The market for large enterprise software is set to grow at up to 9% a year until 2010, but the software support service will suffer a slump in growth, according to market research company Ovum.
Ovum's David Mitchell told technology law podcast OUT-LAW Radio that in certain sectors the technology market would enjoy massive growth, but in others growth would slow to effectively zero.
"By the end of this decade we'll be talking about a £6.44 billion market for software in the UK, a really substantial market," he said. "Compared to 2003 you're getting close to a doubling of the market size in seven years."
Mitchell was delivering a technology forecast based on Ovum research, and said that large industrial-scale software such as that produced by SAP or Oracle was the business to be in.
"In terms of some of the key growth areas within software, the business applications area is going to stay growing, that's going to make approximately 9% growth all the way through to 2010," he said.
"Some of the areas that are growing less are the support services market. That's growing at about 3% per annum through to the end of the decade; that's relatively flat. If you subtract inflation from those figures, that's a relatively static market," said Mitchell. Companies in that business should be thinking about producing products and producing and licensing intellectual property, he said.
Mitchell was critical of the current fashion for convergence which sees IT firms, telecoms companies and software houses all offering each others' products and services. This would not, he predicted, be a strategy that is likely to meet with significant success. "The people for me who are doing best are those who stick to their knitting and do what they're good at," he said.
"I'm counting convergence as one of those things that is a lot talked about, there's a lot of money being spent on it, but it's not one that I personally think that is one of the huge ones to watch for a lot of money to be made out of it."
Mitchell was confident that social networking sites, currently the darlings of the investment community, would be able to earn out the large sums being invested in them. "I think some of these could prove not to be overpaid, but they'll need very careful engineering to ensure that the benefits come out," he said. "It does have some of the uncertainty of the late '90s but I don't think it has got some of the silliness of the late '90s yet."
Mitchell was speaking at an event organised by ScotlandIS, the trade body for software, telecomms and IT in Scotland.