As part of our on-going Application Usage Management Benchmarking Report series (Q2 2011 report: The Global Recession – Impact on Software Downloads), we analyzed data on new entitlements created in our FlexNet Operations On-Demand service for the years 2007-2011.
New software entitlements represent purchases of software by new and existing customers of the software companies and intelligent device manufacturers we serve. As shown in the accompanying figure, we plotted changes in new entitlements created in each year with 2007 serving as the baseline. Given the five year horizon, we only included software producers that have used FlexNet Operations On-Demand throughout 2007-2011. This eliminates the effect of new customer wins and attritions for Flexera Software. We also compared our data to the Dow Jones Industrial Average and NASDAQ Computer Index. The latter includes the many software producers in the US - many also use our service.
Our analysis shows that:
The software industry has rounded the corner, and is recovering from the recession. New software entitlements created in 2011 grew 3% compared to 2007. 2011 is the first year where new entitlements grew compared to 2007.
- Entitlement creation trends closely follow the ups and downs of the Dow Jones Industrial Average. However, the volatility of entitlements is less compared to the Dow Jones Index.
- While new entitlements seem to also follow the NASDAQ Computer Index trend, we found 2010 and 2011 to be intriguing. In 2010, the NASDAQ Computer Index was up 30% compared to 2007, where as new entitlements were down 13%. In 2011, new entitlements grew 3% over 2007 but the NASDAQ grew by 38%. Of the 394 companies included in the NASDAQ Computer Index, we recognized many of our customers, some SaaS providers and many semiconductor manufacturers, none of whom could explain the anomaly in 2010 and 2011. Only one company stood out – Apple! Its stock grew 151% in 2010 and 237% in 2011 compared to 2007, and likely has had huge impact on the index containing it.