Microsoft Corporation (NASDAQ:MSFT) is making inroads in a key market, and at the rate its going, longtime stalwarts including Hewlett-Packard Company (NYSE:HPQ) and International Business Machines Corp. (NYSE:IBM) better stand up and take notice.
IT operations management: What is it?
Computer Weekly Developer Network describes IT operations management, or ITOM, as, “the day-to-day tasks related to the management of technology infrastructure components,” and the “individual applications, services, storage, networking and connectivity elements of a total IT stack.” And the ITOM market is big, in both the cloud and traditional IT environments, and getting bigger. According to research from Gartner Inc (NYSE:IT), the ITOM software market generated $18 billion last year, up 4.8% from 2011.
Though Microsoft Corporation (NASDAQ:MSFT) ranks fourth in the ITOM marketplace, things start to get interesting for investors when we analyze the last couple of years. The top five ITOM vendors account for 55% of the entire market, and of those, Microsoft has easily outgrown the others on a percentage basis: Jumping 11.2% in annual revenue from 2010 to 2011, and up 16.1% from 2011 to 2012.
The next best growth by any of the top five ITOM vendors last year? BMC Software, Inc. (NASDAQ:BMC) was up a paltry 0 .9% year over year. Even International Business Machines Corp. (NYSE:IBM), the undisputed king of ITOM, grew a mere 0.8% in 2012. Granted, IBM’s $3.28 billion in ITOM revenue in 2012 handily beats Microsoft Corporation (NASDAQ:MSFT)’s $1.48 billion, as does BMC’s $1.92 billion, but the trend is clear: Microsoft is leveraging its enterprise and cloud computing customers better than its ITOM competitors.
Of the top five, only Hewlett-Packard Company (NYSE:HPQ) and CA, Inc. (NASDAQ:CA) — a $12.35 billion market cap ITOM solutions provider — experienced a decrease in revenue compared to 2011. HP experienced the largest decline of the big boys, falling 4.3% year over year. CA was essentially flat, dropping 0.6% to $2.21 billion in revenue compared to $2.26 billion in 2011.
The big picture
Investors aren’t discounting the strides Microsoft Corporation (NASDAQ:MSFT) is making in mobile computing and cloud-related products, including Office 365, as evidenced by its share price pop of over 27% so far this year. IDC’s recent data showing Windows Phone taking over the No. 3 smartphone OS spot in Q1 of this year is also a great topic around the proverbial water cooler.
Now toss in the success Microsoft Corporation (NASDAQ:MSFT) is enjoying in ancillary businesses like ITOM, particularly compared with competitors like Hewlett-Packard Company (NYSE:HPQ) and CA, Inc. (NASDAQ:CA), and the mid- to long-term growth prospects really get interesting.