middleware product market reached 1.546 billion Yuan, up 19.2 percent year-on-year.

Market characteristics
The entire market remains generally stable in 2008, mainly dominated by IBM, ORACLE (BEA) and TongTech. IBM's position is difficult to replace, that although ORACLE acquired BEA, its market share is still behind after IBM. With ORACLE still in the process of merging former BEA's products and channels, the market pattern remains more or less the same.

As for market segments, middleware is expanding in finance, telecom, and enterprise-grade markets, respectively.

The top three middleware manufacturers in China have different industry bases: IBM occupies finance industry; ORACLE (BEA) the telecom industry; and TongTech has breakthroughs in enterprise-grade market and e- government fields. Although they have their own industry base, they also have mutual penetration. For example, IBM sets foot in telecom industry, and TongTech has achievements in finance industry. The global financial crisis has a greater effect on IBM than others. TongTech made considerable advances in the telecom market, as its TongTech's TongIntegrator 3.5 in 2008 had good sales in 2008.

In 2008, China's middleware market has following characteristics:

Market maintains rapid growth in 2008, but growth rate slows down
In 2008, the sales revenue of China's middleware software reached 1.546 billion Yuan, up 19.2 percent year-on-year; the growth rate is higher than the growth rate of the whole software market. The global financial crisis affects middleware market.

Market concentration further improves, shares of IBM and ORACLE account for over 50 percent of total market
IBM still occupies the largest share of China's middleware market in 2008. After acquiring BEA, ORACLE becomes the second largest middleware. By the end of Q3-2008, the market share of IBM and ORACLE account for 52 percent of the total market. China's domestic middleware manufacturers will face a more competitive environment, such as TongTech, Primeton and Kingdee.

Application field penetrates into traditional industries
In 2008, there are few new powerful products and technology in middleware market. The major reasons are that on one hand, middleware technology are becoming more mature, manufacturers' pursue to technology return to the rational track; on the other hand, because of market concentration, middleware manufacturers slow down their product innovation. As for application field, with the gradual saturation of key industrial application, middleware manufacturers pay more attention to traditional industries' application.

SOA speed up deployment, middleware becomes system integration weapon
In 2008, middleware market's another characteristic is SOA has transferred from a concept to real IT architecture scheme. Enterprise integration manufacturers and enterprise software clients gradually accepted SOA, so more and more enterprises and industrial clients consider adopting SOA solution when they carry through information system integration and IT architecture, such as Haier, Dongfeng Motor Corp., Maritime Safety Administration and Air Traffic Management Bureau.

The major reasons are SOA's gradual mature and users' consciousness improvement. Besides, facing a more complex and ever-changing network, middleware plays an increasingly important role in system integration.

Market Trend

In the next three years, the size of China's middleware software market in 2008 will reach 1.546 billion Yuan, while the size in 2011 will reach 2.411 billion Yuan, at a CAGR of 15.9 percent.

The Chinese government's support to the software industry is the powerful impetus of China's informatization construction. The Central People's Government of the People's Republic of China announced to use 4 trillion Yuan to expand domestic demands; traffic, medical health, cultural and education are the highlights.

This action is benefit to middleware market's penetration to traditional industries. China's medical and education industries are in the stage, which has to implement informatization and strengthen informatization. Besides, enterprise-grade market and e-government will be affected by the action.